CHAPTER 10. SHIPMENTS ANALYSIS 

TABLE OF CONTENTS 

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

10.2 MARKET SEGMENTS.................................................................................................... 10-2 

10.3 SHIPMENTS ANALYSIS MODEL EQUATIONS ........................................................ 10-4 

10.3.1 Mathematical Formulation of the Shipments Model ......................................... 10-5 

10.3.2 Stock Events....................................................................................................... 10-6
 

10.4 DATA INPUTS ................................................................................................................ 10-6 

10.4.1 Historical Shipments .......................................................................................... 10-6 

10.4.2 Historical Shipped Units .................................................................................... 10-7 

10.4.3 Equipment Price ................................................................................................. 10-8 

10.5 RESULTS ......................................................................................................................... 10-8 

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

LIST OF TABLES 

Table 10.2.1 Market Segments for the U.S. Beverage Vending Machine Market in 2002–
 

2005.................................................................................................................... 10-2 

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

Beverage Vending Machine Equipment ............................................................ 10-7 

Table 10.5.1	 Forecasted Shipments for Beverage Vending Machine Equipment (Baseline 

Efficiency, Level 1) for Selected Years ............................................................. 10-9 

LIST OF FIGURES 

Figure 10.2.1 Flow Chart Showing Inputs to the Shipments Analysis Model ......................... 10-4 

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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 equipment and presents results of the 

analysis. Beverage vending machine equipment shipment estimates are a necessary input to the 

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

impacts analysis. 

According to an analysis of the beverage vending machine market used at the advance 

notice of proposed rulemaking (ANOPR), there was a stock of about 3.67 million beverage 

vending machines in the United States in 2005.1 According to industry comments at the ANOPR 

that indicated the original shipments estimate contained significant double-counting, the total 

stock in 2007 was about 2.3–2.5 million units. Allowing for double counting, age of stock, 

retirement rates, refurbishment and remanufacture, and estimated extra retirements over the last 2 

years, DOE estimated the year 2000 stock at about 3.3 million units, 2006 stock at 2.7 million 

units, 2007 stock at 2.5 million units, and 2008 stock at 2.3 million units. About 50 percent of 

these units were estimated to be Class A machines, while 50 percent were Class B machines. 

Annual beverage vending machine 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 

125,000 units). The industry estimates that in the most recent years, about 50 percent of units 

shipped were Class A machines, while 50 percent of units shipped are Class B machines, 

discussed at the NOPR public meeting. In the NOPR analysis, DOE assumed based on interested 

party comments that Class A equipment would constitute 55 percent of new sales and Class B 

equipment would constitute 45 percent. PepsiCo (PepsiCo, Public Meeting Transcript, No. 56 at 

p. 89) commented that Class A sales would be between 50 and 60 percent, and Coca Cola (CocaCola, Public Meeting Transcript, No. 56 at p. 90) commented that although it expected Class A 

equipment to be the majority of sales, Class B machines were more than 50 percent of sales. 

DOE decided to shift to a ratio of 60 percent Class A machines to 40 percent Class B sales for 

the final rule. Dixie-Narco (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 107) 

commented that the small-size unit sales were zero but the large equipment share might be 

higher by up to 40 percent. Dixie-Narco also recommended that the National Automatic 

Merchandising Association (NAMA) could act as an intermediary to compile the data on sales 

and provide it to DOE. NAMA was able to provide an estimate of the distribution between 

Classes A and B units for a subset of the manufacturers, approximately 60 percent Class B 

machines and 40 percent Class A machines (NAMA, No. 65 at p. 2). DOE decided to shift to a 

ratio of 50 percent Class A machines to 50 percent Class B sales for the final rule. DOE 

considered 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. Although some Class A machines may be used outdoors, for the purposes of the final 

rule, DOE assumes that all Class A machines are used indoors. Industry sources estimate that 

about 75 percent of Class B machines are used indoors and 25 percent are used in outdoor 

locations. 

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10.2 MARKET SEGMENTS 

Beverage vending machines come in a number of different sizes, but DOE was unable 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 [34 ft3

 refrigerated volume], medium [22 

ft3 refrigerated volume], and small [17ft3 refrigerated volume]) and for Class B units (large [26 

ft3

 refrigerated volume], medium [22 ft3 refrigerated volume], and small [17ft3 refrigerated 

volume]). Beverage vending machines are primarily owned by beverage bottlers and are located 

in many different types of businesses, including commercial/retail buildings, schools, military 

installations, and industry. Additionally, beverage vending machine 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 beverage vending machines for 2002–2005. 

Table 10.2.1 Market Segments for the U.S. Beverage Vending Machine Market in 2002– 

2005 

Business Location Units 

% 

Ownership Units 

% 

Manufacturing 36.2 

Offices 19.5 

Retail 8.0 

Schools/Colleges 13.0 

Health Care 6.2 

Hotels/Motels 3.6 

Restaurants/Bars/Clubs 0.7 

Correctional Facilities 2.1 

Military Bases 3.0 

Other 7.8 

Total 100.0 

Bottlers and Vendors 95.0 

Business-Owned 5.0 

Manufacturing 1.5 

Offices and Health Care 1.4 

Retail/Restaurants/Bars/Clubs 0.8 

Schools, Colleges, and Public Facilities 

(including correctional) 

0.8 

Military Bases 0.4 

Other (including hotels/motels) 0.1 

Subtotal, Site Owned 5.0 

Total 100.0 

Sources: Business Locations–State of the Vending Industry (2007).1

 Ownership–Industry comment on ANOPR. 

Sales of beverage vending machine equipment decreased at the rate of about 3.9 percent 

per year, 2000–2007. Consistent with industry comments on the ANOPR, DOE assumed that all 

shipments after 2001 were for replacement only. Even so, the stock of beverage vending machine 

units was estimated to have fallen from approximately 3.3 million units in 2000 to about 2.5 

million units in 2007 (estimates in industry comments on the ANOPR). Market 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. At the NOPR public 

meeting, sustainability of the industry was a significant topic of discussion. Commenters 

concluded that the long-term sustainable size of the industry was between 1.6 million and above 

2 million units. For the NOPR analysis, DOE assumed that future sales would all be replacement 

sales and would be flat at the then-current level of sales of about 90,000 units per year for the 

entire period of analysis. This level of replacements would result in a reduction in stock from 

today’s level of about 2.3 million units to about 1 million units by 2020. Commenters agreed that 

the current economic situation would result in additional decline in the number of deployed units 

(Royal Vendors, Public Meeting Transcript, No. 56 at p. 74; Dixie-Narco, Public Meeting 

Transcript, No. 56 at p. 76; Coca-Cola, Public Meeting Transcript, No. 56 at pp. 77 and 91) but 

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with a possibility of a near-term recovery based on the need to replace older equipment as it 

reaches the end of its lifetime and to continue to serve the current customer base (Dixie-Narco, 

Public Meeting Transcript, No. 56 p. 79-80; Pepsi, Public Meeting Transcript, No. 56 at p. 88; 

Coca-Cola, Public Meeting Transcript, No. 56 at p. 91). Several commenters (Dixie-Narco, 

Public Meeting Transcript, No. 56 at p. 76; Coca-Cola, Public Meeting Transcript, No. 56 at pp. 

77 and 83; ASAP, Public Meeting Transcript, No. 56 at p. 87) stated that 1 million units was too 

small to sustain the current customer base and that the shipments would have to be higher than 

the current level. During the public meeting, participants estimated the ultimate stock ranged 

from about 1.6 million (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 84) to above 2 

million units (Coca-Cola, Public Meeting Transcript, No. 56 at p. 83). Given the existing rates of 

refurbishments and retirements, maintaining a long-term stock of 2 million units would require 

annual shipments of new equipment of approximately 190,000 units. DOE assumed that the 

industry would ramp up its idle capacity over 2 years to increase production from the 2007–2009 

level of approximately 90,000 units to 150,000 units in 2010 and 190,000 units in 2011. Despite 

the increase in production, the estimated age distribution of the existing stock in 2007 and 2008 

means that retirements would exceed replacements before 2014, and the stock would continue to 

shrink in the short run to about 1.6 million units in 2014. Replacements would then exceed 

retirements, and the stock would steadily recover to about 2 million units by 2022. This stock 

level is maintained until 2042. 

The shipments analysis results are driven initially by historical shipments data for the two 

equipment classes of beverage vending machine equipment from the 1990s. Annual data on 

refrigerated beverage vending machines shipments were available online from U.S. Bureau of 

the Census Current Industrial Reports for most years in the 1990s, though this series was 

discontinued after 2000.2

 The flow chart presented in Figure 10.2.1 outlines the complete 

structure of the shipments analysis model, with net new shipments (shipments to new locations, 

not currently relevant) 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 in a growing market. However, 

industry stakeholder comments at the ANOPR indicated that virtually all future shipments 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 because not all retirements are replaced at this rate of 

sales), and that there will be no new sales in the foreseeable future. This assessment was later 

amended at the NOPR stage to allow for a long-run stock of about 2 million units and 190,000 

annual shipments, as discussed above. 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. 

The analysis model assumes that in each year, the existing beverage vending machine 

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 flow chart). 

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Population Forecast 

Industry Estimate of 

Shipments 

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 

BVM Stock 

by 

Equipment

Class and

Size

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 

Equipment Class 

BVM Stock 

by 

Equipment 

Class and 

Size 

Figure 10.2.1 Flow Chart Showing Inputs to the Shipments Analysis Model 

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 trial 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 beverage vending machine 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.html. In the TSD, chapter 11 and Appendix G discuss how to access the 

spreadsheet and other related spreadsheets and provide basic instructions for using them. 

Section 10.3.2 defines the different beverage vending machine 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 age distribution of the equipment as a basis for calculating replacement sales (section 

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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 beverage vending machine equipment. DOE 

forecasted new sales as a function of population, which is assumed to result in new business 

locations for beverage vending machines. 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 beverage vending machine equipment stock categories. The category 

U0(t,a) is the stock of existing units. Available information suggests that all units have had 

normal repairs and refurbishments that do not affect the overall lifetime of the equipment. 

Beverage vending machine equipment lifetimes range from 1 year to as many as 15. 

Based on discussions with industry, the average value is 10 years, and the industry practice is 

that beverage vending machine 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 (1998) existing stock of equipment had an average rate of decline of about 9.1 

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 data on shipments between 1991 and 1998. 

Shipments from 1998–2000 as well as estimated total shipments after 2000 were allocated as 

necessary replacements for stock breakage and retirements and the remainder to new stock. All 

additions were 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)  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)  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.
 

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). 

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10.3.2 Stock Events 

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

beverage vending machines: 

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

 the stock could simply age by 1 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 beverage vending machine 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 beverage vending machine 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, beverage vending machine equipment will be purchased to 

replace beverage vending machine 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 beverage vending machine 

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 beverage vending 

machine equipment by building type or over time. However, based on industry comments at the 

ANOPR stage and affirmed at the NOPR stage of the rulemaking, there are currently no net 

increases in geographical locations for beverage vending machines (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 

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Machine Industry (2006). NAMA provided DOE with shipments data, indicating that from 

1998–2006, there was a reduction in shipments of 86.4 percent.1 Later industry comments on the 

ANOPR and NOPR stages on the size of the stock were not consistent with these data, and DOE 

estimated that shipments declined about 66 percent during 2000–2006 (and continued to decline 

to 2007). As discussed in section 10.2, Class A machines are about 50 percent of shipments. 

10.4.2 Historical Shipped Units 

Historical shipped units depict the annual amount of beverage vending machine 

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 beverage vending machine 

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 beverage vending machine equipment by capacity ranges and the year of shipment. 

DOE assumed that shipments after 2006 are begin at 90,000 per year for 2007–2009, increase to 

150,000 in 2010, and then 190,000 per year thereafter. All future shipments are assigned to the 

replacement market, as discussed in section 10.2. 

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

Beverage Vending Machine Equipment 

Equipment 

Status* 

1998 1999 2000 2001 2002 2003 2004 2005 2006 

Estimated 

Shipments 

Assumed 

Replacements 

New 

Shipments 

Estimated 

Stock 

372,000 477,000 338,000 300,000 250,000 200,000 200,000 200,000 125,000 

250,000 250,000 250,000 250,000 250,000 200,000 200,000 200,000 125,000 

122,000 227,000 88,000 50,000 -- -- -- -- --

2,789,669 3,046,650 3,164,244 3,242,477 3,267,244 3,229,882 3,170,242 3,070,605 2,690,850 

*

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

Sources: U.S. Census Bureau Current Industrial Reports, State of the Vending Industry (2006) and DOE assumptions 

based on industry comments at the ANOPR and NOPR stages. 

10.4.2.1 Market Shipments 

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

beverage vending machine 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 beverage vending machines has 

undergone significant changes in the last 5 years. Recently, these shipments have been 50 

percent for Class A machines and 50 percent for Class B machines. The shipments analysis relies 

on the three sizes each of the two equipment classes to represent the beverage vending machine 

equipment market. However, industry comments at the NOPR stage indicated that there were 

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very few shipments of equipment in the small size range, so DOE assumed shipments of small 

equipment to be zero. 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 current 

locations. 

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), and 

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 beverage vending machines. It 

includes both the purchase price of the equipment and installation costs. As discussed in the 

engineering analysis (TSD chapter 5) and the life-cycle cost and payback period analysis (TSD 

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 energy conservation standards) and for each standard 

efficiency level, which are discussed in detail in TSD chapter 11. 

10.5 RESULTS 

Table 10.5.1 shows the forecasted shipments for beverage vending machine 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 final rule, DOE presumed that shipments do not change with 

efficiency level. Table 10.5.1 also shows the cumulative shipments for beverage vending 

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

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Table 10.5.1 Forecasted Shipments for Beverage Vending Machine Equipment (Baseline 

Efficiency, Level 1) for Selected Years 

Equipment Units Shipped 

Category* thousands 

2012 2015 2020 2025 2030 2035 2040 2042 Cumulative 

Shipments 

(2012–2042) 

A-L-IN 31.4 31.4 31.4 31.4 31.4 31.4 31.4 31.4 971.9 

A-M-IN 63.7 63.7 63.7 63.7 63.7 63.7 63.7 63.7 1,973.2 

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

B-L-IO 31.4 31.4 31.4 31.4 31.4 31.4 31.4 31.4 971.9 

B-M-IO 63.7 63.7 63.7 63.7 63.7 63.7 63.7 63.7 1,973.2 

B-S-IO** -- -- -- -- -- -- -- -- -- * A=Class A equipment, B=Class B equipment, L=large size, M=medium size, S=small size, IN=indoor, IO=indooroutdoor.
 ** There are no shipments of small (S) equipment. 

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REFERENCES 

1. Automatic Merchandiser. State of the Vending Industry Report. 2006. (Last accessed May 

2007.) <http://www.amonline.com> 

2. For example, see “Vending Machines (Coin-Operated).” Current Industrial Reports 

MA333U(00)-1. July 2001. (Last accessed August 5, 2009.) 

<http://74.125.155.132/search?q=cache:cP8gTgY2RxMJ:www.census.gov/cir/www/333/ma33 

3u.html+http://www.census.gov/cir/www/333/ma333u.html&cd=1&hl=en&ct=clnk&gl=us> 

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