Coupon redemption declined 6% in 2005, while distribution increased 10% last year to 323 billion coupons. For several years, coupon face values have increased 8-9%, compared to the 1-2% in prices. The average coupon value is $1.16. Overall, coupon distribution is up 10%, with 6% for non-food categories and 3% for food coupons. Meanwhile, redemption is up 20% for food, but down 29% for non-food categories. The number of coupons requiring multiple purchases is down. In the non-food category, consumers are 30% more likely to use a buy-two coupon than a buy-one. In food, they are actually 14% more likely to use a buy-four than a buy-one. And overall, across food and non-food consumers are 49% more likely to use buy-four and 18% more likely to use buy-three than to use a buy-one. Most of the increased redemption can be seen with in-store coupons as about a third of redemption’s are from in-store distribution. The Internet accounts for less than 2/10ths of a percentage of coupon distribution and redemption, however, they are reaching their targets.

Minority group such as Hispanics and African-Americans are undeserved markets in terms of coupons. CPG marketers are seeking consumers more than ever before by using targeted distribution methods. Marx Promotion Intelligence reports that during the first six months of 2006, Free Standing Insert (FSI) average face value increased 8.6 percent to $1.18 versus the same period in 2005. It is the largest average face value for a half year period on record. This trend is being driven primarily by the expanded use of FSI coupons for high-value products which are increasingly being added to the grocery channel such as Teeth Whitening Kits, Diabetes Care Products, Portable Air Treatment Systems and Disposable Toilet Cleaning Systems. Face values for high-value products averaged $4.07 during the first half of 2006, up 20 percent from the same period in 2005.

COUPON DISTRIBUTION SURGES 9% in 2004

Source: CMS, Inc. Advantage Update, "CMS 2004 Coupon Trends: Coupon Distribution Surges 9%," First Quarter, 2005

Sluggish Economy Spurs Search for Deals

COUPON DISTRIBUTION GROWS IN 2002

CONSUMERS EXPLORE NON-TRADITIONAL SHOPPING CHANNELS

Amid tales of economic uncertainty and consumer malaise, leading packaged goods marketers turned to proven promotional tactics to protect and grow market share. According to CMS, the premier provider of innovative promotion management solutions, 2002 coupon distribution rose 3.4% to 336 billion coupons, offering consumers more than $272 billion in potential savings. That gives us about 3,100 coupons (60 coupons per week) for every household in the U.S.

One primary driver behind this increase in coupon distribution volume was the Procter & Gamble Brand Saver program. This well-integrated multi-brand marketing program enticed consumers with savings from multiple Sunday newspaper coupon inserts, and was further supported by magazine advertising, tie-in promotions with retailers, a Brand Saver web site and electronic newsletters.

The volume of in-ad coupons, or those redeemable at a specific retailer, grew 4.3% from 2001(this figure excludes store coupons issued by a retailer using trade promotion dollars.

The record number of new product introductions in 2002 may also have influenced overall coupon distribution. According to Supermarket News, over 22,000 new products were introduced, more than in any year since 1995. Marketers typically promote trial of new products with consumer-direct incentives such as coupons, and some leading retailers reportedly require coupon support behind new product introductions.

"Coupon promotions are flexible, and can be structured to support a variety of marketing and merchandising objectives and collaborative category management goals," explains Bob Carter, president of CMS. "Coupons compliment many other forms of advertising, trade and consumer promotion, and can be distributed broadly to the masses, or be tightly targeted to reach a specific audience -- or even a specific consumer. And, unlike many other elements of the marketing mix, the immediate impact on product sales can be forecasted and tracked."

Tactically, marketers increased the average face values of their coupons by $.04 to $.81. This increase, however, was tempered by an increase in coupons requiring multiple purchases. More than one-quarter (28%) of all coupons now require consumers to purchase two or more products. According to Carter, "Smart marketers are willing to experiment with coupon attributes to find the combination that will best appeal to the target consumer while maximizing overall coupon ROI for the brand."

The economic uncertainty in 2002 impacted consumer usage of coupons in surprising ways. As often reported, consumers were on the lookout for bargains, resulting in a move away from traditional grocery shopping channels. Instead, consumers increasingly shopped warehouse clubs, supercenters and dollar stores, which feature lower prices on many brand name products. This shift helped reduce coupon volume, as many of these alternate shopping channels do not accept manufacturer coupons. "Consumers also tend to associate coupons with grocery stores, so they may not even remember to take their coupons when visiting non-traditional grocery retailers," explains Carter.

The number of coupons redeemed by consumers during 2002 dipped 5.4% to 3.7 billion coupons, with most of the weakness in the first half of the year. By midyear, coupon redemption trends strengthened, with more consumers proactively seeking savings as concerns rose over way, unemployment and rising energy costs.

Also impacting coupon redemption were changing consumer demographics and shopping behavior - in particular, more men shopping for groceries and shrinking household sizes. An increasing number of men planned, shopped for, and prepared meals; however, research shows that men are somewhat less likely than women to use coupons on a regular basis. In addition, the number of single-person households, which tend to redeem fewer coupons, was at its highest point ever.

Source: CMS 2003 Trends Press Release

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COUPON SPENDING INCREASED 4.5 PERCENT TO $6.8 BILLION IN 2002

The number of CPG coupons printed and issued also rose, jumping 3.8 percent to 248 billion in 2002, after posting a drop for the first time in five years in 2001, according to NCH Marketing Services, CMS Inc. estimates that the number of coupons distributed rose 3.4 percent to 336 billion. The average expiration period also dropped 4.8 percent, to around three months, giving consumers less time to redeem coupons.

Coupons distributed via FSI rose to 86 percent per NCH, while handout co-op, handout off-store location, in-ad, in-pack, in-pack cross ruff, instant redeemable, Internet, and Sunday supplement coupons also gained ground. Electronic distribution accounted for 8.8 percent of total redemption, while Internet coupons measured 0.2 percent of total redemption, per CMS.

Much of the growth was propelled by Procter & Gamble, which ran its own branded insert eight times in 2002. Others, such as H.J. Heinz, Nestlé, and ConAgra, either developed their own brand-saver inserts or bought out the whole first section of a co-op FSI, as Kraft did with its Friends & Family program.

In 2002 a whopping 71 percent said coupons save them a lot of money, compared to just 50.9 percent in 2001, according to an NCH poll. However, redemption rates fell again in 2002, down 5.4 percent to 3.7 billion, according to CMS. And while the number of consumers who say they sometimes use coupons increased to 37.6 percent compared to 36.6 percent in 2001, the number of respondents who always use coupons fell from 21.3 percent to 18.5 percent, per NCH. The number of consumers who rarely use coupons rose from 17.9 percent to 23.3 percent.

One boon for the industry is the increased coupon use among Hispanic consumers. More than 65 percent of Hispanics reported using coupons, according to a separate NCH survey. More manufacturers, consequently, are starting to produce double-sided coupons in both English and Spanish.

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CPG Coupon Distribution Rebounds as Large Companies' Corporate Events Drive Volume Up

The total number of manufacturer coupons printed and distributed by consumer-packaged goods (CPG) companies grew by 3.8% to 248 billion in the United States during 2002, as measured by NCH Marketing Services. Health & Beauty Care (HBC) products saw the largest increase, up 15.9% and volume was driven up by large companies who issued more coupons to consumers through corporate events in solo and co-op Sunday free standing inserts (FSIs).

The second half of 2002 saw a rebound of coupon events growing by almost 10% compared to the second half of 2001, which had been greatly impacted by September 11th, the economic downturn and an overall advertising and promotional spending decline. The positive rebound of 2002 was seen in many types of coupon media, including in and onpack, Internet, electronically dispensed, run-of-press (ROP) newspaper and FSIs.

FSIs continue to increase their share of all coupons distributed, rising to 86% of the 248 billion manufacturer coupons in 2002. Most notable in the FSI increase is the volume driven by national corporate solo events such as Procter & Gamble’s Brand Saver insert, and Kraft’s Food & Family insert. Additionally, other large corporations like Campbell’s,

ConAgra, and Nestle, with many brands across several categories, have created corporate group events over the first six to ten pages of co-op FSIs that feature many of their products in one congruent campaign. Such events provide significant corporate branding and consumer recognition opportunities with coupons.

Internet coupons experienced continued growth of over a 50% increase in distribution volume in each of the previous three years. Handout coupons remain the second most frequently used medium to issue coupons, which includes in-store, on-shelf, electronically dispensed and with samples. [Chart A]

“Consumers interest in all types of coupons grew in the past year, as primary grocery shoppers looked for ways to economize on their family budget, choosing brands offering coupons that they know and trust and forming positive connections with new products,” said Charles Brown, vice president of marketing for NCH. Today, 84% of shoppers report they use coupons while shopping for grocery, health care, and household items at supermarkets, mass merchandisers, and drug chains, and 71% say "coupons save me a lot of money," up from 51% a year earlier,  according to NCH’s 2002 Consumer Survey.

Consumers’ attitudes toward coupon values are changing. Now, 71% of consumers agree that coupons save them a lot of money, compared to only 51% of consumers in 2001. [Chart B]  

The savings value may be more reflective of the perceived need to economize, than the actual savings offered by manufacturers. Average face values offered and distributed on coupons increased by 4 cents to $0.89 overall in 2002, however, coupons with multiple purchase requirements rose two percentage points to 26% of coupon distribution, effectively counteracting the face value increase. With multiple purchase requirements, the average value offered per product item purchased is really only $0.77, a gap of $0.12 per item versus the printed face value. “The savings per item gap has offset the increased face value offered to consumers, making coupons less attractive to redeem,” said Brown.

Consumers saved more than $3 billion by redeeming CPG coupons in 2002, or $0.80 per coupon redeemed on average. “The $0.80 average savings obtained by consumers in using coupons continued a departure from the typical trend when in 2001, for the first time ever, the average face value redeemed declined and dropped below the average face value distributed,” noted Brown. “This was true again in 2002, and is due to many of the higher face value coupons requiring consumers to purchase multiple items (two or more) in order to redeem the coupon. Consumers are less likely to redeem those coupons, and instead, choose single purchase, lower face value offers.”

Additionally, coupons that are good for multi-brands or good universally across an entire product group saw a significant increase in usage among marketers last year, up 22% in distribution volume. “This type of multi-brand coupon first became popular when the Post brand of cereals introduced a universal coupon in 1996. Although in the last two years we had seen a declining usage of the technique, there was a big upswing again in 2002,” noted Brown.

The return on investment (ROI) for the marketer using multi-brand coupons can be excellent, because they offer high perceived face values, but often also move two or more product items with multiple purchase requirements, all in one distribution buy. In 2002, however, the complexity and clutter of multi-brand and universal coupons, worked to suppress redemption, as the average redemption rate for those offers dropped to 1.5% from 1.8% in the prior year. Multi-brand and universal coupons carrying purchase requirements of two or more items grew to 40% of all such coupons distributed, which contributed to the decline in redemption.

Consumers also had less time to redeem the coupons distributed in 2002. The overall duration of offers was dramatically shortened, by nine days less, to an average of only 12.6 weeks, down from 13.9 weeks in 2001. “This is the first time ever in the United

States that we have seen offers with this short a duration since NCH began tracking worldwide coupon trends nearly 40 years ago,” said Brown. “Throughout the 90’s, an average expiration date of three and a half months was typical for all coupons. Now consumers have less time than ever to use a coupon, as many Sunday FSI coupons have only eight to ten weeks as a typical expiration date,” noted Brown.

Consumers reacted negatively to the shortened period of time available to use their coupons in 2002. NCH’s Consumer Survey showed a dramatic increase in the number of consumers who said coupons expire before they have a chance to use them. In 2002, 69% of consumers said coupons expire too soon, compared to only 53% of consumers in 2001 when duration averaged more than three months.

These suppressing offer characteristics generated a total redemption volume of 3.8 billion coupons in the United States, a reduction of 5% compared to the year prior. “To balance budgets, marketers continued to increasingly use multiple purchase requirements, while also shortening the expiration period of coupons by more than one week, significantly reducing the usability and attractiveness of coupons for consumers by 20%, in spite of the increased quantities printed,” said Brown. The NCH Coupon Attractiveness Index measures the offer attributes of expiration date, face value and multiple purchases in combination to show the overall effect on consumers’ propensity to redeem. The NCH

Coupon Attractiveness Index dropped seven points to 51 points in 2002, after several years of holding relatively steady. All in all, redemption attractiveness is far less than it once was for manufacturer coupons. [Chart C]

Not all coupons are designed to be redeemed; in fact, an opposite 20% increase in the Coupon Attractiveness Index would exceed most marketers’ budgets. It is a balancing act between motivating consumer response, supporting retail sell-through and creating advertising value from the coupon, while also maintaining control of the promotion budget. In the past year, marketers have suppressed redemption due to a number of factors, including the new Financial Accounting Standards Board (FASB) ruling requiring redemption cost to be accounted for as a direct reduction of revenue, and the impact of a rising cost per coupon redeemed for many traditional grocery channel retailers and wholesalers – especially influential to the small and mid-size coupon volume manufacturers.

The grocery channel represents the largest portion of all coupons redeemed; however, the share of coupons going through traditional supermarkets has been declining as more shopping shifts to other channels. Evidence is seen even within the top five retail redeemers of coupons in the United States:

 
“As more and more consumers shop for grocery items in alternative channels like discount, dollar and drug stores, I would expect to see Wal-Mart outpace Kroger as the largest redeemer of coupons, as well as, a continued shift in the landscape of where coupon use occurs,” said Brown. “The impact of a rising cost per coupon redeemed combined with the lack of merchandising around coupon events within the traditional grocery channel would seem to be counterproductive to competing with the emerging channels.”

  TOP 20 DISTRIBUTION CATEGORIES

 
Coupons continue to be used successfully by marketers for new product introductions, as seen last year particularly among health and beauty care items, where seven of the ten fastest growing categories for coupon distribution were HBC products. The highest growth in coupon distribution volume for 2002 came in the Oral Hygiene category where many promotions were seen for the introduction of teeth whitening products. While HBC products saw a 15.9% increase in total coupon distribution volume, grocery products declined in total by 2.7%. Among the categories with the largest volume of coupons distributed, Prepared Foods and Detergents moved up the ranks to No. 2 and No. 3 respectively, following Household Cleaners, which held the No. 1 spot for two years in a row.

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Coupons provide consumers with significant savings on the products they buy in supermarkets, drug stores and mass merchandisers.   Coupons influence promotional activity that increases brand and category sales without affecting the base price that consumers are willing to pay for a brand. 

Even though Canadian marketers distributed 2.32 billion coupons to consumers in 2002, the amount of couponing activity in Canada declined year-over-year, with marketers distributing 13% fewer coupons to consumers. 

This decline in coupon activity began during the last 4 months of 2001, and increased after the September 11 tragedy.  At that time there was reluctance by marketers to commit to new promotional spending which affected 2002-couponing activity. Several major marketers did not repeat major coupon programs that they had conducted in late 2000 and early 2001.

Coupon distribution continued to be strong in some categories like Cold Beverages, Dairy, Over-the-Counter Medicines, Infant Care and Premium Pet Food.  Among the major methods of distribution, only the Free Standing Insert maintained its levels from a year earlier.

While redemption volumes declined by 10%, to 110 million coupons, the amount of Free Standing Insert coupons redeemed increased because of higher average redemption rates and stable volumes. The overall decline in redemption was led by the amount of In/On Package and In Store couponing. 

The average face value remained at $1.25 per coupon distributed, the same as in 2001.  Coupon values continued to be influenced by much higher value offers on Pet Food, Over-the-Counter Medicines, Infant Care and Household Products.  Food Product coupons, however, had a below average value of 75¢.  

Couponing on Household Care, Infant Care and Pet Foods and Products accounted for 30% of all coupons distributed in 2002 up from 26% a year earlier. This growth offset some of the decline in couponing in the food and personal care categories.  Coupons on food products accounted for 39% of all coupons distributed, which is a decrease of one percentage point year-over-year.  Food product coupons, however, continued to account for more than 50% of all coupons redeemed.  Coupons on high purchase frequency food products achieve above higher redemption rates even though face values are lower than in other categories.  As a result, the average face value of coupons redeemed remained lower than the value distributed.

Among all of the major media, only Free Standing Inserts (FSI) maintained its volume of coupons distributed, year-over-year.  The FSI accounted for 64% of all coupons distributed in 2002, which is up by 9 points over 2001.  FSI’s are newspaper inserts that contain coupon advertising and other consumer offers, and are delivered to 5.5 million homes twice each month. 

       ONLINE COUPONS INCREASE 111 PERCENT TO 242 MILLION IN 2002

Consumer Product Goods (CPG) marketers are beginning to devote more of their budgets to online marketing. They are offering coupons that customers can print out at home and redeem at the store. Consumers downloaded about 242 million coupons last year, an increase of 111 percent over the 114 million downloaded in 2001, according to Carolina Manufacturer Services Incorporated. Of those, 7.6 million were redeemed, which is more than a 400 percent increase from the 1.7 million in 2001. But online coupons remain less than one percent share of the coupon market. More than 335 billion paper coupons were distributed last year, with 3.7 billion being redeemed for a total of $3.1 billion.

Lorraine Gallaher, director of marketing for CMS, said "The growth in online coupons is quite significant and with the economy the way it is, once consumers realize they can get better values online, there's a good chance more of them will make that switch. In addition, online coupons are much less likely to require customers to buy more than one unit of a product and the average time to expiration is 4.8 months, versus 3 months for the typical newspaper coupon.”

One company that has used online coupons extensively stated that they spend 20 percent less to acquire each new customer in marketing campaigns that include coupons, compared with noncoupon campaigns. One benefit of using online coupons is the ability to track such statistics. When the coupon is downloaded, users give the company their name, e-mail address and other information. The coupon's code is tied to each individual user, so when it is redeemed, the company knows who redeemed it and where.

The SmartSource iGroup, which includes the online coupon unit (SmartSource.com) of the News Corporation's News America Marketing Division. works similarly to many other online coupon sites. Users register with the site, including details about family members' ages, gender and pets, along with the names of stores where they shop. After that, users have free access to 30 to 35 coupons on a given day, worth about $14. Manufacturers pay SmartSource an undisclosed fee each time a consumer redeems a coupon. "We're seeing companies start to budget for this, which hasn't happened before," said Bill Christie, SmartSource's president.

Other coupon providers include CoolSavings, which offers discounts and coupons for online and off-line companies, and E-centives. CoolSavings last year began to offer coupons on sites other than its own, a service that Coupons Incorporated and E-centives also provide. Manufacturers often place the coupons on their own sites, where they can have more control over the presentation.

Coupons Incorporated distributes coupons on behalf of more than 200 Web sites, according to its chief executive, Steven Boal. Mr. Boal said that there were no definitive statistics on the size of the online coupon industry but that what marketers pay for the coupon distribution and redemption process is probably in the neighborhood of $50 million per year compared with the $2 billion that marketers spend annually delivering coupons in Sunday newspapers.

Grocery executives are showing more interest in online marketing because the typical Internet user is much like customers who come into their stores. A recent report by Forrester Research, a technology research firm, found that 50 million households in the United States qualify as middle income, defined as earning from $25,000 to $75,000 a year. Of those, 69 percent are now online. A Forrester analyst said those Internet users are obvious potential customers for online coupons because they tend to be the heaviest off-line coupon clippers.

At the Joint Industry Coupon Conference held in Coronado, California on September 30 - October 1, 2002, Dick DiBlasio, corporate accounts manager and industry relations executive for CMS delivered the "State of the Coupon Industry" address. DiBlasio indicated that changing economic conditions, shifting consumer demographics, and continuing retail consolidation are affecting the coupon industry.  Over the past several months’ consumer confidence has been flat, reflecting the uneasiness of the economy.  Interest rates are down and economic growth is slow.  To save money, consumers are looking in newspapers for specials, participating in frequent shopper programs, stocking up on sale items, comparing prices, and using manufacturer and retailer cents-off coupons. 

Consumer demographics are changing.  Hispanic and Asian populations in the U.S. are growing.  Together, they now account for more than 15% of the total U.S. population.  These ethnic groups may be unfamiliar with or new to cents-off coupons; therefore, marketers must employ new strategies to reach and inform these consumers.

Retail consolidation continues to affect the coupon industry. Based on A.C.V., the top ten U.S. supermarket retailers now comprise 50% of the total market and are expected to increase this share to 70% by 2007.  As consolidation continues to occur, retailers will continue to gain power and influence over manufacturers. In order to succeed, retailers and manufacturers will have to increasingly work together to reach consumers.

Dick revealed that the CMS Midyear Trends show that despite the uncertain economy and trying business conditions, consumer packaged goods companies continue to utilize coupons as a critical part of their marketing mix. Total coupon volume for the first six months of 2002 increased 1.5% to 170.2 billion distributed for the six-month period ending in June 2002.  Total redemption declined however, to 1.9 billion coupons redeemed, an 8.3% decline.

"Even though the total redemption market declined, I believe it is unfriendly tactics, not consumer need or desire that drove this decline," stated DiBlasio. "We've seen an increase in both the number of coupons requiring multiple purchases and shorter expiration periods.  In fact, over 15% of coupons distributed expired in a month or less.  This makes it more of a hassle for the consumer, and restricts coupon redemption."

Average expiration period on a coupon is now three months, down 10.4% from one year ago, while 26% of all coupons require a multiple purchase. FSIs account for over 78% of all coupons distributed. "CMS tracks 41 different methods of distribution, offering coupon issuing manufacturers many options to get the right coupon in the hands of the right consumer" said DiBlasio.

Internet coupons remain a small but active percentage of overall distribution (0.1% of total distributions); consumers are reacting to them more favorably. Average redemption rates increased to 3.6% for Internet coupons. As Internet coupon distribution companies continue to invest and perfect their promotional offerings and as consumers search the Internet for more promotional alternatives, look for Internet coupons to be a more significant part of the total coupon market.             

In addition to unfriendly consumer coupon tactics, other in-store factors may be driving down redemption.  Out-of-stock levels are reported high, at 7.4% of all SKUs.  Brand loyalty is reported growing, along with the use of frequent shopper cards and retail-driven targeted promotions.

The coupon industry continues to respond to change.  The recent Financial Accounting Standards Board (FASB) ruling requiring accounting changes for corporate promotional expenses (See my article in the News & Views Section) will further sharpen the focus on couponings' performance and ability to deliver measurable results.  And upcoming changes to product and coupon bar codes must enhance a marketer's ability to efficiently deliver the right incentive to the right consumer, properly monitor and account for the results.  Despite lower redemption volume, consumer's still pocketed annualized savings of $3 billion using coupons and marketers moved billions of units of incremental product.

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    COUPON DISTRIBUTION AND REDEMPTION DECLINED IN 2001

Through consolidations, retailers have improved inventory controls, merchandising, space management, private label and category management. Wal-Mart continues to gain market share as they open 100 Supercenters annually and are losing their customer base, which was 94.6% of weekly shoppers in 1980 and is estimated to drop to 68.1% in 2004. In 1990, Wal-Mart’s grocery sales were $25.8 billion from 1,402 stores and 123 Sam’s Clubs. In 2000, that increased to $191 billion from 1.709 stores, 476 Sam’s Clubs, 939 Supercenters and 1,405 international stores.

According to Carolina Manufacturer’s Service, coupon distribution declined 2.1% to 333 billion while coupon redemption declined 11.4% to 3.9 billion with FSI’s representing 79.6% and In-ads at 10% of the coupons distributed. The average face value of a redeemed coupon dropped for the first time 1.3% to 78 cents and 26% of all coupons distributed required multiple purchases lead by cereals, frozen deli and beverages. The average expiration date for coupons distributed dropped from 3.4 to only 3.1 months with 45.7% expiring in less than 2 months and 46.5% expiring in 3 to 5 months while the average coupon redeemed dropped from 5.2 to 4.1 months. Only 7.9% of all coupons distributed had expiration dates if six months or greater. Internet coupons remain negligible at 0.1%of all coupons distributed and had a 2.91% redemption rate in 2001.

Valassis determined what a coupon shopper looks like in its September Consumer Navigator.  The monthly report developed statistics that identify characteristics of coupon shoppers. The study found the following:

Carolina Manufacturer’s Service did indicate that coupon distribution was up 29% in the 4^th quarter of 2001, which is significantly higher than the historical average of 9%. On average, there were 14 coupons redeemed per person in the U.S. in 2001. In addition, CMS research indicated that retailers offering double and triple coupons achieve as much as $11,000 more in average weekly sales with sales per square foot running about $9 higher than stores without bonus coupons.

    CONSUMERS SAVE OVER $3 BILLION WITH COUPONS IN 2001

    CPG's Change Coupon Media Mix & Purchase Requirements

COUPONING TRENDS FOR THE YEAR 2000

During the year 2000 several large Consumer Packaged Goods manufacturers consolidated via merger with other CPG's impacting the total number of coupons distributed in the U.S. to promote purchases of their products. NCH’s annual analysis of coupon trends has shown that the number of manufacturer coupons distributed in 2000 totaled 248 billion, a slight decline of three percent over the previous year. The 2000 trends are consistent with the past three years, with 256 billion, 249 billion and 250 billion coupons distributed in each corresponding past year.

"In a year filled with many mergers and acquisitions it is not uncommon to see an impact on coupon promotion," commented Charles Brown, vice president for worldwide coupon processor NCH. "In 2000, if not for the eight noteworthy CPG marketers who followed pre-consolidation strategies, the U.S. coupon distribution and redemption volumes would have remained relatively consistent with 1999," continued Brown.

"In prior years, we have seen companies approach pre-consolidation by tightening their promotion budgets as a short term tactic for cost reduction. After the consolidation is complete, these companies often return with increased coupon promotion activity in the following year to grow newly acquired brands," said Brown. NCH’s measurement found four companies who are 6 to 12 months post-consolidation increasing their coupon distribution activity by +23% on a weighted average basis compared to prior year.

"The completion of many mergers combined with current news of an economic slowdown in the U.S. indicates that," according to Brown, "for 2001 and beyond we are likely to see an overall increase in couponing activity. Marketers have historically distributed more coupons when the economy slows in an effort to motivate consumer purchases, and consumers tend to be more apt to respond and redeem during periods of economic decline."

NCH reports that American shoppers redeemed 4.5 billion coupons and saved a total of 3.6 billion dollars during 2000. This redemption volume was down 4.2% when compared with 1999, due to the aforementioned pre-consolidation strategies followed by eight noteworthy CPG companies. The 3.6 billion dollars saved by Americans remained consistent with 1999. This was due to an increase in the average face value distributed of 77 cents, up 5.5% from 73 cents in 1999 and an increase in the average face value redeemed to 79 cents.

The 2000 couponing activity of many other companies indicates coupons were employed in their promotional marketing strategies to a much greater degree than the prior year, as high as 22% more in certain categories. The Top 10 highest growth categories for coupon distribution were as follows:

Media choice overall for marketers showed only slight changes to the past (see chart B), however, the impact of mergers again changes the picture. In fact, for some media, such as Free Standing Inserts, the total volume of coupons distributed grew year over year when you exclude the impact of CPG consolidation. Additionally, the overall share of FSI's grew to 82.4% of all coupons distributed with a redemption rate of 1.5%.

Notable media trends in 2000 also included the use of Custom Corporate Sunday Free Standing Inserts which stand alone from the cooperative insert, and the continued growth of Electronic coupons, including those distributed via the Internet for CPG products, which have doubled in total volume distributed compared to 1999. "Although they remain less than half a percentage share of the total 248 billion coupons distributed in the U.S., the four year growth trend and strong consumer response to this vehicle indicate continued expansion of the electronic medium in the future," noted Brown. Other characteristics of coupons in 2000: