CHAPTER 10. SHIPMENTS ANALYSIS 

TABLE OF CONTENTS 

10.1 INTRODUCTION ............................................................................................................ 10-1

10.2 MARKET SEGMENTS.................................................................................................... 10-1

10.3 SHIPMENTS ANALYSIS MODEL EQUATIONS ........................................................ 10-3

10.3.1 Mathematical Formulation of the Shipments Model ......................................... 10-4

10.3.2 Stock Events....................................................................................................... 10-5

10.4 DATA INPUTS ................................................................................................................ 10-5

10.4.1 Historical Shipments.......................................................................................... 10-5

10.4.2 Historical Shipped Units.................................................................................... 10-6

10.4.3 Equipment Price................................................................................................. 10-7

10.5 RESULTS ......................................................................................................................... 10-7

REFERENCES .......................................................................................................................... 10-9

LIST OF TABLES 

Table 10.2.1 Market Segments for the U.S. BVM Market in the Years 2007........................ 10-2 

Table 10.4.1 Estimated Historical Shipments (Units Shipped) and Stock (Units) of BVM 

Equipment.......................................................................................................... 10-6 

Table 10.5.1 Forecasted Shipments for BVM Equipment (Baseline Efficiency, Level 1) 

for Selected Years (thousands of units shipped)................................................ 10-7 

LIST OF FIGURES 

Figure 10.2.1 Flow Chart Showing Inputs to the Shipments Analysis Model......................... 10-3 

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EERE-2006-STD-0125 COMMENT 46
CHAPTER 10. SHIPMENTS ANALYSIS 

10.1 INTRODUCTION 

This chapter describes the U.S. Department of Energy’s (DOE)’s methodology for 

projecting annual shipments of beverage vending machine (BVM) equipment and presents 

results of the analysis. BVM equipment shipment estimates are a necessary input to the national 

energy savings (NES) and net present value (NPV) calculations and the manufacturer impacts 

analysis (MIA). 

According to an analysis of the BVM market used at the ANOPR stage, there were about 

3.67 million BVMs in the United States in 2005.1

 According to industry comments at the 

ANOPR stage, which indicated the original shipments estimate contained significant doublecounting, the total number in 2007 was about 2.4 million units. Allowing for double counting 

and estimated extra retirements over the last two years, DOE estimated the 2006 stock at 2.7 

million units. About 15 percent of these units were estimated to be Class A machines intended 

for indoor use only, while 85 percent are Class B machines intended for either indoor or outdoor 

use. Annual shipments have decreased from about 338,000 in 2000 to under 100,000 in 2007 

(DOE estimates that the total of 2006 shipments was about 122,000 units). The industry 

estimates that in the most recent years, about 55 percent of units shipped were Class A units, 

while 45 percent of units shipped are Class B machines.2

 DOE considered the fact that there may 

be Class A machines intended for either indoor or outdoor use as well as some Class B machines 

that are intended for indoor use only; however, DOE was not able to locate any sales data for 

these two equipment application scenarios, so the sales are assumed to be zero. So, although 

some Class A machines may be used outdoors, for the purposes of the advance notice of 

proposed rulemaking (ANOPR) analysis, DOE assumes that all Class A machines are used 

indoors. Industry sources estimate that about 75 percent of Class B units are used indoors and 

25 percent are used in outdoor locations. 

10.2 MARKET SEGMENTS 

BVMs come in a number of different sizes, but DOE was not able to locate any market 

data concerning shipments by size (unit vending capacity); therefore, the shipments analysis 

focused on three sizes believed to be typical, each of which is assumed to be about one-third of 

the market for Class A units (large [410 12-oz. cans], medium [350 cans], and small [270 cans]) 

and for Class B units (large [800 cans], medium [650 cans], and small [450 cans]). BVMs are 

owned by a number of different business types and are used in many different kinds of business 

locations. Additionally, BVM units are divided into several market segments. Table 10.2.1 gives 

the business locations as well as the approximate size of market segments of the BVMs for 

2002–2005. 

Sales of BVM equipment decreased at the rate of about 24 percent per year from 2000 to 

2005. Consistent with industry comments on the ANOPR, DOE assumed that all shipments after 

2000 (about 580,000 units) were for replacement only. Even so, the stock of BVM units was 

estimated to have fallen from as many as 4.2 million units in 2000 (National Automatic 

Merchandising Association [NAMA] estimates, which may include some double counting) to 

about 2.5 million units in 2007 (estimates in industry comments on the ANOPR). Market 

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EERE-2006-STD-0125 COMMENT 46
shrinkage is believed to be continuing, and DOE assumes that future sales units will continue to 

be for replacement only. Future replacement sales of standard units at current rates (assumed to 

be about 90,000 units per year) are not sufficient to maintain stock initially, so the stock 

continues to shrink until about 2020, at which point it stabilizes at about 945,000 units. This 

stock level is maintained until 2042. 

The shipments analysis results are driven primarily by historical shipments data for the 

two equipment classes of BVM equipment. The flow chart presented in Figure 10.2.1 outlines 

the complete structure of the shipments analysis model, with new shipments driven by 

population growth, and distributions across equipment classes, size categories, applications, and 

ownership matching recent history. Replacements were initially assumed to be driven by the 

need to replace retiring stock. However, comments provided by industry stakeholders at the 

ANOPR stage indicated that virtually all shipments in the future are expected to be replacements 

for (some of the) existing units, that sales would be constant at approximately the 2007 level of 

sales (estimated at approximately 90,000 units per year, which results in a declining stock of 

equipment since not all retirements are replaced at this rate of sales), and that there will be no 

new sales in the foreseeable future. The shipments model was operated according to this 

guidance. The parts of the overall model actually used in the current analysis are indicated by the 

double-lined boxes in Figure 10.2.1. 

Table 10.2.1 Market Segments for the U.S. BVM Market in 2002-2005 

Business Location Percent of Units Ownership Percent of Units 

Manufacturing 36.2% Bottlers and Vendors 95.0% 

Offices 19.5% Business-Owned 5.0% 

Retail 8.0% Manufacturing 1.5% 

Schools/Colleges 13.0% Offices and Health Care 1.4% 

Health Care 6.2% Retail/Restaurants/Bars/Clubs 0.8% 

Hotels/Motels 3.6% 

Schools, Colleges, and Public Facilities 

(including correctional) 0.8% 

Restaurants/Bars/Clubs 0.7% Military Bases 0.4% 

Correctional Facilities 2.1% Other (including hotels/motels) 0.1% 

Military Bases 3.0% Subtotal, Site Owned 5.0% 

Other 7.8% Total 100.0% 

Total 100.0% 

Sources: Business Locations--State of the Vending Industry (2007).1 Ownership—Industry comment on advanced 

notice of proposed rulemaking. 

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Population Forecast

Industry Estimate of 

Shipments (2002-2005)

Initial Replacement 

Shipments 

Initial Shipments to New 

Locations 

Initial BVM Stock

Estimated Lifetime 

of BVM Stock

Shipments to New 

Locations 

Replacement 

Shipments 

Total 

Shipments By 

Equipment 

Class and 

Size

% Shipments by 

Equipment Class (2002-

2005)

BVM Stock 

by 

Equipment 

Class and 

Size

Population Forecast

Industry Estimate of 

Shipments (2002-2005)

Initial Replacement 

Shipments 

Initial Shipments to New 

Locations 

Initial BVM Stock

Estimated Lifetime 

of BVM Stock

Shipments to New 

Locations 

Replacement 

Shipments 

Total 

Shipments By 

Equipment 

Class and 

Size

% Shipments by 

Equipment Class (2002-

2005)

BVM Stock 

by 

Equipment 

Class and 

Size

Figure 10.2.1 Flow Chart Showing Inputs to the Shipments Analysis Model 

The analysis model assumes that in each year, the existing BVM equipment stock either 

ages by one year or breaks. As broken equipment would be replaced, new equipment can be 

shipped into new commercial floor space, and old equipment can be removed (not shown in the 

diagram). 

The balance of this chapter explains the shipments analysis in more detail. Section 10.3

presents the mathematical formulation of the model, section 10.4 describes the data inputs to the 

model, and section 10.5 presents the results for different efficiency level scenarios. 

Shipments forecasts were determined for all of the candidate standard levels for which 

NES and NPV are required. DOE is considering up to eight candidate standard levels for each of 

the two classes and three size categories of each class. 

10.3 SHIPMENTS ANALYSIS MODEL EQUATIONS 

The shipments analysis model is a description of BVM equipment stock flows as a 

function of year and age. While there are two equipment classes, no coupling is assumed 

between them, so the equations describe each type of equipment independently. The shipments 

analysis is conducted using a Microsoft Excel (NES) spreadsheet accessible on the Internet at 

http://www1.eere.energy.gov/buildings/appliance_standards/commercial/beverage_machines.ht

ml. Chapter 11 of this TSD and appendix G discuss how to access the spreadsheet and other 

related spreadsheets and provides basic instructions for using them. 

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Section 10.3.2 defines the different BVM equipment stock categories. DOE formulated 

the equations as updates of the distribution of stock in year t as a function of age a to year t+1. 

DOE presented the different purchase decisions and provided a description of the data sources 

(section 10.3.2). DOE used this calculation of existing stock and the average age of the 

equipment as a basis for calculating replacement sales (section 10.3.2.1). In section 10.3.2.2, 

DOE subtracted replacement sales from historical total sales statistics to calculate the new sales 

of new BVM equipment. DOE forecasted new sales as a function of population, which is 

assumed to result in new business locations for BVMs. Sales of new and replacement equipment 

are recorded by the year sold, and each annual vintage is depreciated over the estimated life of 

the equipment (averaging approximately 10 years, with a 15-year maximum). Sales in each year 

are allocated to the two equipment classes in proportion to their relative historical sales. 

10.3.1 Mathematical Formulation of the Shipments Model 

DOE uses two BVM equipment stock categories. The category U0(t,a) is the stock of 

existing units. Available information suggests that all units have had normal repairs that do not 

affect the lifetime of the equipment. 

BVM equipment lifetimes range from one year to as many as 15 years. Based on 

discussions with industry, the average value is 10 years, and the industry practice is that BVM 

equipment is withdrawn from service and renovated at about 5 years with one renovation cycle. 

Most equipment is not renovated a second time (see chapter 8 for further details). Also, data 

obtained from multiple industry and government sources suggest that the initial existing stock of 

equipment to have an average rate of decline of about 8 percent per year, based on the 10-year 

lifetime of a unit of equipment and a Weibull statistical distribution of stock survival as well as 

the historical estimated annual replacements for the past 10 years. Replacements for stock 

breakage and retirements are tracked by vintage and in turn follow the Weibull distribution. The 

total stock of age a in a given year t is represented by 

 U(t, a) = U0(t,a) - ∑a Pa(a) x U0(t,a) Eq. 10.1 

the total stock of equipment is 

∑a (U( t,a)) Eq. 10.2

and the average age of the stock in year y is defined as 

 StockAge(t) = ∑aU(t, a) x a / ∑a (U( t,a)) Eq. 10.3

Where: 

 U (t,a) = total stock of age a in a given year t, 

 U0 (t,a) = initial stock of existing units of age a, 

 StockAge(t) = average age of stock in year t, 

 P(a) = probability that stock of initial units will break or retire in year a, 

 a = age of stock in years, and 

 t = year. 

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EERE-2006-STD-0125 COMMENT 46
The shipments of new stock in a given year t are Uship(t). By definition, the age of the 

equipment is zero in the year that it is shipped, so that Uship(t) = U0(t,0). 

10.3.2 Stock Events 

In the transition from year t to year t+1, two things could happen to the stock of BVMs: 

 existing equipment could break or be removed and be replaced, or 

 the stock could simply age by one year. 

In the model, early replacements (i.e., existing equipment replaced before the end of its 

useful life) are not considered, and not all broken and removed equipment is replaced. The 

following sections present the equations used to represent each possible event. 

10.3.2.1 Replacing Equipment 

DOE determined the probability that BVM equipment of age a from stock U0 will break 

or will be replaced before the end of its useful lifetime using a known function P(a) (based on 

the age of BVM equipment a and Weibull statistical distribution with location=1.0, shape=9.62, 

and scale=7.0). These probabilities do not depend on the model year t. All broken units are 

assumed to leave the inventory. Replacements are set independently based on the current level of 

sales and current distributions across equipment classes and sizes. Replacements may not be 

sufficient to replace all broken and retired units. 

10.3.2.2 New Equipment 

As discussed in section 10.1, BVM equipment will be purchased to replace BVM 

equipment as described above and to serve any increased numbers of customers at existing as 

well as new geographical locations, which result in new unit locations. Available information 

suggests that the purchase of new BVM equipment serving new customers in new locations is 

driven by net growth in locations. 

DOE has no information on the variation in the market saturation of BVM equipment by 

building type or over time. However, based on industry comments at the ANOPR stage, there are 

currently no net increases in locations for BVMs (any new locations are offset by losses in 

existing locations). Therefore, in the model, the net purchase of equipment for new locations is 

assumed to be zero, and any equipment purchases are for replacement only. The replacement 

units are allocated to building type according to the current percentage shares, and each vintage 

of the retiring equipment is removed by vintage according to the Weibull stock survival function. 

10.4 DATA INPUTS 

10.4.1 Historical Shipments 

Historical shipments are critical to the development of the shipments model because DOE 

used historical data to calibrate the model. DOE’s primary source of historical data for shipments 

of refrigeration equipment was data in an e-mail from NAMA and the State of the Vending 

Machine Industry (2006). NAMA provided DOE with shipments data (from 1998–2006, there 

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EERE-2006-STD-0125 COMMENT 46
was a reduction in shipments of 86.4 percent).1 Later industry comments on the ANOPR indicate 

that Class A machines now approach 55 percent of shipments, and the trend is to increase this 

number as the number of beverages offered in containers of all shapes, sizes, and material 

increases that allow DOE to allocate sales of equipment to refurbished and new units and among 

the two equipment classes.

10.4.2 Historical Shipped Units 

Historical shipped units depict the annual amount of BVM equipment capacity 

introduced into the marketplace. DOE converted shipped units to percent of shipped units for use 

in the shipments analysis model to establish the BVM market share attributed to each equipment 

class. The market share calculation and its use in forecasting shipments are explained in 

section 10.3.2.2. Table 10.4.1 presents the historical shipments of BVM equipment by capacity 

ranges and the year of shipment. The shipments analysis relies on the three sizes each of the two 

equipment classes to represent the BVM equipment market. Shipments after 2006 are assumed to 

be 90,000 per year. 

Table 10.4.1 Estimated Historical Shipments (Units Shipped) and Stock (Units) of BVM 

Equipment 

1998 1999 2000 2001 2002 2003 2004 2005 2006 

Estimated 

Shipments 

372,000 477,000 338,000 150,000 150,000 100,000 90,000 90,000 122,000 

Assumed 

Replacements 

250,000 250,000 250,000 150,000 150,000 100,000 90,000 90,000 122,000 

New Shipments 122,000 227,000 88,000 - - - - - - 

Estimated 

Stock 

3,887,000 4,114,000 4,034,880 3,862,090 3,703,122 3,506,873 3,316,323 3,074,691 2,789,221

Table notes: Allocation of units to refurbished and new units is based on industry estimates of total stock. 

Source: State of the Vending Industry (2006) and DOE assumptions based on industry comments on the ANOPR. 

10.4.2.1 Market Shipments 

DOE used the above shipments data to estimate the market shipments in year t of each 

BVM equipment class y (MKTSHIP(t,y)) defined in terms of units shipped for both new and 

replacement markets. Because the percent of shipments in each equipment class is relatively 

constant over time and the lifetime of each equipment class is the same (10 years typical, 

15 years maximum), the ratio of shipments to equipment class is indicative of the market share 

for that class (MKT(y)). DOE estimated the MKT(y) for a particular equipment class to be a 

constant value equal to the average of the yearly percent historical shipments for that equipment 

class. Based on industry comments, the market for BVMs has undergone significant changes in 

the last 5 years. Recently, these shipments have been 55 percent for Class A machines and 

45 percent for Class B machines, where the percentages used to be almost the exact opposite 

between Classes A and B machines. Each equipment class was further divided into large, 

medium, and small sizes, with about 25 percent each for large and 75 percent for medium-size 

machines and no shipments of small machines. All shipments are currently for replacement only 

and are assumed to remain that way. Any shipments to new locations are assumed to be offset by 

losses at old locations. For the historical stock, Class B machines are assumed to be about 85 

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EERE-2006-STD-0125 COMMENT 46
percent of the stock and Class A machines are at 15 percent. Large, medium, and small machines 

of the historical stock are assumed to comprise 25, 65, and 10 percent, respectively. 

 MKTSHIP(t,y) = MKT(y) x (UN(t) + UB(t)) Eq. 10.4

Where: 

MKTSHIP(t,y) = total market shipments of equipment class y in year t 

MKT(y) = percentage of total market shipments of equipment class y

UN(t) = total shipments to new locations in year t (assumed to be zero)

UB(t) = total replacement shipments in year t

DOE estimated total sales by adding replacement sales to new sales in each year. DOE 

estimated the total number of units for each type that were replacement units. DOE assumed that 

new units last an average of 10 years and that their lifetimes follow a Weibull distribution 

(commonly assumed for equipment failure studies). The initial size of the existing stock was 

back-calculated. DOE set up an inventory accounting scheme to keep track of required 

replacements and the aging of new units as they are added to the inventory each year. 

10.4.3 Equipment Price 

Equipment price is the price paid by the customer for BVMs. It includes both the 

purchase price of the equipment and installation costs. As discussed in the engineering analysis 

(chapter 5) and the life-cycle cost and payback period analysis (chapter 8), equipment prices in 

this analysis are functions of efficiency (or reduced energy consumption). DOE based equipment 

price projections on potential equipment efficiency options but did not develop estimates of 

market trends in efficiency. DOE developed an efficiency mix for the base case (i.e., the case 

without new efficiency standards) and for each standard efficiency level, which are discussed in 

detail in chapter 11. 

10.5 RESULTS 

Table 10.5.1 shows the forecasted shipments for BVM equipment classes and size 

categories for the baseline efficiency level (Level 1) for select years from 2012–2042. As 

equipment purchase price increases with efficiency, a drop in shipments would be expected. 

Although there is a provision in the shipments analysis spreadsheet for a change in shipments as 

the efficiency level increases, DOE had no information with which to calibrate such a 

relationship. Therefore, for the ANOPR analysis, DOE presumed that shipments do not change 

with efficiency level. Table 10.5.1 also shows the cumulative shipments for BVM equipment for 

the entire 31-year period (2012–2042). 

Table 10.5.1 Forecasted Shipments for BVM Equipment (Baseline Efficiency, Level 1) for 

Selected Years 

Thousands of Units Shipped 

Equipment 

Category 2012 2015 2020 2025 2030 2035 2040 2042 

Cumulative 

Shipments 

(2012-2042) 

A-L-IN 12.4 12.4 12.4 12.4 12.4 12.4 12.4 12.4 383.6 

A-M-IN 37.1 37.1 37.1 37.1 37.1 37.1 37.1 37.1 1,150.9 

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A-S-IN - - - - - - - - - 

B-L-IO 10.1 10.1 10.1 10.1 10.1 10.1 10.1 10.1 313.9 

B-M-IO 30.4 30.4 30.4 30.4 30.4 30.4 30.4 30.4 941.6 

B-S-IO - - - - - - - - - 

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10-9 

REFERENCES 

1. Automatic Merchandiser. State of the Vending Industry Report. 2006. 

<http://www.amonline.com> (Last accessed May 2007). 

2. Eils, L. Personal communication. National Automatic Merchandising Association, Chicago, 

IL. E-mail to Dr. Sriram Somasundaram, Pacific Northwest National Laboratory, May 24, 

2007.

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