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Panasonic exits vending machines as market shrinks

Japan's No. 3 player failed to improve profitability amid growing competition

Vending machines are a ubiquitous sight in Japan, but their numbers are falling as the country's population shrinks. (Photo by Hisashi Iwato)

OSAKA -- Panasonic will stop making and selling vending machines within the year as fierce competition in Japan's contracting market limits future growth.

The company ranks third among domestic producers, behind Fuji Electric and Sanden Holdings. Resources will be focused instead on areas where it is more competitive to improve profitability.

Panasonic will continue to supply replacement parts even after terminating machine production at Gunma Prefecture facilities. Roughly 130 employees now involved in the business will be reassigned, with the Gunma production lines to be repurposed.

The decision comes amid competition from convenience store coffee machines in a country where cold and hot canned coffee is a vending machine staple. The declining national population is shrinking the market as well.

Beverage vending machines decreased around 5% over a decade to about 2.42 million at the end of 2018, according to the Japan Vending System Manufacturers Association. Many unprofitable machines have been retired, especially with operating companies struggling to secure labor.

Panasonic had tried to fight such headwinds by moving production to the Gunma facilities, which make related products like commercial refrigerators and display cases, in 2015 to boost efficiency. But "performance did not improve," a Panasonic source said.

"The company struggled to secure a profit," an industry insider said, citing its significantly smaller market share than Fuji Electric.

Panasonic entered the vending machine business in 1969, with the segment estimated to now generate hundreds of millions of dollars in revenue.

Larger rivals are looking abroad to make up for slowing demand at home. Fuji Electric, which controls more than half of the Japanese market, is increasing output in China and Southeast Asia as it bets on continued rapid growth in these markets.

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