2011 Year-End US CPG Coupon Distribution and Redemption Trends Highlights - January 2012

1. Year‐end Coupon Report & Analysis
February 21, 2012
Matthew Tilley
Director of Marketing, Promotions Network

2. Inmar’s Portfolio of Services
• Returns Management • Coupon Management
• Liquidation/Asset Recovery • Digital Promotions
• Supply Chain Analysis
• Rebate Management
• Recalls and Withdrawals
• Business Intelligence • Fulfillment Services
• Sustainability • Sweepstakes
Management
• Promotion Consulting
• Pharmaceutical • Third‐Party • Contract
Returns Reconciliation Management
© 2012 Inmar®, Inc. CONFIDENTIAL 2
® Not to be reproduced or distributed without written permission from Inmar

3. A Tale of Two Data Points
Distribution Redemption
‐7.5%
311 billion
+6.1%
3.5 billion
© 2012 Inmar®, Inc. CONFIDENTIAL
3
® Not to be reproduced or distributed without written permission from Inmar

4. Industry Coupon Redemption
© 2012 Inmar®, Inc. CONFIDENTIAL
® Not to be reproduced or distributed without written permission from Inmar

5. Redemption Sparked in Q3 2011
2010 2011
Q1 +13% ‐3%
Q2 +1 +4%
Q3 ‐1% +16%
Q4 ‐11% +5%
© 2012 Inmar®, Inc. CONFIDENTIAL
5
® Not to be reproduced or distributed without written permission from Inmar

6. Redemption Growth Across the Board
Food Non‐food
2.3 billion 1.2 billion
65.7% +7.4% 34.3% +3.6%
of Total Growth of Total Growth
© 2012 Inmar®, Inc. CONFIDENTIAL
6
® Not to be reproduced or distributed without written permission from Inmar

7. Long‐term Trend: Redemption Growth
2011
3.5 billion
2009
3.3 billion
2006
2.6 billion
© 2012 Inmar®, Inc. CONFIDENTIAL
growth rate! 7
® Not to be reproduced or distributed without written permission from Inmar

8. Redemption Continues to Climb
2000
4.4 Billion
2011
3.5 Billion
Q1 Q2 Q3 Q4
2008 ‐7% ‐1% ‐3% +10%
2009 +17% +33% +29% +26%
2010 +13% +1% ‐1% ‐11%
2011 ‐3% +4% +16% +5%
© 2012 Inmar®, Inc. CONFIDENTIAL
8
® Not to be reproduced or distributed without written permission from Inmar

9. Most Major Coupon Methods See Growth
Share of Redemption Volume Change
Free‐standing Insert 43.9% 6%
Instant Redeemable 12.8% 2%
Electronic Checkout 7.7% NC
Shelf Pad 7.0% ‐2%
Internet 4.7%* 76%
Direct Mail 3.4%* 29%
Handout 3.0%* 11%
In‐pack 2.6%* 16%
On‐Pack 2.3% 18%
In‐ad 1.8% ‐18%
Electronic Shelf 1.7% 9%
© 2012 Inmar®, Inc. CONFIDENTIAL * Methods showing growth in share of redemption 9
® Not to be reproduced or distributed without written permission from Inmar

10. Coupon Redemption Drivers
© 2012 Inmar®, Inc. CONFIDENTIAL 10
® Not to be reproduced or distributed without written permission from Inmar

11. Consumers Feel the “Misery Index”
misery index = unemployment rate + inflation
13
12
11
10
9
8
7
6
5
4
3
2
1
0
© 2012 Inmar®, Inc. CONFIDENTIAL Source: U.S. Bureau of Labor Statistics; 11
® Not to be reproduced or distributed without written permission from Inmar CPI non‐seasonally adjusted, unemployment rate seasonally adjusted

12. Consumer Confidence Remains Low
140
120
100
80
60
40
20
0
Mar‐01 Mar‐02 Mar‐03 Mar‐04 Mar‐05 Mar‐06 Mar‐07 Mar‐08 Mar‐09 Mar‐10 Mar‐11
Previous Restated
© 2012 Inmar®, Inc. CONFIDENTIAL Source: The Conference Board ‐ Nine census regions, 5,000 12
® Not to be reproduced or distributed without written permission from Inmar US households; 1985 = 100; conducted by Nielsen

13. CPG Prices on the Rise
Percent Change in Unit Prices
5
4
3
2
1
0
‐1
‐2
17 periods of price gains;
4.9% increase in latest period
Source: Nielsen Scantrack, (U.S. FDM w/ Walmart)
4 week increments (vs. prior year); UPC‐coded
© 2012 Inmar®, Inc. CONFIDENTIAL 13
® Not to be reproduced or distributed without written permission from Inmar

14. Price Increases Affecting Most Departments
Percent Change in Unit Prices
14
12
10 Dairy
8 Fresh Meat
Pkgd Meat
6
Fresh Produce
4
Frozen Foods
2
Dry Grocery
0
TOTAL ALL DEPTS
‐2 Deli
‐4 Non‐Food Grocery
‐6 General Merch
‐8 Alcoholic Bevs
‐10 HBA
13 W/E 13 W/E 13 W/E 13 W/E 13 W/E 13 W/E 13 W/E 13 W/E
01/30/10 05/01/10 07/31/10 10/30/10 01/29/11 04/30/11 07/30/11 10/29/11
Source: Nielsen Scantrack, (U.S. FDM w/ Walmart)
13 weeks increments (vs. prior year); UPC‐coded
© 2012 Inmar®, Inc. CONFIDENTIAL 14
® Not to be reproduced or distributed without written permission from Inmar

15. All Signs Point to Promotional Effectiveness
80% Coupon Performance Benchmarks by Type
All Categories (n=1,476)
70%
60%
50%
40%
30%
20%
10%
0%
FSI Other On‐Pack At Shelf Coupon
Machine
% Incremental Redeemed Volume % ROI ‐ Estimated * % Volume Redeemed by Prior Non‐Buyers
* Estimated Return on Investment (%ROI) = Average Unit Price *31% (assumed margin) / cost per incremental unit
Source: Knowledge Networks / PDI – Coupon Performance Normative Database
© 2012 Inmar®, Inc. CONFIDENTIAL 15
® Not to be reproduced or distributed without written permission from Inmar

16. Industry Coupon Distribution
© 2012 Inmar®, Inc. CONFIDENTIAL
® Not to be reproduced or distributed without written permission from Inmar

17. A Tale of Two Data Points
Distribution Redemption
‐7.5%
311 billion
+6.1%
3.5 billion
© 2012 Inmar®, Inc. CONFIDENTIAL 17
® Not to be reproduced or distributed without written permission from Inmar

18. Is Distribution Just Leveling Out?
2011
‐7.5%
2008‐2010 311 billion
+17%
336 billion
2007
290 billion
© 2012 Inmar®, Inc. CONFIDENTIAL 18
® Not to be reproduced or distributed without written permission from Inmar

19. Distribution Declines Across the Board
Food Non‐food
124.7 billion 186.3 billion
40.1% ‐8.6% 59.9% ‐6.7%
of Industry Decline of Industry Decline
© 2012 Inmar®, Inc. CONFIDENTIAL 19
® Not to be reproduced or distributed without written permission from Inmar

20. Are Brands Turning to Digital & Social?
US Media Reach
200 47
million million
Traditional Newspaper
Sunday Subscribers
© 2012 Inmar®, Inc. CONFIDENTIAL Source: Facebook & Newspaper Association of America 20
® Not to be reproduced or distributed without written permission from Inmar

21. More brands issuing digital promotions …
@
© 2012 Inmar®, Inc. CONFIDENTIAL 21
® Not to be reproduced or distributed without written permission from Inmar

22. Or are Brands Following the Pattern?
Inmar Clients’ Distribution Index by Month
180
160
140
120
2006
100
2007
80 2008
2009
60
2010
40 2011
20
0
© 2012 Inmar®, Inc. CONFIDENTIAL Source: 2011 Inmar Coupon Report 22
Not to be reproduced or distributed without written permission from Inmar 22
®

23. Distribution Dropped off in 2nd Half 2011
Q1 Q2 Q3 Q4
Quarterly Change
in Redemption ‐3% +4% +16% +5%
2011
Quarterly Change
in Distribution ‐11% ‐4% ‐13% ‐10%
2011
© 2012 Inmar®, Inc. CONFIDENTIAL
23
® Not to be reproduced or distributed without written permission from Inmar

24. Coupon Redemption Drivers
© 2012 Inmar®, Inc. CONFIDENTIAL 24
® Not to be reproduced or distributed without written permission from Inmar

25. Distribution Slips for Most Major Methods
Share of Distribution Redemption
Method Distribution Volume Growth Volume Growth
Free‐standing insert 87.7% ‐7% +6%
Magazine‐on‐page 1.5% ‐26% +6%
In‐ads 2.8% ‐18% ‐18%
Direct mail 0.9% ‐15% +29%
Electronic Checkout 0.9% ‐32% NC
Handout 0.8% ‐24% +11%
Instant Redeemable 0.6% ‐3% +2%
Internet print‐at‐home 0.4% NC +76%
© 2012 Inmar®, Inc. CONFIDENTIAL 25
® Not to be reproduced or distributed without written permission from Inmar

26. Tactics Having Little Impact on Redemption
Average
Average Average Purchase
Redemption
Face Value Requirements
Distributed Distributed Periods
Distributed
Distributed: Distributed: Distributed:
$1.57/coupon 1.49 units/coupon 2.4 months
(‐1.3%) (‐4.0%)
Redeemed:
Redeemed: 1.61 units Redeemed:
$1.14/coupon 5.4 months
(+1.8%)
(‐7.0%)
© 2012 Inmar®, Inc. CONFIDENTIAL 26
® Not to be reproduced or distributed without written permission from Inmar

27. Putting It Into Context
© 2012 Inmar®, Inc. CONFIDENTIAL 27
® Not to be reproduced or distributed without written permission from Inmar

28. Mindsets Moving Toward Smart Living
• Value
• Quality
• Features
• Benefits
• Pay More/Get More
• Surprise Me
© 2012 Inmar®, Inc. CONFIDENTIAL 28
® Not to be reproduced or distributed without written permission from Inmar

29. Value Consumer = Benefits/Price
Remaining Yogurt Total Greek Yogurt
Avg Price 107% higher
Dollar Sales ‐6% Dollar Sales +133%
Unit Sales ‐5% Unit Sales +117%
Regular Eggs Specialty Eggs Designer Eggs
Avg Price 44% higher Avg Price 76% higher
Dollar Sales +9% Dollar Sales +16% Dollar Sales +16%
Carton Sales ‐0% Carton Sales +12% Carton Sales +14%
Mainstream Coffee Premium Coffee Pod Coffee
Avg Price 18% higher Avg Price 40% higher
Dollar Sales +4% Dollar Sales +8% Dollar Sales +115%
Unit Sales ‐4% Unit Sales +5% Unit Sales +99%
© 2012 Inmar®, Inc. CONFIDENTIAL Source: Nielsen Scantrack, Total U.S. FDM (including Walmart) 29
® Not to be reproduced or distributed without written permission from Inmar 52 weeks ending 09/03/2011 (vs. prior year); UPC‐coded

30. Marketers May Be Lagging
Shoppers Marketers
• Smart Living • Deal Giving
• Value • Savings
• Quality • Pack Size
• Features • Economy Brand
• Benefits • Private Label
• Pay More/Get More • Pay Less/Get Less
• Surprise Me • Predictable
© 2012 Inmar®, Inc. CONFIDENTIAL 30
® Not to be reproduced or distributed without written permission from Inmar

31. Great recession created new normal for store brands
Store Brand Unit Share
(Data through August 6, 2011)
Economic Growth Recession Post‐Recession
23.5%
23.0%
PL U Share excl WM
22.5%
22.0%
21.5%
Post‐Crisis Norm
21.0% Pre‐Recession Norm
20.5%
20.0%
19.5%
19.0%
2005 2006 2007 2008 2009 2010 2011
© 2012 Inmar®, Inc. CONFIDENTIAL Source: 2011 Nielsen Private Brands Outlook 31
® Not to be reproduced or distributed without written permission from Inmar

32. Looking Ahead to Smart Living
© 2012 Inmar®, Inc. CONFIDENTIAL 32
® Not to be reproduced or distributed without written permission from Inmar

33. The Digital (R)Evolution
© 2012 Inmar®, Inc. CONFIDENTIAL 33
® Not to be reproduced or distributed without written permission from Inmar

34. Planning for the Future
• Promotions as a
strategy… not a reaction
• Targeting vs. mass
marketing?
• Options exploration
• Great offers trump
macro trends
• Digital integration
© 2012 Inmar®, Inc. CONFIDENTIAL 34
® Not to be reproduced or distributed without written permission from Inmar

35. Where is all of this going?
+5%
• Distribution leveling off
• Redemption experiencing
modest increases
© 2012 Inmar®, Inc. CONFIDENTIAL 35
® Not to be reproduced or distributed without written permission from Inmar

36. Questions & Answers
36
© 2012 Inmar®, Inc. CONFIDENTIAL
Not to be reproduced or distributed without written permission from Inmar

37. For more information:
Matthew Tilley
Matthew.Tilley@inmar.com
336.631.2524
Twitter: @matthewjtilley