U.S. Mid-Year 2013 CPG Coupon Industry Facts - Reported By NCH, July 2013

Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report

Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity

U.S. Mid-Year 2013

CPG Coupon Industry Facts Reported By NCH, July 2013



CPG Coupon Distribution Volume Trending Modestly Upward

In 2013, Driven By An Increase In The Non-Food Segment (First Half Total U.S. CPG Coupon Distribution Volume, In Billions / All Media)

158 178 167 165 168

First Half 2009 First Half 2010 First Half 2011 First Half 2012 First Half 2013

Chart 2

+12.7% -6.2% -1.2% +1.8%

+12.1%



63 63

102 105

First Half 2012 First Half 2013

Non-Food

Products

Food

Products

The Food Segment Has Maintained Coupon Distribution

Volume While Non-Food Continues To Grow In 2013 (First Half Total U.S. CPG Coupon Distribution Volume By Segment, In Billions / All Media)

+2.9%

FLAT

165 168

Chart 3

62

.5%

37

.5%

Sh

are

Sh

are

Volume Volume

61

.8%

3

8.2

%



8.9%

91.1%

Chart 4

Handout

In-Store

3.5%

Magazine

1.8%

Direct Mail

1.9%

Remaining*

<2.0% All Other

Media

(See Pie)

Free Standing

Insert

(FSI)

All Other Media

FSI Grew From 89.7% To 91.1% Of All Coupons Distributed

While Digital Coupons Sustain Double Digit Growth Rates (Percent Of First Half 2013 Total U.S. CPG Coupon Distribution Volume By Media Type)

*Remaining Includes: Newspaper, All Digital Formats, Handout Away From Store, In/On Pack & Cross-Ruff,

Military And Miscellaneous, Where No Individual Media Format Exceeds One Share Point Of The Total Market.

Retailer In-Ads Excluded.



Overall CPG Average Face Value Offered Has Increased,

Driven By The Non-Food Segment Marketers

$1.55 $1.62

Average CPG Face Value Offered (Average Of Total U.S. CPG Distribution / All Media)


+4.5%

Chart 5

$1.01

$1.88

$1.00

$1.99

Food

Non-Food

Average Segment Face Value Offered (Average By Segment / All Media)

First Half

2012

First Half

2013

First Half

2012

First Half

2013



Non-Food Is Increasing Multiple Purchase Requirements

While Raising Face Values; Food Product Coupons Continue

To Use Multiple Purchase Requirements Extensively

Chart 6

43%

17%

42%

18%

Food

Non-Food

Segment Multiple Purchase

Requirement Frequency (Percent Of Segment Coupon Distribution)

First Half

2012

First Half

2013

First Half

2012

First Half

2013

27% 27%

CPG Multiple Purchase

Requirement Frequency (Percent Of Total U.S. CPG Coupon Distribution)


Flat



$1.15 $1.24 $1.28 $1.31 $1.27


Face Value Redeemed Decreased Due To A Shift In Mix Including

More Non-Food Coupons Distributed With Higher Purchase

Requirements, Which Drove Down Redemption Volume From

That Segment And Lowered The Overall Average

(First Half Total U.S. CPG Redeemed Coupon Savings In Billions Of Dollars / All Media)

$2.2 $2.0 $1.8

Chart 7

$2.1 $1.8

Total

Consumer

Redeemed

Savings

(In Billions)

$2.2 $2.0 $1.8 $2.1 $1.8



Offers Are Expiring More Quickly, Driven Down By Food

Coupons That Reduced Average Duration By Nearly One Week

Chart 8

10.8

8.4

10.1

8.3

First Half

2012

First Half

2013

First Half

2012

First Half

2013

Non-

Food

Segment Average Offer Fuse (Average Segment Duration In Weeks / All Media)

Food

9.3 9.0


Average CPG Offer Fuse (Average Duration In Weeks For Total U.S. CPG

Distribution / All Media)

-3.2%



The Rate Of Redemption Decline Has Slowed In 2013 As

Marketers’ Corrections Begin To Stabilize, Following The

Recession-Driven Years Of Unusual Redemption Growth (First Half Total U.S. CPG Coupon Redemption Volume, In Billions / All Media)

1.575 1.700 1.750 1.550 1.425


Chart 9

+7.9% +2.9%

-11.4% -8.1%

+18.9%



0.900 0.850

0.650 0.575


Non-Food

Products

Food

Products

The Redemption Volume Decline Is Larger In Non-Food Due To

Greater Distribution Of FSIs And A Higher Saturation Of Very Short

Expiration Dates For Products With Long Purchase Cycles (First Half Total U.S. CPG Coupon Redemption Volume By Segment, In Billions / All Media)

-11.5%

-5.6%

1.550 1.425

Chart 10

40

.4%

5

9.6

%

Sh

are

Sh

are

Volume Volume

41

.9%

5

8.1

%



17.0%

13.1%

17.6%

52.3%

Internet

Print At Home

6.1%

In/On Pack &

Cross-Ruff

Military

2.3% Direct Mail

4.1% Remaining* 2.0%

Handout

In-Store

Free Standing

Insert

FSI Continues To Represent The Majority Of Redemption Volume,

And Digital Coupon Formats Have Grown, Reaching 6.1% Of

The Total For Internet Print At Home And 2.5% For Paperless (First Half 2013 Percent Of Total U.S. CPG Coupon Redemption Volume By Media Type)

Chart 11

Paperless

2.5%

*Remaining Includes: Newspaper, Magazine, Handout Away From Store, And Miscellaneous Where

No Individual Media Format Exceeds One Share Point Of The Total Market. Retailer In-Ads Excluded.

All Other Media

All Other

Media (See Pie Chart)

(FSI)



-11.1%

-10.5%

-17.5%

-10.8%

-4.0% Grocery Stores

Mass Merchandisers (Includes Supercenters)

Drug Stores

Military Commissaries

All Other (Includes Convenience, Warehouse Club,

Variety/Discount – i.e. Dollar Stores)

While All Channels Are Experiencing Some Redemption

Decline, Differing Shopper Audiences And Business

Strategies Affect The Rate Of Change Within Some Retailers (Percent Change In Class Of Trade Of Total U.S. CPG Coupon Redemption Volume

First Half 2012 vs. First Half 2013)

Chart 12



All CPG Average

First Half 2013

Middle-Half Range

First Half 2013

Average

Free Standing Insert 0.3% – 0.9% 0.7%

Newspaper 0.1% – 0.6% 0.7%

Magazine 0.2% – 0.9% 0.8%

Direct Mail 0.4% – 2.8% 3.3%

Regular In-Pack 0.5% – 2.8% 3.3%

Regular On-Pack 2.2% – 9.0% 10.6%

In-Pack Cross-Ruff 0.7% – 1.9% 1.9%

Instant On-Pack 7.8% – 34.3% 22.0%

Instant On-Pack Cross-Ruff 1.8% – 13.7% 10.3%

On-Shelf Distributed 2.7% – 15.4% 11.3%

Handout Electronic Checkout 1.6% – 7.5% 6.8%

All Other Handouts In-Store 0.5% – 3.4% 3.6%

All Other Handouts Away From Store 0.6% – 3.2% 3.0%

Internet Print At Home 5.6% – 19.8% 14.2%

Paperless 3.1% – 12.1% 8.7%

Military 1.1% – 12.4% 9.8%

Forecasted Final Redemption Rate As A Percentage Of Active Coupon Offers Representative Of First Half-Year Time Period.

Chart 13

CPG Average Redemption Rates By Media Type

For Offers Distributed In First Half 2013



Food Products Average

First Half 2013

Middle-Half Range

First Half 2013

Average


Newspaper 0.2% – 0.9% 0.9%

Magazine 0.3% – 1.0% 0.9%

Direct Mail 0.8% – 9.4% 6.2%


Regular On-Pack 2.5% – 6.9% 7.0%

Instant On-Pack 6.6% – 29.7% 20.5%







Paperless 4.6% – 13.7% 10.0%

Military 1.3% – 17.3% 11.5%

Chart 14

Food Products’ Average Redemption Rates By Media Type





Non-Food Products Average

First Half 2013

Middle-Half Range

First Half 2013

Average


Newspaper 0.1% – 0.3% 0.3%

Magazine 0.2% – 0.7% 0.7%

Direct Mail 0.4% – 1.4% 1.7%


In-Pack Cross-Ruff 0.8% – 4.1% 3.6%

Instant On-Pack 11.0% – 42.5% 27.2%







Paperless 1.2% – 5.2% 3.8%

Military 0.8% – 3.7% 5.4%

Chart 15

Non-Food Products’ Average Redemption Rates By Media Type





NCH Coupon Facts™

Methodology And Source Description About the Publisher

NCH Marketing Services, Inc., a Valassis Company (NYSE: VCI), is the global leader in business solutions for the redemption,

settlement and analysis of promotion offers. Each year, NCH protects the financial integrity of nearly $4 billion in promotional funds

transfers between trading partners across the globe. NCH: 155 Pfingsten Road, Suite 200, Deerfield, IL 60015. (847) 317-5500.

For more information about NCH, visit www.nchmarketing.com or follow us on Twitter @NCHMarketing.

About Our Methodology

With the volume of coupons processed by the company in the United States and worldwide, NCH is in a unique position to deliver the

most accurate analysis of coupon promotional trends. Coupons distributed and redeemed in the U.S. Consumer Packaged Goods

(CPG) marketplace are studied utilizing our manufacturer client databases, data cleared via our retailer processing operation and

other independent sources. Our proprietary methodology utilizes rigorous controls and statistical standards to maintain the integrity of

the information contained in this report, as well as all other information tools supplied by NCH.

Data points from client and market sources are dynamic. As such, projections are based on the most current information available at

the time of publication and may be revised in the future. Also, due to rounding, the sum of certain percentages may not equal 100

percent. The scope of this report includes Manufacturer Coupons of all paper and paperless media formats that are most typically

funded by CPG marketing budget allocations for consumer promotion. Retailer In-Ad coupons are not included in this report, as they

are most often funded by trade dollars. Consequently, In-Ad distribution and redemption are less precisely tracked by manufacturers.

How To Use This Report

Syndicated data suppliers, strategic media partners and promotional agencies are best positioned to help you review competitive

marketplace conditions, consumer behaviors and promotional strategies – all of which are contributing factors to the results that your

company or brand may experience with coupon promotions. Use this report for understanding the total market picture, including the

dollars to be protected as they are transacted between trading partners, and for comparing your results to the industry averages.

To obtain additional information about this report, please send an email to [email protected].

Acknowledgments

A special thanks to Marx, a Kantar Media solution, whose data is included in the analysis conducted to produce this report.

Marx is the leading provider of syndicated coupon distribution information to manufacturers of consumer packaged goods.

Marx delivers brand and category-specific promotion intelligence for both advertisers and coupon industry vendors.

http://www.nchmarketing.com/

U.S. Mid-Year 2013 CPG Coupon Industry Facts - Reported By NCH, July 2013

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