The Paper Chase : From store counter back home to manufacturer, your coupons travel labyrinthine route through 2 countries, countless hands.

Beep. Beep. Beep.

In a drafty warehouse, Alma Leticia Munoz stands at her cramped work station, eyes riveted on the greenish computer screen.

She reaches into an overflow of oddball-sized slips of paper and drags a single coupon across an electronic eye. With a beep, the computer reads the bar code and flashes the number 67.

Munoz quickly turns to rows of cubbyholes behind her and shelves the coupon into its proper slot.

Elapsed time: Four seconds.

Then she does it again. And again. And yet again. A million times a year. Around her, the electronic burst of beeps sings the staggered medley of a dozen nearby workers.

When she’s on her game, Munoz can sort up to 1,300 coupons an hour. But she pays a price.

Often, she can barely move her left arm after a day of lifting and lowering. And her feet ache from standing.

So the 26-year-old maquiladora worker uses rubbing alcohol to ease the pain. On the worst days, she goes straight to bed.

Tomorrow will come early. And another 10,000 coupons await her.

*

Manufacturers’ coupons, America’s other currency, are giving the venerable greenback a run for its money.

Almost 100 years after C.W. Post introduced a 1-cent chit to promote his new Grape-Nuts cereal, coupon redemption has become a consumer obsession.

U.S. shoppers are expected to clip a record $4.7 billion off their grocery bills this year by getting cash back on everything from Tom’s Natural Toothpaste to Fancy Feast cat food.

Americans will redeem 8 billion manufacturer coupons in 1992, industry analysts predict. That’s more than the 6 billion people living on Earth.

One by one, after being traded as cash at the checkout counter, cents-off coupons embark on a fantastic voyage--a bi-national paper chase--as grocery retailers seek repayment for this colorful currency. In all, the coupons’ labyrinthine circuit will twice take them south to Mexico to be counted and recounted, sorted and stacked, shaped up and shipped out.

Eventually, coupons pass through countless hands, moving past the watchful eye of international border guards, whisking along airport conveyor belts and across electronic computer scans as they make their way back to the manufacturers who issued them.

Back home again, like some paper prodigal son.

*

Beep. Beep. Beep.

Alma Munoz remembers her first day as a coupon counter--before bar codes or computers. Unable to read English, she memorized a confusing myriad of symbols to sort coupons.

Her head throbbed, but she learned that the white genie was really a washing liquid and that the little doughboy was a bread company. She liked the pictures--so bright, well-drawn and stylish. But the words were meaningless.

But most anyone can read numbers. With computers, coupons flow like sand through her fingers.

“If you want to eat well,” Munoz explains, “you learn to sort fast.”

While working, she mentally paints pretty pictures of the bleak beauty of Sonora, where her family lives. Her eyes, Munoz says, “no longer cry” from the strain of reading coupons.

Usually, she outpaces the minimum 700-coupon-per-hour handling rate and adds a $15 weekly bonus to her $2-an-hour wage.

She needs the money. With $70 monthly rent and $100 for food in the markets near downtown, she doesn’t have much left.

Munoz came to the border city seven years ago to make a living and to help support her family. But to send money home, she needs to save all she can.

Sometimes, she imagines her mother and father looking over her shoulder, urging her on.

Urging her to sort the coupons faster and faster.

*

Clip. Clip. Clip.

Every Sunday, the drill is the same. Troy Thompson collects the colorful slicks from the morning newspaper as wife Rhonda pulls her scissors from the drawer next to the refrigerator.

Side by side, the Burbank couple cuts, counts and arranges their coupon cache. Desserts in this pile, laundry soap in that one. Perishables here. Cereals over there.

Finally, they’re off to the supermarket to redeem their clutch of funny money.

Coupons shave $30 from their $130 weekly grocery bill, cutting the cost on everything from dill pickles to diapers for the baby on the way.

“If there’s a way to fight the system, we’re gonna do it,” says Troy Thompson, a 29-year-old father of two. “Coupons are like cutting dollar bills out of the paper. They might as well have little George Washingtons printed on them.”

The couple is inspired by the San Diego woman whose coupon savings bought a new car. And Captain Coupon, the Studio City man who has saved two-thirds on a $100 grocery bill.

Indeed, as consumers stretch their food dollars in bleak economic times, the coupon has lost its penny-pinching stigma. More than three-fourths of the nation’s 94 million households now use the scrip regularly.

The Thompsons got hooked when a salesman handed them a $1-off coupon for their favorite cereal. “I mean, it was the cereal we were gonna buy anyway,” Troy Thompson recalls. “Something clicked in our heads.”

Coupons have become a worldwide currency, standard trade in Canada, England, Italy and Spain. But American consumers are still the kings.

Grocer Gregg Moorman knows. The Vons store manager in Burbank, where the Thompsons shop, is reminded each Monday when the armed guards carry off the bulging bags of coupons to begin their sojourn south of the border.

*

Beep. Beep. Beep.

It’s lunchtime and Alma Munoz and most of her co-workers have already finished sorting their morning batch of coupons.

At a table near the computer lines, they cheerfully arrange a potluck lunch of tacos and refried beans, a spread each takes turns bringing from home. Nearby, a teen-age girl--a new hire--has lagged behind and sweats next to a small mountain of coupons.

A young man--the only male among the dozen sorters--comes to her rescue. Rumor is, he has a crush on her. The women smile.

Manager Pedro Arroyeulos is willing to look the other way.

Although his factory is only 2 months old, he already knows that to keep his staff productive, he must keep them happy. So workers are not only allowed to help one another, but they can also play volleyball and plan parties on slow days.

“This is tiresome work,” Arroyeulos says. “Sorting, sorting, sorting. It drives you crazy. But to be good, you need to love your job.”

By Mexican standards, the pay is good. The best workers receive such bonuses as 90-day pregnancy leaves and paid holiday leaves, he says.

Munoz is one such employee.

At home, she watches TV to forget the constant beeping, the ebb and flow of coupons.

Sometimes, she dreams of them.

*

“It’s staggering,” says Robert L. Grottke, a consultant for the accounting firm Arthur Andersen. “The number of coupons being redeemed just boggles the mind.”

But it’s only a fraction--less than 3%--of the total printed. Product-makers will stamp out more than 330 billion coupons this year. At an average redemption value of about 50 cents, their potential worth exceeds $165 billion, or one-sixth of the total U.S. currency in circulation. In fact, manufacturers couldn’t afford to redeem them all.

All this commerce has inspired a round-the-clock industry to handle the surge, one that employs about 12,000 workers, most in sorting factories known as clearinghouses.

There are also the drivers who deliver the scrip from the border, workers who unpack the boxes and others who repackage them for return shipment. Still others track the whole process on computers.

Speed is everything. Retailers want coupons moved quickly: The faster coupons return to the manufacturer, the sooner stores will be reimbursed. To maintain the flow, workers must handle at least one coupon every five seconds--or lose their jobs.

Trust is nothing. Even after being meticulously counted by retailers, manufacturers recount the coupons. Manufacturers know that fraud is rampant, that misredeemed coupons cost them more than $500 million annually.

As many as one-third of coupons fall into that category, ranging from expired ones redeemed by consumers to elaborate redemption scams that net millions each year.

The largest manufacturers recount coupons themselves, like bank tellers checking to see that a stack of $100 bills is truly on the money. Most others hire firms called paying agents.

Virtually all counting and re-counting occurs in Mexico, in such places as Tijuana, Chihuahua, Monterrey, Delicias and, especially, Juarez--the world’s coupon-counting capital.

“I don’t think the average consumer really has a clue of what befalls a coupon once they kiss it goodby,” says Paul Corliss, president of the New Jersey-based Coupon Controls Inc., a clearinghouse handling more than 500 million coupons annually.

“These factories are like walking into an endless airport hangar. As far as the eye can see, there are women working at tables, using their bare hands to sort coupons.

“Let me tell you, the paper flies.”

*

Thanks to people like Munoz, the paper also flies at Procesamiento Electronico de Cupones en California .

Co-operated by Andreas Eulenstein of Newport Beach, the factory will handle 30 million coupons a year--small change compared to the big boys, which do twice that in a week.

Fewer than 10 companies process coupons; the two largest handle 70% of all business. Some do the job for retailers and manufacturers alike.

Business is cutthroat. Most companies won’t release customer identities. Trade secrets, you know. At stake is a piece of the 8-cent handling fee manufacturers pay to retail outlets. Even at a measly penny per coupon for handlers, profits multiply fast.

Eulenstein, a 38-year-old MBA, won’t reveal his East Coast grocery clients. But several times each week, the latest cargo of coupons arrives by overnight express at San Diego’s Lindbergh Field.

The coupons arrive helter-skelter, in bags and envelopes, both stapled and taped. Organized stores neatly label their cargo. Others merely dump loose coupons into cardboard boxes.

Within hours, the coupons are whisked to an Otay Mesa warehouse north of the border while Eulenstein wades through U.S. Customs paperwork.

Sometimes, frustrating delays of six hours or more slow the process. A few miles away, Munoz and others await the arrivals.

“The commercial gate at San Ysidro can be like the old Checkpoint Charlie,” Eulenstein says. “The Mexican guards can hassle you, open every box, even if they know you.”

At the factory, the containers first are weighed. A general rule is that one pound equals 900 coupons.

After they’re sorted, the scrip is placed in bags--ready to be shipped off to the manufacturers. The names on the wall of Eulenstein’s Mexican factory read like a Fortune 500 product list: Ragu. Ocean Spray. Heinz. Del Monte. Coca-Cola. Frito-Lay.

Eulenstein holds up a bag about the size of a plastic grocery sack: It holds coupons worth $6,000.

*

Like people, coupons are born. And they die.

Coupon drops--or blitzes--are conceived by company marketing experts to introduce new products or invigorate sales of old ones.

Although a few coupons are disseminated through costly direct-mail marketing, 90% arrive in your Sunday newspaper as free-standing inserts.

After manufacturers decide on a coupon drop, art directors design the currency--complete with product image, expiration date and bar code for identification.

When the makers of Fancy Feast cat food issue coupons, for example, they feature a colorful image of their mascot, SH-3.

“Fancy Feast buyers are loyal, and they’re triggered to that cat,” said John McMennamin, vice president for marketing services of Nestle USA, one of the world’s largest food manufacturers with more than 1,000 products. “It’s instant product recognition.”

Like shopper-seeking missiles, coupons then hit the streets. With 5,000 manufacturers, the stream of cut-along-the-dotted-line coupons seems endless.

Nationwide, more than 230,000 retail outlets, from hardware stores to flower shops, accept the scrip. A majority--more than 130,000--are grocery or convenience stores. Places such as Vons on North Pass Avenue in Burbank may redeem 19,000 coupons a week.

Manager Moorman says coupons generate customers who will then buy other items. That’s why many chains double, or even triple, coupon values.

Retailers have another good reason to absorb such costs: If one grocer doesn’t, the competitors certainly will.

And, says Moorman, “They work. Coupons bring us business. Tons of business.”

*

When coupons finally return to manufacturers, they inspire no heroes’ welcome.

Rather, they suffer an ignominious death. Tortured by bleach. Mulched. Shredded and recycled. Dumped into landfills.

By now, manufacturers have forwarded checks to retail headquarters or, in a few cases, have made payments electronically.

The paper chase is complete.

But the marathon may become memory as the coupon industry takes steps to modernize. Although the precise future is unclear, a picture of tomorrow’s couponing emerges.

Using exacting census data, manufacturers will target their audience by mail. Some supermarkets already feature coupon-dispensing machines. After a shopper buys a product, the machine issues a coupon for the next purchase of that item.

One day, sophisticated computers at check-outs will be able to itemize coupons on the spot, rendering sorters like Alma Munoz obsolete.

For now, though, both the paper coupon and its supporting industry flourish.

And that irks coupon expert Ryan Mathews.

The associate publisher of Grocery Marketing magazine calls couponing a Stone Age industry in a high-tech world, one in which manufacturers have run amok by flooding consumers with tons of worthless paper.

Each American household receives an average of 3,000 coupons annually. But consumers redeem only one in 50.

To pay for such bonanzas, he says, product-makers merely raise prices, thus hurting everyone.

“Like Social Security, coupons help a select number of people at the expense of the majority,” he says. “No company believes that a fraction of these coupons will be redeemed. In fact, if people redeemed even half of the coupons, there wouldn’t be enough money in the Treasury to pay for it. The economy would collapse.”

Manufacturers admit that such a redemption rate would be disastrous.

“It would kill us,” says Nestle’s McMennamin. “But we’d never reach that point. The product would disappear before that ever happened.”