FOR AN outsider it was a riveting scene: A representative of the manufacturing segment of the food industry was debating with a representative of the retail sector. The vice president of the Grocery Manufacturers of America got more than just a little hot under the collar when the consumer adviser of Washington's largest supermarket chain attempted to rebut some information he had presented about coupon fraud. The public is not often privy to these quarrels.
The debate, which took place at the annual meeting of Newspaper Food Editors and Writers Association, is only the latest in a series of "incidents" brought on by the cents-off coupon fever sweeping the country. It has pitted manufacturer against retailer, caused red faces and cancellation of a program at the annual food industry convention, created careers for professional coupon clippers and frustrated shoppers who get stuck behind a clipper in the checkout line.
The cents-off coupons are good for hard cash when presented with the product at the time of purchase. Their face values range from 10 or 15 cents to as much as $1.
Some observers predict their demise soon as more and more companies fall all over each other issuing more and more coupons. Even those who favor coupons agree some new gimmicks will be needed to keep people interested. In 1977, 58 billion coupons were issued; last year there were 81 billion in circulation. While only 3.4 billion were redeemed, that still amounts to a lot of coupons.
A film questioning the value of coupons, produced by Giant Food, has brought some of the negative aspects of coupons into sharp focus. The film, featuring Esther Peterson, White House consumer affairs adviser and former vice president for consumer affairs at Giant, points out that:
Millions of coupons are misredeemed each year by organized criminals as well as individual shoppers and those misredemption costs are passed on to consumers.
Coupons discriminate against the poor, who do not get them through the mails, and often do not buy newspapers or magazines where they are most often found.
If the money spent on coupons were used to lower prices instead, everyone would benefit.
Giant's present consumer adviser, Odonna Mathews, showed the film, "Coupons -- Good Business or Bad Business?," to newspaper food writers last week in Washington. Paul Kelly, vice president of marketing for the Grocery Manufacturers of America, presented the manufacturers' point of view.
Kelly said that Giants' figures on misredemption -- $140 million in 1978 -- are grossly exaggerated. "Beware of spectacular numbers. They disappear into the mists," Kelly said. "If the losses were of the magnitude in Giants' film, manufacturers would find it uneconomical to use coupons."
Mathews countered that the "figures were based on industry estimates."
Whatever the figures may be, there is definitely large scale fraud going on.
According to Modern Grocer, a retail food industry trade journal, nine northern New Jersey independent retailers have just pleaded guilty to illegally redeeming $350,000 in cents-off coupons. Federal officials told Modern Grocer that "illegal coupon redemption is 'one of the country's largest white collar crimes,' netting between $120 to $500 million annually."
Another trade journal, Supermarket News, reported that coupon fraud under investigation if Philadelphia involves 389 legitimate retail organizations and 354 individuals who have established fictitious locations as retail outlets.
During the debate Kelly admitted that low income people redeemed fewer coupons than those in other income groups, but he said their rate of redemption was only 7.5 percent below the national average. Of course, there is no way of knowing whether that's because they get fewer coupons or just use them less often.
Mathews said Giant had conducted surveys in one of its markets in a poor neighborhood and in Bethesda and McLean stores. They found that coupon redemption in the poor neighborhood was .09 of 1 percent and .33 to .39 of 1 percent in the affluent areas.
Kelly said, "elimination of coupons will not lower prices . . . but might cause prices to rise" because "increased sales volume spreads fixed costs" of doing business.
On the other hand, he admitted there is no way to know just how much coupons increase business because some products would be purchased even without them.
Kelly did not mention another concern of manufacturers: what will happen if coupons are eliminated and prices lowered to retailers. But a Pillsbury executive talked about it in a conversation with a reporter. Dean Thomas said: "What guarantee do you have that the stores will pass on the savings to consumers?" Others have asked the same question.
Just about the only thing Kelly said with which Mathews agreed was that if, without a coupon, a consumer "can buy a product of satisfactory quality at a lower price, she is crazy not to buy it if it satisfies her needs."
On a recent shopping trip, one person bought house brands while the other purchased national brands with cents-off coupons. The house brand purchaser paid $2.22 less for her groceries.
One of the reasons many supermarket chains do not like coupons is because of their handling costs. Stores claim the fee manufacturers pay for redeeming the coupons does not cover the stores' costs. In addition, they don't like coupons for the same reason non-users don't like them: they slow down checkout lines.
This spring Giant offered double coupons because it said it "had to stay competitive." Its chief rival, Safeway, as well as other area chains, were offering them. But earlier this month, Giant announced it would no longer offer coupons on house brand items or a 30 cent coupon for milk. Instead, it reduced the price of milk 16 to 20 cents a gallon.
The first volley in the current war over coupons became public when the presentation of the Giant film at the May Food Marketing Institute convention in Dallas was cancelled. It had appeared on the first schedule of events for food editors but disappeared by the time the final program was sent out. A letter from Mathews to food editors scheduled to attend the conference offered no reason for the cancellation but said the film would be shown privately at the hotel where the reporters were staying.
Asked why the schedule has been changed, Marian Tripp, whose public relations firm handles arrangements for food editors on behalf of Kraft Foods, said: "It's not a big, deep, devious thing."
Tripp said she "got a call from FMI saying they wanted editors at a lunch honoring them and the 50th anniversary of supermarketing. Since all the other speakers had been booked . . . that was the easiest thing to take off the schedule." But an official of FMI said, "I didn't think Kraft and FMI should be sponsoring this" because the film is "inflammatory" and "got a lot of manufacturers angry."
According to Karen Brown, vice president for consumer adviser at FMI, "since the program for food editors is put together primarily by Kraft you don't want to embarrass a good friend like Kraft if they are going to be uncomfortable about it."
Battle lines are also drawn between shoppers.
On the pro-coupon side are those few who figure out ways to "buy" $100 worth of groceries for $7. Some of them publish newsletters telling other coupon clippers and refunders (for refunds you have to send a proof of purchase, and sometimes money, to the manufacturer to receive the product) how to do it. In supermarkets coupon clippers can be seen prowling the aisles peering at pieces of paper and then at the shelves.
On the anti-coupon side are those who refuse to spend the time clipping even one coupon. Many describe it as a "nuisance." Some find coupons infuriating, particularly people who hold down jobs outside the home and don't have the time to spend clipping coupons or searching for the exact brand and size in the supermarket.
The fact that more and more women are working may hasten the downward spiral of the couponing craze. Wrote one: "A working woman has no time to spend hours in the supermarket filing, mailing, clipping coupons and keeping boxtops, bottoms or what have you!"
Some people who use coupons resent them. Said one: "The costs of promotion are built into the price so the purchaser loses out if the coupons aren't used. I use them in self-protection against prices which have been inflated."
The Cincinnati Enquirer ran a story on couponing recently and asked readers to let it know how they felt about coupons.According to the paper's food editor, Marie Ryckman, the mail ran "almost 6-to-1 against couponing. People said they used them but-resented having to use them."