The economics of scapegoating vending machines
For his part in reviving a crippled Japan, Tokyo governor Shintaro Ishihara has made himself the point man in the demonization of vending machines. “Only in such a country do you see them lined up everywhere,” he groused recently, and suggested that anyone who wants a cold drink buy it in a store and put it in his own refrigerator.
There are various reasons why vending machines are ubiquitous in Japan. From the demand side, Japanese people just like gadgets and don’t always enjoy the face-to-face experience of dealing with store clerks. From the supply side, Japan is a relatively safe country, meaning you can install as many vending machines as the law allows without fear of vandalism. And the law allows a lot. However, if Ishihara and four other Kanto region prefectural governors have their way, vending machine operations will be curbed, at least during the summer peak electrical usage months. According to Sankei Shimbun, the five Kanto prefectures are pushing the central government to implement directives to limit electrical usage of vending machines based on existing ordinances, some of which have been in place since the “oil shocks” of the 1970s.
One regulation allows the authorities to limit the use of “decorative lighting, advertisements, and the like.” Ishihara wants to place vending machines under these kinds of controls, but he also wants to limit the hours of operation. The Democratic Party of Japan’s Tokyo assembly members, perhaps hoping to steal some of the governor’s thunder, has made a more specific proposal: Turn off the refrigeration function of vending machines in the city between 10 a.m. and 9 p.m. to As a symbolic gesture, all 80 vending machines in the Tokyo Prefectural offices have been turned off since the earthquake of March 11.
Consumer affairs minister Renho, a DPJ member herself, has advised caution since such regulations could have a negative effect on economic activity. According to Japan’s vending machine industry association, there are more than 2 million machines in Japan just selling soft drinks. The average yearly revenues per machine is ¥1 million, which means total revenues top ¥2 trillion. That’s about 30 percent of all soft drink sales. If half of them were shut down, that would theoretically mean a potential loss of 15 percent. Of course, many people would simply buy their canned coffee or Coke or oolong tea from a store, but in the majority of cases, vending machine prices are higher than store prices, so there would still be a substantial loss of revenue. And such a directive would be worse for some makers than for others. The soft drink manufacturer Dydo sells approximately 80 percent of its products through vending machines.
Sankei says that within the area serviced by Tokyo Electric Power Co. there are some 870,000 soft drink vending machines. That’s one vending machine for every 50 persons living in the Kanto region. For the most part these machines operate round the clock, consuming at any given time 260,000 kilowatts (one v.m. consumes on average 4 kw), which is about 70 percent of what both Tokyo subway systems use. This is actually less than it used to be. In 1995 vending machine makers devised energy-saving systems that allowed the devices’ refrigeration units to shut off between 1 and 4 p.m. during the months of July to September without letting the drinks’ temperature rise above an acceptable level for consumer tastes. (Vending machines that heat their drinks use more energy.)
It’s the standard now, and manufacturers are reportedly trying to extend that time period so that they can save an additional 25 percent in electricity, which is impressive but probably not enough to satisfy the Tokyo assembly’s call for a daily moratorium of 11 hours. In any case, compared to the amount of electricity consumed by air conditioners, which is about 25 percent of all power provided during the summertime, vending machines use very little.