Thinking outside the box? H.U.M.A.N. moves beyond the vending machine to the ‘healthy micro-market’

07-Jan-2014 - Last updated on 23-Oct-2014 at 17:14 GMT

Sean Kelly: Women in particular are far more likely to use micro markets than vending machines

The entrepreneur who proved that vending machines can dispense more than candy and soda and still make a decent return has taken the H.U.M.A.N. Healthy Vending concept to the next level with the launch of a new breed of self-service ‘micro markets’.

Speaking to FoodNavigator-USA after launching the first healthy micro markets in LA with others to follow soon in Honolulu, Houston, and Northern California, H.U.M.A.N. Healthy Vending founder Sean Kelly said: “We’ve got about 2,000 machines in circulation now, and we’re aiming for 10,000 locations in the next few years, but over the next three years or so, we expect to have equal growth in micro healthy markets and vending machines.”

Like a mini-Whole Foods Market

Kelly, who believes healthy vending will be “the norm” in 5-10 years - spurred on in part by legislation* requiring schools to adhere to strict new nutritional guidelines on ‘competitive foods’ - is widely credited with helping to change the image of vending machines from a candy-spewing shop of last resort to just another convenient destination to buy KIND bars, Larabar Fruit & Nut bars, Steaz teas, and Kombucha beverages.

Removing the glass barrier between the customer and the product - but keeping the self-service concept and the franchisee business model, opens up new opportunities, particularly in office environments, said Kelly.

“Women in particular are far more likely to use micro markets than vending machines. They are more accessible, as there is no physical barrier between you and the product, and you can pick up the items before you buy them, just like in a store.”

Like a "mini-Whole Foods Market” with a network of coolers, shelving and a touchscreen self-checkout enabling regular users to pay using their thumbs, micro markets are “the go-to option for corporations”, he added.

Sean Kelly-Healthy Human Vending — Picture: Sean Kelly. While healthier options are still somewhat lacking in many vending machines, with “arguably no healthy snacks among the top 20 vending best sellers”, consumers do want healthier options, particularly women, says market researcher Packaged Facts in a recent report. “Almost half of adult consumers would use vending machines more often if the machines sold more healthy food options.”

We’re not a vending company, we’re a platform that’s bringing easy nutrition everywhere

He said: “They are just more in line with the way people want to shop now, and you can also stock far more SKUs (stock keeping units). An average vending machine has 32 SKUs, whereas our micro markets have 100-200.

“We’re creating a food distribution platform - we’re changing the way people access food, bringing nutrition directly to people. We’re not a vending company; we’re a platform that’s bringing easy nutrition everywhere.”

Shrinkage not been a problem, he insisted: “It’s 2% or less. The benefits far outweigh any downside.”

If you don’t put healthy foods in front of people, they will make bad decisions

The school market has been a tough nut to crack, admitted Kelly, but his firm is uniquely placed to help schools meet the new snack food/vending standards enshrined in the Healthy, Hunger-Free Kids Act of 2010, which kick in this summer, although they are still - frustratingly - subject to last minute changes, he said.

“You can divide schools into three groups: People acting now so they are ready by the July deadline [for the new rules to come into force]; those waiting until the last minute to act; and those that are pulling out of vending altogether because they don’t want to be in violation of the rules.

“But pulling out is not the answer. They’ll lose revenue and miss an opportunity. If you don’t put healthy foods in front of people, they will make bad decisions and instead of getting healthy snacks they will go to 7:11 and buy junk food.”

The guidelines are somewhat arbitrary

Human-healthy-vending2 — Growth in the vending market is expected to come from more cashless payment options; healthier snacks - particularly targeting women; fresh foods; better quality coffee; and more products targeting heavy users such as young people and Hispanics. More premium options are also springing up.

Right now, securing products that are in compliance with the new rules remains a challenge, he said. “There will be many more products available in the second quarter of 2014 than there are today. The problem is that the guidelines are somewhat arbitrary, even though I agree with them in principal, but you are never going to please everyone so we have to work with them.

“Even many of our products [which are healthier than standard vending machine fare] needed some adaptations because of the sodium limits and the whole grain requirements, for example.

“What is frustrating is that the guidelines are still potentially open to changes until the last minute although they are supposed to come into force in July, which means there are still some products we have that we don’t know if they will be allowed - it’s still by no means solidified.”

HUMAN, which stands for ‘Helping Unite Mankind and Nutrition’, donates 10% of its profits to promote improved nutrition & entrepreneurial education in underserved schools via its charity, HUMAN Everywhere.

*USDA’s new smart snacks in schools rules - enshrined in the Healthy Hunger-Free Kids Act of 2010 and taking effect on July 1, 2014 - affect the 100,000+ elementary, middle and high schools that accept assistance from the National School Lunch Program and apply to ‘competitive foods’ (snacks sold in vending machines, a la carte lunch lines and school stores).

The rules (click here) set limits on calories, fats, sugar and sodium and encourage the consumption of dairy, whole grains, protein, fruits and vegetables.

Click HERE to find out more about H.U.M.A.N. Healthy Vending.