I currently spend slightly less than $200 per month for the two of us. If I really watch the sales and shop carefully, I can reduce that by $40 to $50 per month. With a family of 5 that is about $500 per month. These amounts include food, toilet paper, dog food, and other consumables.
I seldom use coupons. I shop at Walmart because they match prices. I went in there Monday and the cashier refused to match prices. After she was done ringing me up, the bill came to $12.88. I saw a manager and called her over and told her the clerk refused to match prices. The manager then instructed the clerk to ring my purchases up again using price matching. My bill came to $5.29. $12.88 to $5.29. I knew the prices of all the other grocery stores in the area and had written them down. Then I made out my list and went to Walmart.
If you look at your $1200 grocery bill and you look at my $200 grocery bill and you figure price per person, that is about the same as Walmarts regular prices ($12.88) and the sale prices at all the other stores ($5.29). If you want to reduce your grocery bill, study the prices of other stores in your area and buy at the lowest prices.
My rule of thumb is: If its a good price, I buy long term stuff and buy twice as much as I came to the store to buy. If it is a real good/wonderful price, I buy a dozen of them. Example: Ragu cream sauce (alfredo sauce) is normally $3 per 16 oz jar. When it was $.99 I bought 24 jars. When it was $1.50 I bought one. When Ragu is not on sale, I use my Ragu that I bought for $.99. Thus saving $2 per jar.
I do that with almost everything. That is how I spend only $200 per month for the two of us. And back in September 2012, nothing seemed to be on sale. I spent $96 for groceries for the 2 of us over 6 weeks. Almost all of that was for fresh fruits and vegetables.
The other way to really save is to have a garden. Lettuce and tomatoes are real easy to grow. You can grow about 50 heads of lettuce over 8 weeks for less and $1.50. If you use containers or raised beds a 4x8 raised garden can provide half the produce for a family of 4. Read the book, "Square Foot Garden". It will give you lots of ideas. Go to youtube for suggestions. I just watched http://www.youtube.com/watch?v=AKrkaSf8aT4
It should give you lots of ideas.
ETA: I NEVER buy meat at Sams and Costco. They are just too expensive. Hamburger is almost 25% higher at Sam's and Costco than where I buy it. Sirloin roast or steak is 30 % to 50% higher at Sams and Costco than where I buy it on sale.
Good luck to you and yours.