2009 Coupon Trends Review

January 21, 2010

Who am I?

Matthew Tilley is responsible for marketing Inmar as a premier promotions services firm, marketing promotions as a vital tool, and helping Inmar's clients market themselves through Your better promotions.

Matthew and his team supply the brains and production power behind PromotionsInfoNow.com and the annual Coupon Report, both oft-quoted sources for CPG coupon statistics. Matthew's insights are often included in a variety trade and consumer media including: The Wall Street Journal La Opinion Progressive Grocer Chicago Tribune

Presenter

media including: The Wall Street Journal, La Opinion, Progressive Grocer, Chicago Tribune, PROMO, Baltimore Sun, FOX Business News, Associated Press, Supermarket News, Los Angeles Times,The Wise Marketer, CPGMatters.com and New York Magazine.

Matthew is also Co-Chairman of the Promotion Marketing Association's Coupon Council; a member of the Association of Coupon Professionals' Taskforce on Mobile and ElectronicMatthew Tilley member of the Association of Coupon Professionals Taskforce on Mobile and Electronic Couponing; chairman of the ACP’s Market Research taskforce; a member of the Direct Marketing Association's Mobile Marketing Council; and a member of the Mobile Marketing Association’s mCoupon committee.

He has been with Inmar 10 years, in various marketing roles.

Director of Marketing, Inmar

matthew.tilley@

Prior to Inmar, he managed branding, advertising, public relations and government relations campaigns for banking, entertainment, media, heath care and consumer product clients.

Matthew holds a B.A. in Journalism from Bob Jones University and an M.B.A. from Wake Forest University's Babcock Graduate School of Management

inmar.com

336.631.2524

Forest University s Babcock Graduate School of Management.

2

Asking a question

3

Methodology

What’s CoveredWhat’s CoveredWhat s CoveredWhat s Covered• Consolidated data from Inmar’s coupon database• Extrapolated industry statistics • Consumer Packaged Goods coupons• All classes of trade and product categories• In-ad CouponsIn ad Coupons

What’s Not CoveredWhat’s Not CoveredWhat s Not CoveredWhat s Not Covered• “Local” advertiser coupons• Restaurant coupon, other “Self-redeeming” coupons• Retailer coupons

4© Inmar 2009

What happened in 2009?

C d d l t f• Consumers redeemed a lot of coupons

• Brands made more coupons availableBrands made more coupons available

• Everybody grew cautiously optimisticy y g y p

• The (coupon) world dramatically changed

© Inmar 20095

Consumers Use More Coupons

2000: 4.4 Billion

2009 vs. 2008:

2009: 3.3 Billion

+27% redemptions

6

Back to the Future

2000: 4.4 Billion

2009: 3.3 Billion

2004 @ 3.2 Billion

7

Coupon Groups Increase, Use More

15E th i t

Manufacturer Coupon Users

104 +

Units w/ Coupon

7

13

SuperHeavy

Enthusiasts

9

15

SuperHeavy

Enthusiasts104 +

51– 103

0

2

Medium

Heavy

1

2

Medium

Heavy28– 50

15– 27

-10

-5

-9

-6Low Low

Super Low Super Low

4– 14

1– 3

2Non-Users

% Chg. in U.S. Households

0Non-Users

% Chg. in Mfg. Coupon UnitsSource: Homescan®, a service of The Nielsen Company; UPC-coded purchases; 26 weeks ending 06/27/09 versus year ago

© Inmar 20098

Five quarters of growth

2009: 3.3 Billion redeemed; 27%

l iannual increase

2006-2008: 2.6 Billion coupons redeemed annually

9© Inmar 2009

All Major Trade Classes Show Growth

Class of Trade Redemption GrowthConvenience +12%

Conventional Supermarket +20%

Dollar/Discount/Variety +71%y

Mass Merchandiser +26%

Military Commissary +12%

Pharmacy +16%

© Inmar 200910

Started with food …

Overall F d N F dOverall%Change in Redemption

Food Non-Food

Q1 09 +17% +22% +9%

Q2 09 +33% +27% +46%

Q3 09 +29% +26% +45%

Q4 09 +26% +14% +37%

FY 2009 +27%3.3 billion coupons

+31%2.1 billion coupons

+20%1.2 billion coupons

Percent change in coupon redemption comparing current year’s period to the same period a year agoPercent change in coupon redemption, comparing current year s period to the same period a year ago.

11

“If You Can’t Eat It, You Don’t Need It”

Top 15 Categories: % Unit Growth (FDM w/WM)

10.9Canning & Freezing Supplies

7.06.8

5.5

5 4

Fresh Meat

Frozen Novelties

Cheese

Vitamins 5.45.2

4.8

4.6

Vitamins

Baking Mixes

Yogurt

Wine

4.54.5

4.24 0

Pasta

Fresh Produce

Refrigerated Juices & Drinks

Prepared Foods Dry Mixes

Back to basics continues

4.03.9

3.73.5

Prepared Foods-Dry Mixes

Condiments, Gravies & Sauces

Shortening/Oil

Spices/Seasoning/Extracts

Confidential & ProprietaryCopyright © 2009 The Nielsen Company

March 31, 2010 Page 12U.S. Buying Trends

Source: Scantrack®, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 11/28/09 (versus prior year) – minimum $100 million in sales

Switched to non-food…

Overall F d N F dOverall%Change in Redemption

Food Non-Food

Q1 09 +17% +22% +9%

Q2 09 +33% +27% +46%

Q3 09 +29% +26% +45%

Q4 09 +26% +14% +37%

FY 2009 +27%3.3 billion coupons

+31%2.1 billion coupons

+20%1.2 billion coupons

Percent change in coupon redemption comparing current year’s period to the same period a year agoPercent change in coupon redemption, comparing current year s period to the same period a year ago.

13

Non-Edibles Leading Unit Decline

% Unit Growth (FDM w/WM)Economy driving

consumers to make trade-ff b l

7.0

4 5

offs or buy less

4.52.9

2.1 1.81.0 0.9

-0.3

-2.6 -2.8

-0.5

Total Fresh M

eatesh Produce

Dairy

ckaged M

eatc Beverages Deli

Frozen

Dry Groce

ryNon-Food

HBAGen M

erch

-8.2

Fres

PackAlcoholic

B D

Confidential & ProprietaryCopyright © 2009 The Nielsen Company

March 31, 2010 Page 14U.S. Buying Trends

Source: Scantrack®, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 11/28/09 (versus prior year)

Overall driven by food coupons

Overall F d N F dOverall%Change in Redemption

Food Non-Food

Q1 09 +17% +22% +9%

Q2 09 +33% +27% +46%

Q3 09 +29% +26% +45%

Q4 09 +26% +14% +37%

FY 2009 +27%3.3 billion coupons

+31%2.1 billion coupons

+20%1.2 billion coupons

Percent change in coupon redemption comparing current year’s period to the same period a year agoPercent change in coupon redemption, comparing current year s period to the same period a year ago.

15

Top Redemption Growth Methodstop 10 with significant redemptionp g p

Method RedemptionGrowthGrowth

Internet 263%Direct Mail 69%

Magazine Pop-up 51%

Instant Redeemable 48%Direct Mail Co-op 45%

Electronic Checkout 39%F t di I t 36%Free-standing Insert 36%

Digital Promotions 31%Shelf Pad 30%

In-ad 27%16

More Coupons Made Available

2009: 367 Billion

2009 vs. 2008:

2000: 321 Billion

+14% distribution

17

Giving them what they want … Part 1

Overall F d N F dOverall%Change in Distribution

Food Non-Food

Q1 09 +16% +25% +9%

Q2 09 +20% +31% +12%

Q3 09 +10% +4% +21%

Q4 09 +13% NC +18%

FY 2009 +14%367 billion coupons

+17%148 billion coupons

+13%219 billion coupons

Percent change in coupon redemption comparing current year’s period to the same period a year agoPercent change in coupon redemption, comparing current year s period to the same period a year ago.

18

Giving them what they want … Part 2

Overall F d N F dOverall%Change in Distribution

Food Non-Food

Q1 09 +16% +25% +9%

Q2 09 +20% +31% +12%

Q3 09 +10% +4% +21%

Q4 09 +13% NC +18%

FY 2009 +14%367 billion coupons

+17%148 billion coupons

+13%219 billion coupons

Percent change in coupon redemption comparing current year’s period to the same period a year agoPercent change in coupon redemption, comparing current year s period to the same period a year ago.

19

Food Drives ’09 Distribution Growth

Overall F d N F dOverall%Change in Distribution

Food Non-Food

Q1 09 +16% +25% +9%

Q2 09 +20% +31% +12%

Q3 09 +10% +4% +21%

Q4 09 +13% NC +18%

FY 2009 +14%367 billion coupons

+17%148 billion coupons

+13%219 billion coupons

Percent change in coupon redemption comparing current year’s period to the same period a year agoPercent change in coupon redemption, comparing current year s period to the same period a year ago.

20

An historic year

2005 @ 319 Billion2009: 367 Billion

2005 @ 319 Billion

2000: 321 Billion

21

An historic year

Distribution RedemptionYear Distribution Growth

RedemptionGrowth

2009 +14% +27% ↑ ↑2008 +5% NC ↑ ↔2007 +8% NC ↑ ↔2007 8% NC ↑ ↔2006 -11% -13% ↓ ↓2005 5% 6% ↑ ↓2005 +5% -6% ↑ ↓

1992 +10% +3% ↑ ↑

© Inmar 200922

↑ ↑

Cautious Optimism Gets its Due

Th d f b d• The pros and cons of a bad economy

• Promotional bark with minimal bitePromotional bark with minimal bite

• Back to the basics, in a big wayg y

• New media grows up

© Inmar 200923

Cautious Optimism Gets its Due

Th d f b d• The pros and cons of a bad economy

• Promotional bark with minimal bitePromotional bark with minimal bite

• Back to the basics, in a big wayg y

• New media grows up

© Inmar 200924

All Incomes Increasingly Looking for Grocery Deals

% Change in Grocery Channel % Items on Deal

10

12

% Items on Deal*

33%

6

8

10 33%32%29%

0

2

4

$70K +$30 t $69 9K

-6

-4

-2 $30 to $69.9K< $29K

07/12

/0808

/09/08

09/06

/0810

/04/08

11/01

/0811

/29/08

12/27

/0801

/24/09

02/21

/0903

/21/09

04/18

/0905

/16/09

06/13

/0907

/11/09

08/08

/0909

/05/09

10/03

/0910

/31/09

11/28

/09

4-week period ending* Latest Period

Confidential & ProprietaryCopyright © 2009 The Nielsen Company

March 31, 2010 Page 25U.S. Retail Shopping Trip Trends

Source: Homescan®, a service of The Nielsen Company; excludes gas only or Rx only trips; versus year ago

91% of Shoppers Plan Their Buys, but More Opportunities to Capture Impulse Buys

Pl d I l Sh i

Which one of the following best describes to what extent you plan your grocery shopping?

Planned vs. Impulse Shopping:

45%2% I usually plan what I want to buy and never buy additional items

45%I usually plan what I want to buy, but sometimes buy additional items91%

98%

9%

44% I usually plan what I want to buy, but always buy additional items

I usually do not plan what I want to buy before I shop

Confidential & ProprietaryCopyright © 2009 The Nielsen Company

March 31, 2010 Page 26U.S. Retail Shopping Trip Trends

Source: Homescan® 09/2009 survey, a service of The Nielsen Company

Results of promotion sensitivity

Higher response

Private LabelLabel

competitors

B dBrand competitors

Consumer expectationsexpectations

27

Cautious Optimism Gets its Due

Th d f b d• The pros and cons of a bad economy

• Promotional bark with minimal bitePromotional bark with minimal bite

• Back to the basics, in a big wayg y

• New media grows up

© Inmar 200928

Mixed Signals or Managing Spend?

2008 2009 Pre-’09 Trend2008 2009 Pre 09 Trend

Distribution 321 billion+5%

367 billion+14% ↑

Redemption 2.6 billion±0%

3.3 billion+27% ↓

$1.45 $1.44 Face values

$distributed

+10%

$distributed

-1%↑

2 9 months 2 6 monthsExpiration periods 2.9 months -3%

2.6 months-10% ↔

Purchase i t

72% singles 74% singles ↑requirements 28% multiples 26% multiples ↑29

How Consumers Responded

Distributed Redeemed

Face Values $1 44 $1 07Face Values $1.44 $1.07

Expiration Periods 2.6 months 4.6 months

Purchase requirements 1.52 1.65

30

More to gain … more to lose

• Increased counterfeit attempts• Increased counterfeit attempts

• Increased concern at checkout

• Increased vigilance in the industry

Internet coupons– Internet coupons

– High value coupons

– Consumer relations coupons

– General redemption assuranceGeneral redemption assurance

© Inmar 200931

Cautious Optimism Gets its Due

Th d f b d• The pros and cons of a bad economy

• Promotional bark with minimal bitePromotional bark with minimal bite

• Back to the basics, in a big wayg y

• New media grows up

© Inmar 200932

Methods Gaining Ground

MethodPercent

DistributedVolume

DistributedPercent

RedeemedVolume

Redeemed

Direct Mail + + + +Direct Mail1.2% + 40% 3.4% +69%

Electronic Checkout

+1 2%

++23%

+9 3%

++39%Checkout 1.2% +23% 9.3% +39%

FSIs +88.7%

++16%

+52.3%

++36%

Internet +0.3%

++92%

+1.5%

++263%

91 4% 66 5%91.4% 66.5%

Methods Gaining Ground

MethodPercent

DistributedVolume

DistributedPercent

RedeemedVolume

Redeemed

Handout Off-store location - - - -

Handout Off-store locationstore location with sample

- - - -

Military Shelf yPad - - - -

On Pack - - - -

Cautious Optimism Gets its Due

Th d f b d• The pros and cons of a bad economy

• Promotional bark with minimal bitePromotional bark with minimal bite

• Back to the basics, in a big wayg y

• New media grows up

© Inmar 200935

Internet Coupon Redemption

2008: +141%

1st Half 09: +308%

2009:+263%

• Significant distribution growth • +92% in 2009 and 2008

• Growing importance:•1.5% of all redemption

0 3% of all distribution• 0.3% of all distribution• High response rates

• “Mixed” = 4 33%

© Inmar 200936

Mixed 4.33%• “Print only” = 19.56%

Digital Promotions Redemption

• Growing share of redemptionGrowing share of redemption– +31% redemption

1 5% of total– 1.5% of total• Still small share of distribution

% f– 0.1% of total• Significant consumer response

– 8.63% redemption rate– 2048 redemption index

© Inmar 200937

The Inmar Solution

© Inmar 200938

What happened in 2009?

C d d l t f• Consumers redeemed a lot of coupons

• Brands made more coupons availableBrands made more coupons available

• Everybody grew cautiously optimisticy y g y p

• The (coupon) world dramatically changed

© Inmar 200939

So … now what?

2009: 3.3 Billion redeemed; 27%

l iannual increase

2006-2008: 2.6 Billion coupons redeemed annually

40© Inmar 2009

Coupon Redemption Drivers

? + – “moderating”

© Inmar 200941

?

Matthew TilleyDirector of Marketing InmarDirector of Marketing, Inmarmatthew.tilley@inmar.com

336 631 2524336.631.2524www.Inmar.com

42© Inmar 2009