The reality is, either we keep quality high by raising prices or there will be bad consequences for

HOSTELVENDING.com | 19/09/11.- Interrupting his well-deserved holidays, the new managing director for N&W in Spain and Portugal, Davide Mapelli, was kind and gentle enough to have a lengthy interview with HOSTEL VENDING magazine:  A review of his first months in charge, the need of keeping high quality standards in spite of the rising prices, and N&W’s new product releases for Europe that will be launched during the upcoming Madrid show.

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- Back in early 2010, we interviewed you as a Sales Manager. By the end of the year, you became the leading man in N&W Global Vending Spain. How did you adapt to this big responsibility and what have been your business strategies so far?

I found no difficulties at all. It was a progressive process and the idea was always to continue with the same policy. Angel Rojas, our former MD, has been supporting me during the whole process and he will stay in the company as Non-Executive Chairman. I assume all responsibilities for N&W’s subsidiary in Spain and Portugal since January 2011.

We are being coherent with the goals that we have been pursuing for years. Basically, the Group’s business concept is to be a worldwide industrial company with market-oriented services. These services are provided to each local operator, and that is how we get to guarantee the same pricing and quality standards for every region in Spain and Portugal.

For global market issues, the Group’s country managers meet to deal with the main industrial challenges – like how to harmonize the design of new machines with the rising prices of raw materials.

- What is the margin of increase? Have you applied it to your price list, or are you planning to do it?

When I talk about raw materials, I am thinking of four main commodities: aluminum, copper, plastics and the different commodities used in traded products. In the last decade, the average inflation rate for these four values was 250%. For copper specifically – we apply copper in internal parts, such as the boiler – prices went up drastically last year, with a 400% growth. And then there is also the rise of fuel prices, which obviously makes logistics more expensive.

We have no other choice but to apply this increase, just like many vending operators have decided to do with their product range. Anyway, we cannot establish a specific increase. Market figures are so voluble that you cannot tell how they are behaving. What I can confirm is that, in our company, the increases for 2012 will be those we should be applying this year – that is to say, the increase will be adjusted and downgraded.

- Not only do we have a general economic recession, but we also have to carry the cross of higher prices in basic goods for vending machines: coffee, cocoa, milk, sugar, plastics, etc. What are the odds for Vending professionals?

One thing is for sure: at this moment, we cannot afford to lose quality. If we want to keep the quality bar up, prices have to go up as well. That is our reality. We work day by day to provide the best machines with enhanced features to our clients, so we can justify the price increase.

- In the manufacturer-supplier-operator trading relationship, shouldn’t your official agents be responsible of delivering this message to operators?

We really believe that adjusting prices for inflation will help the Vending industry become more competitive. Our company and our agents are committed to deliver the best products and management solutions, so the balance between price and quality is fair.

But then again, there are operators who argue that is worth selling more affordable products, while others say their margins are high enough.

With prices of raw materials in crescendo, the reality is this: either we keep quality high by raising prices or there will be bad consequences for all.

- And yet you recently reported great sales numbers: over 200,000 Colibri machines sold, whereas Brio and Astro had surpassed 100,000 units.

Well, when we announced those figures we obviously wanted to celebrate the numbers. But it was also a way to say thank you to our clients for their support. The Colibri sales cover the last decade – and the last 5 years for Brio and Astro.

What I mean is, we should curb the euphoria. The results are good, but prior the crisis the Group overall annual sales were an average 150,000 units. Since the crisis broke out, the average fell down to 130,000 units.

- Solista is N&W’s latest approach for the OCS market. Why this model? What are the market needs that Solista pretends to anwer?

Solista is replacing the Colibri Top. We make this kind of update every five years, approximately. In this case, Solista offers enhanced features but the retail price stays put. It is a similar thing with Canto, which is gradually replacing Astro with a current market presence of 80 and 20 per cent, respectively. My wish is that we will experience the same success in the next 10 years.

About the OCS market, I have no doubt that it will move forward. This year, OCS machine sales went down to half the numbers recorded in 2007. But still, it will be a key market in the future.

Solista can be complemented with a Minisnakky machine to provide snack and hot beverages service in offices and other locations with a short staff. There is a growing trend in offices, where employees aged 20 to 30 present a new end-user profile: they like different things and are more prone to buy solid products, which have wide profit margins.

In N&W, we are keeping a close eye to consumables and their evolution. I am still surprised that, in Spain, Necta is considered a leading machine manufacturer for hot beverages only, when we actually control almost 60% of the snacks vending machine market in Europe.

- That is interesting. Does it mean that you are making stronger investments in specific sectors?

No, not actually. You see, every year we spend around 6 to 8 million euros in R&D. Our engineering department does not make that kind of distinctions. Half of our researchers work to develop new machines – the other half to innovate for the current range. We use to introduce new features and updates every year.

- Changing the subject, what are your expectations for Vendiberica, the vending machine expo that will be held in Madrid in November?

We are very excited about Vendiberica. We expect a very successful trade show, making new synergies with hotel and restaurant companies exhibiting in Horeq. After four years without a national trade show, we truly wish that it will help to encourage business.

In our meetings, the Committee of Suppliers [N.B., a recently independent corporate association integrated by vending machine manufacturers working in the Spanish market] agreed that this would not be a spendthrift and indulgent show. On the contrary, we think that being austere (while stating our quality) is more coherent with the current times.

- Will we find any surprises in N&W’s stand?

Yes, you will. I am not going to tell the names of the new releases (you have to keep expectations high!) but I can advance great improvements for both a 1.70 freestanding and a 1.83 anti-vandal machine. We are also introducing new features in our Horeca range. And we will exhibit Podsy, our coffee pods machine: the first and only machine in the world featuring an automatic discharge system for paper pods. This product will be available for the whole European market in September.

N&W will also be present in Eu’Vend, in Germany, but the new releases will be launched in November, coinciding with Vendiberica.