• • • and two bright young Canadians named Harry Verner and Gus Weinstein do the rest. From space ships to bottle warmers, they handle the lion’s share of this country’s lively premium business

ERIC HUTTON September 15 1952


• • • and two bright young Canadians named Harry Verner and Gus Weinstein do the rest. From space ships to bottle warmers, they handle the lion’s share of this country’s lively premium business

ERIC HUTTON September 15 1952


• • • and two bright young Canadians named Harry Verner and Gus Weinstein do the rest. From space ships to bottle warmers, they handle the lion’s share of this country’s lively premium business


AMONG the conveniences of Canadian life which the Hon. Shane Alexander took back to England when his father’s term as governor-general ended was a Magni-Glo ring. This is not only a handsome piece of jewelry, but it glows in the dark and thus becomes a code sender by night; it incorporates a secret message compartment, a retractable magnifying glass and a built-in bail-point pen guaranteed to write in the stratosphere or under water.

Young Alexander acquired this useful article by the same method as thousands of Canadian boys: He munched two packages of Super-Puff’t popcorn at a movie matinee, saved the boxtops and put them in an envelope along with twenty-five cents in coins. Once mailed, the letter no longer represented solely the boyish urge of an earl’s scion to “he the first of your gang to flash a Magni-Glo”’ It became part of Canada’s newest multi milliondollar business: the premium deal.

As every housewife and youngster knows, it has become practically impossible to buy Î box of cereal or a package of soap powder without thereby becoming entitled and exhorted to buy, for a boxtop and a sum of money alleged to be one third to one half the usual retail price, a cheese cutter or i smoke-ray pistol, a plastic bottle warmer or a mixing bowl, a stratosphere helmet or a kitchen gadget which fillets fish, disjoints chickens, opens bottles, tenderizes meat and tacks upholstery.

As recently as four years ago only ^ half dozen Canadian companies were timidly experimenting with premiums: this year approximately a hundred manufacturers, almost all of them in the soap products and packaged food industries, are offering premiums regularly or seasonally. It is about as difficult to nail down the current dollar volume of the Canadian premium business as to take the

census on a rabhit ranch, but the estimates of men behind the scenes of premiums average out to a total turnover this year of four million dollars. In three to five years the volume may level off at twenty million dollars.

On the surface a premium offer is such a simple, kindly offer from seller to buyer that elderly ladies are apt to regard it as just that and to write letters like: “Dear Mr. Lever: Thank you for your offer to let me have a Keep-Fresh Plastic Refrigerator Box for half price. I will take one. Also please let me know if my sister, Mrs. Annie Smith, of Halifax, has sent for one. If not, I will get another to send her for her birthday.”

Actually, the premium mechanism is so complex the very thought of having to identify any individual request among tens of thousands of orders is the stuff of which premium handlers’ nightmares are made. The premium operation is frequently more involved than the company’s own business of converting grains into crunchy tidbits or whipping up a hatch of soap flakes. To offer a potato peeler to the public for half price plus a boxtop calls not only for high-level cerebration by company officials and advertising agency executives but requires the services of premium designers, procurers, patent attorneys, premium-handling companies, coupon-servicing outfits and public preference survey organizations.

“Sometimes," says one advertising executive who has recently become deeply involved with premiums, I feel that we’re pushing sales of gadgets - and giving awav soap

Occasionally the premium incentive brings results so good as to be downright embarrassing, as when a Saskatoon housewife recently informed the makers of a popular brand of porridge oats; "We bought so much of Continued on page 39

Continued on page 39

You Just Tear Off That Box Top


your product to get a full set of silverware for my daughter's hope chest that we had to find other uses for it than eating. You will be interested to know that when cooked stiff your porridge makes an excellent filler for cracks in the floor.”

An Ontario farmer whose wife overstocked on cleansing powder to bedeck herself with costume jewelry later gave this testimonial: “1 finally started

feeding the suds to the hogs, and am delighted to say it keeps them free of worms.”

Although manufacturers who make premium offers keep close tabs on public reaction to each deal the premiums are usually handled by a company which specializes in processing mass orders. Shane Alexander’s letter in quest of a Magni-Glo ring went nowhere near the Super Puff’t popcorn factory. Instead, it joined eight thousand other letters delivered every working day to the Premiumwares Company, which occupies two floors of an elderly building on the edge of downtown Toronto. There, two young partners, Harry Vemer and Gus Weinstein, aided by a staff of seventy, engage in a frenzied struggle to keep up with Canadians busily occupied in stuffing boxtops and money into enve-

Processed in an assembly line manned by nimble-fingered women, the orders are converted before day’s end into a ton or more of mailing packages containing pots and pans, scissors, giftwrap paper, silverware, postage stamps, plastic beverage sets and, of course, atomic-age toys and juvenile space weapons. The average Canadian family succumbs to at least one such “super bargain offer” a year—and it’s Mom who sends in the boxtop twice as often as all the other members of the family combined.

Vemer and Weinstein have no monopoly in the handling of premium deals. But as pioneers of premiums as a big-time operation in Canada they have the lion’s share of the business Last year they handled premiums worth more than a million dollars and this year are running far ahead of that figure. Their nearest competitor, Premium Post Ltd., of Toronto, got into the premium business less than a year ago. In the first half of this year Premium Post has topped half a million dollars.

When Vemer and Weinstein visited the United States to find out. as Vemer put it, “how premiums were handled by experts," they discovered that their young Canadian enterprise was already offering a more complete service than was available south of the border. They promptly capitalized on this by organizing a New York City subsidiary, Premiumwares Incorporated. The offspring was a success from opening day, and this year will probably pass its Canadian parent in volume.

The partnership of Verner and \N einstein started with a chance encounter on Bay Street in Toronto, in May 1945 They had known each other casually at the University of Toronto where Weinstein graduated in law and Verner in commerce and finance. Weinstein, round-faced and cheerful, grinned at the strange object which Verner, a dark brooding young man then in his late twenties, was carrying under his arm. It was a large knobbly toy. a team of horses hand-carved out of wood.

Vemer explained that after three

years in the army he was looking for an interesting business. He had visited a patent attorney in search of ideas. “He hands me this thing and tells me ‘how about the toy business—an old gentleman carved this and is looking for a market.’

“Do you want a partner in the toy business?” asked Weinstein.

“But I’m not in the toy business." Verner insisted, “and anyway, aren't you practicing law?"

Weinstein shook his head. After practicing law for five years he had finally talked his wav past the army

medical board, wound up his affairs and got into uniform. Three days later the army medicos had changed their minds and Weinstein was “boarded out."

“I just can’t bring myself to go back to my associates and clients and say, well, here I am again let's take up where we left off three days ago."

When Verner and Weinstein turned to walk up Bay Street they were in the toy business -with a joint capital of a thousand dollars. Metal toys had disappeared during the war and the partners figured that the first toymakers to bring them back would

reap a harvest. For the first Canadian Toy Fair in 1946 they hand-assembled a line of metal toys.

What happened at the fair was a toymaker’s dream The booth of their Wonder-Bilt Products company was besieged by the big buyers from Sears Roebuck. Montgomery Ward. Macy’s. as well as Canadian department stores. When Verner and Weinstein addl'd up the orders they came to just one million dollars.

They started to look for metal to get their million-dollar production line rolling. "There just wasn’t any,”

Vemer recalls sadly. “That year we scraped up enough material to turn out a few thousand dollars’ worth of toys."

By the fall of 1947 Wonder-Bilt was barely limping along and it was all the partners could do to finance a small booth at that year’s Canadian National Exhibition. It is true neither of them was in actual danger of going hungry. Vemer's family owns a partnership in the northern Ontario department-store chain of Bucovetsky’s Limited, and Weinstein Sr. is head of the Power Stores, a Toronto chain of supermarkets. But they wanted to make good on their own and in a final effort they worked in their booth at the CNE from opening till closing, buttonholing potential buyers of the toys and the small line of housewares they had added to their output. Among the latter was a novel egg beater, a gadget which spun when a spiral rod was pushed up and down in a bowl.

Business was slow, and on the last day of the exhibition Vemer and Weinstein were pretty discouraged. Then a man stopped at their booth, fiddled with the egg beater and mused in a barelyaudible voice: "Hmmm.

might make a good premium.’ And he placed an order.

“I don’t think either of us had ever heard the word ‘premium’ before,’’ Weinstein says now. “but it had a nice sound. Especially since that customer, v, ho happened to be a buyer for Procter and Gamble, ordered more egg beaters than the total we had sold up to then. So we were in the premium business as of that day.” In the spring of 1949 they bade farewell to the toy business and Premiumwares was bom.

It wasn't easy at first to find big companies willing to try the premium idea. A few companies had experimented with them as « means of introducing new products or to help maintain sales during slack periods, but most of them were reluctant to get into premiums too deeply.

What really put the premium business into high gear was the development of the self-liquidator, a device which makes it possible for the manufacturer to offer retail purchasers of his product the added inducement of being able to buy an article at one third to one half its claimed retail value. Until then most companies had regarded premiums as "give-aways,” small enough and cheap enough to pack in the box along with their product—but at an added cost of anywhere from half a cent to four cents.

What finally opened the eyes of sceptical executives to the potential of premiums was a deal handled by Premiumwares which brought in well over a hundred thousand orders for a ring that launched a miniature jet plane by means of a spring. This selfliquidating premium sold for twenty cents and a cereal boxtop—but it also showed that premiums were effective, if not dignified. Since then success has lent premiums all the dignity they

Premiums which sell for half their over-the-counter price and yet pay their way are possible because the economics of premiums are based on large quantities and strategic riming “Look at it this way,” says Weinstein. "We go to a manufacturer of Christmas wrapping paper and say. How would you like to run us off a million sheets in your slack season?’ Naturally he’s interested in keeping his presses rolling and his employees busy at a time when usually the only activity around his Christmas paper division is the overhead piling up. So he's willing to work at a minimum profit.

"We eliminate fancy packaging and all the markups from wholesaler to the store counter, and that actuahy

means we can supply merchandise at a genuine reduction of up to two thirds, sometimes more. Here’s an actual case, showing how we were able to sell half „ million copies of an encyclopedia at ninety-five cents each. The same encyclopedia had been selling door to door in the United States at fifty-five dollars for a set of sixteen volumes, or about three dollars and forty cents per volume. How did we do it? Well, we started with the publisher. We interested him in running off a half million copies after all his regular editions had been completed, so that he could forget about overhead. What’s more, we settled for a less expensive binding and a lighter paper. By distributing the encyclopedia directly off the shelves of Dominion Stores in Ontario and the Maritimes and Steinberg's grocery chain in Montreal, cash and carry-, we eliminated a whole train of additional costs: the wholesaler’s

thirty-three-and-one-third percent of the publisher's original higher price the salesman's twenty-five percent, the financing.”

The premium price structure is also greatly aided by the fact that advertising campaigns invariably accompany the launching of a premium deal, making possible the high buyer interest

necessary for a sales volume of one hundred thousand or more—but advertising costs are not charged against the premiums

“They don’t have to be,” an advertising agency executive points out, “because the space in an advertisement devoted to the premium offer more than carries its weight. We had a good example of this recently when two soup-mix companies took similar space in national publications. One ad featured just soup: the other featured a premium. „ set of plastic relish dishes. Later a survey showed that the advertisement offering the premium had attracted four times more readers.”

A premium deal advertised over the radio—soap operas are a popular medium for plugging both product and premium—usually lasts two to three weeks. Advertised in more durable publications the offer may run up to six weeks, but in actual practice most offers remain open indefinitely. When coupons are printed in advertisements orders may straggle in for years. This is known politely as the “outdoor librarytrade.”

Regardless of response, the biggest single beneficiaryof any premium deal is the federal post office, which Weinstein calls “our senior partner.” Last year Premiumwares alone spent one hundred and fifty thousand dollars for postage, and postage on orders from

Continued on page 42

premium customers brought the total to a quarter of a million dollars. Postage due on short-stamped incoming mail came to six thousand dollars.

Radio listeners who identify the program too closely with the product add to the woes of sponsors. Not long ago the hero of a popular soap opera got into a bad fix. The villain contrived to lure him into an underground room and lock him in. One woman wrote in bitter protest: “I had my seventyfive cents all ready to send in for the locket you are offering, but I'm not going to mail it until you get Desmond Darling out of that horrid room he's locked in. And I'm not going to buy any more of your soap, either.”

The soap manufacturer passed the protest on to his advertising agency, who checked the serial’s future episodes and discovered that Desmond would escape a week later. The agency wrote the listener promising to take steps on behalf of Desmond. ‘"That woman,” said an agency man. "is probably still boasting that she sprung Desmond single-handed.”

The premium with the poorest response to date has been, strangely enough, a commodity usually quite popular—cash money. To get more women to try his product a soap manufacturer offered to refund the full price to every buyer who sent in a boxtop as proof of purchase. When company officials got reports of soaring sales they braced themselves for a heavy payoff. Soon the first boxtops started to trickle in. But trickle was all they ever did. A good premium draws a response from twenty-five percent of purchasers, but fewer than five percent who bought that moneyback soap product got around to asking for a refund. Yet sales figures showed that tens of thousands of boxes had been bought as a result of the offer.

Harry Vemer is unable to understand the psychology of this indifference to cash—even when it happens in his own home. “I noticed that my wife had bought a box of the stuff.” he recalls, “and I told her to be sure to get her money back.”

"Of course,” answered Mrs. Vemer, “that’s why I got it.” And she tore the boxtop off then and there to show she was in earnest.

"But two weeks later,” Vemer says, "I noticed that the boxtop was still on the kitchen window sill. It just goes to show that premiums are more valued than money itself.”

Canadians vary in their enthusiasm toward premiums, depending on what part of the country they live in. A sales executive of a large Toronto packing plant which produces both foods and soaps reveals that Quebec residents are by far the most enthusiastic premium buyers. "Especially,” he adds, "if the price is about one third of usual retail cost and the article is really useful around the house. Maritimers come next. I guess the French and the Scots both have a thrifty outlook. The west is nearly as good as the Maritimes, and better if the deal includes a contest or some competitive angle like finishing a sentence in twenty-five words or less. Seems that the pioneer take-a-chance spirit is still alive in the west. That leaves Ontario and—let’s face it—Ontario comes last in per capita response to premiums. I figure that’s because Ontario people are more sophisticated, or think they are. They tend to be more cynical about bargains and take a what’s-the-catch? attitude.”

Surveys have shown that economic status has little effect on eagerness to buy premiums. Rich, poor and middleincome families account for almost exactly the same volume of premium responses in proportion to their num-

bers. And there is no noticeable difference in the premium volume in rural areas, towns and cities. Occupation can be a factor, though. Not long ago an evaporated-milk company offered a butcher knife as a premium. A southern Albertan wrote a pleading letter: "I sure admire that knife and

would like to get one. But can’t I send in anything but the label from a can of milk? I’ve got eighteen cows giving so much milk that I can’t get rid of all of it.”

The biggest potential disaster in premium dealing is getting stuck with a warehouse full of some gadget the fickle public might decide it didn't like, even at half price. Elaborate precautions are taken to guard against such an occurrence. Typical procedure in one large cereal company is this:

When it has been decided to launch a new premium deal, word is spread throughout the trade and a collection is made of fifty or sixty possibilities for the premium. Advertising agency personnel do the first culling, reducing the number of potential premiums to twenty or so. Then a solemn conference of advertising executives and company officials is held around a board table on which lie the premiums. After spirited analysis of the merits and demerits of each, a vote is taken and the six or eight highest-scoring premiums pass on to the next ordeal.

Samples of these premiums are distributed by a surxey company to dozens of cities, towns and villages from coast to coast, where operatives poll up to two thousand “average citizens" on their preferences. The most popular sample becomes the premium which is finally offered to the public.

An exception to this method is the handling of ultra-modem juvenile weapons, which are guarded in all stages of development with as much secrecy and caution as real secret weapons. Dick Harcourt of Premium Post recently got the idea for a torgun which will soon be featured in a cereal premium deal. His first step was to take his idea to Paul Kemp, a London. Ont., plastics manufacturer who turns out a large variety of articles for the Canadian premium market. Kemp called in an industrial artist who. having been sworn to secrecy, made sketches of Harcourt’s ideas. Individual parts of the secret weapon were then distributed among pattem makers, and the various pieces were locked in a safe every night during the construe tion of the master pattem. It took three months to bring the gun to completion but Harcourt isn’t breathing freely yet, lest a rival get wind of the idea and spoil his "scoop.” "AU I can say about the gun,” says Harcourt, "is that it makes its own harmless ammunition and fires it eighty feet with a loud bang.”

Juvenile premium customers are at least twice as hard to please as adults and insist on hairbreadth accuracy and realism in their toys. The premium industry must watch the trend of juvenile interests closely or run the danger of being hopelessly out of date. Comic books, radio and television influence children's demands, and even in its short existence the premium business has noted—and followed—a trend away from cowboy trappings toward inter-stellar equipment.

Headache number two from the premium dealers’ viewpoint is the tendency of client companies to underestimate demand for a premium, an understandable caution since the company is responsible for unsold premiums once they are ordered. Not long ago Vemer and Weinstein tested a premium offer of three German-made scissors for a

Continued on page 45

dollar. The survey response was fairly good, so a moderately large order was placed and the advertising campaign launched. Then two reports came in on the same day: ¿The mail room

reported an unprecedented flood of orders and a cable from Germanystated, “Steel supplies tightened, can ship only half your order.”

Weinstein got on a trans-Atlantic plane that night—no unusual occurrence, since the partners travel seventyfive thousand miles a year, scouting the world for new premium ideas. “I sat on that German scissors-maker's doorstep for a month.” Weinstein recalls, “urging him to make more and more scissors. And when I wasn't doing that I was rounding up other manufacturers and trying to make them understand why Canada suddenly wanted tens of thousands of pairs of scissors in a

After four years in the premium business, Vemer and Weinstein have learned something about premiums and rather more about people. “We’ve learned,” said Weinstein, “that a good premium is something that a lot of people like for reasons we haven’t figured out in all cases. If we didn’t pre-test premiums before offering them, we might have gone broke long ago. The only limitations we put on types of premiums are that they must be light enough to mail economically, to avoid ruining our tight price structure. And they must be unbreakable, or nearly so. That’s why plastics and the premium business go so well together, and why glassware and china are of no use for premiums that have to be mailed.”

Vemer and Weinstein are convinced that people who buy premiums are a the most patient, and (b' the most impatient in the world. Both types provide headaches for the partners.

“A kid tagging along with his mother in a grocery store sees the picture of a rocket-launching ring on a cereal box, talks mom into buying the cereal, and can hardly wait to get home, tear off the boxtop, dig a quarter from his piggy bank and get it into the mail,” Verner explains. “This kid, mind you, lives in Vancouver. But if the postman doesn’t deliver his premium first thing next day, the kid figures he’s been stung and writes us a letter of complaint which becomes a small monkeywrench in our machinery. That goes for a surprising number of grown-ups. too. They just have no idea of the time it takes a letter to travel halfway across the continent, and for their order to travel back.”

On the other hand, Canadians with

an apparently inexhaustible store of patience create another problem: The partners have a thick file of orders they can’t fill because people have forgotten to send in their addresses.

Some time ago postal inspectors found that a post-office employee had been systematically smuggling out thirty or forty letters a day, extracting the money and destroying the letters. He admitted stealing between eight hundred and nine hundred letters addressed to Premium wares. But since then only fifty persons have written to ask why they have not received their premiums. The rest, presumably, are waiting patiently. And the partners are waiting impatiently to hear from them.

But the “customer” who arouses the ire of the entire premium industryis the dishonest person who tries to get a premium without boxtop or money. Not only does this miserable wretch thereby cast reflection on the superlativeness of the bargain, but—unforgivably—he or she avoids buying the product. Recently a filing clerk in the premium department of a large Ontario cereal company brought her boss five letters from the same woman, a resident of a nearbysmall town. The letters were identically worded: she had not received the premium for which she had sent. In each case, because of the possibility of loss of the original order, the premium had been sent on receipt of the complaint. But the chance discovery of five letters concerning as many different premiums suggested the coincidence was too great. Sure enough, investigation showed that the woman made a hobby of collecting premiums without paying for them or buying the product.

She had discovered this interesting possibility quite innocently. She had actually sent for a premium, enclosing money and boxtop. Or thought she had. When she failed to receive it she had complained and promptly got the premium, along with a note of apology. Then she found she had forgotten to mail the original order. “How long has this been going on?” she asked herself, and launched a career of pettyfraud.

Dishonest customers add up to onlyan infinitesimal fraction of premium buyers, however, and sooner or later they give themselves away.

"Fortunately," says Vemer, “there are enough people who appreciate a bargain to offset all the headaches of the premium business. What if we do put in a seventy-two hour week? It’s more fun handling premium deals than working for a living.” ★