Valassis--King of Coupons

Collaring a Commodity
Valassis is also very unique in the way in which it deals with its paper suppliers, according to Larry Berg, vice president of purchasing. "Of our total paper consumption—170,000 tons—75 percent is covered by long-term, price-collared contracts. These three-to-five-year deals prevent rapid escalation or deceleration of paper pricing. Through this collared arrangement, we have been able to take out the peaks and valleys of our highest cost of goods component. Not only does this inject stability into our pricing strategies, it creates a sense of predictability in the public investment marketplace. No longer do existing or potential stockholders have to worry about wild variations in the paper market creating extraordinary pressure on our bottom line.