Coupons may get rate cut

The multimillion-dollar coupon business is in for a shakeup, with one of its benchmark figures likely headed downward.The Canadian Council of Grocery Distributors and the Grocery Products Manufacturers of Canada want to cut costs.And one of the areas a ccgd-gpmc joint...

The multimillion-dollar coupon business is in for a shakeup, with one of its benchmark figures likely headed downward.

The Canadian Council of Grocery Distributors and the Grocery Products Manufacturers of Canada want to cut costs.

And one of the areas a ccgd-gpmc joint committee is examining is coupons.

Specifically, the ccgd and the gpmc want to reduce the recommended 12 1/4-cent handling charge a grocery products manufacturer pays a grocery distributor when a consumer redeems a coupon.

Nick Jennery, vice-president of market relations at the gpmc, says the committee thinks two cents to four cents can be cut from the handling charge.

Jennery says manufacturers are now paying $34 million a year in handling charges.

‘This is, strictly speaking, an industry overhead,’ he says.

Jennery says manufacturers want to know if there is ‘a more efficient way of handling coupons.’

Max Roytenberg, vice-president of public affairs and membership services in Ontario for the ccgd, says the committee has called for tenders from coupon redemption houses and agencies.

Roytenberg says the grocery industry will offer the redemption houses a guaranteed volume of coupons in return for their commitment to a reduction of the 12 1/4-cent handling charge.

He says he would rather not disclose details of the tenders.

He says discussions to cut down the cost of coupon redemption began in February and there have been a couple of meetings since then.

Jennery says the joint committee will examine the bids on the tenders beginning this month.

He says he hopes to see the implementation of some cost-cutting ideas by next year.

Couponing in Canada, though dwarfed by the colossal coupon business in the u.s., and against which it has to compete in these days of low tariff, no tariff and cross-border shopping competition, is still considerable.

According to ccgd figures, 290 million coupons worth $150 million to $190 million were redeemed in Canada last year.

An incredible 26 billion coupons were distributed with a potential redemption value probably larger than the gross national products of most small countries.

The average value of a coupon last year was 58 cents, up from 51 cents in 1990.

And Roytenberg notes redemption rates are climbing because of the recession.

In 1991 alone, he says $168 million was returned to consumers after their coupons were redeemed.

But it is not only a reduction in handling charges the joint committee is seeking.

Roytenberg says there are another six or eight coupon items on the table.

He says one of them is standard-size coupons, which would reduce handling, consequently cutting labor costs.

Jennery says in the longer term, the committee is looking at scanning coupons in the same manner goods are scanned for their universal product code at supermarket checkouts.

‘There’s a lot of counting that goes on,’ he says, and one way to reduce costs is to reduce counting.

So far, Jennery says the response to the proposed changes from the redemption house industry has been ‘quite positive.’

However, he expects some shakeout in the future.

The major coupon redemption houses in Canada are NCH Promotional Services (a division of A. C. Nielsen), Herbert A. Watts, Tann Group and cms, among others, all in the Toronto area.

There are also a number of regional players.