Show i i BUBBLY nf BEVERAGE OUTLOOK As we e near the prime consumption consumption con ron time for beverages beverages- the warmer months better financial results for the major companies in this industry are expected For 1977 as a whole revenues and profits should surpass those for 1976 The brewers will be aided by the anticipated labor peace this year versus last years year's strike- strike restricted conditions The soft drink makers should also record a sizable annual Improvement owing to the increasingly favorable economic conditions There are some negatives in the outlook such as the spread of packaging ordinances which affect both sectors but on balance the stability of the industry and high consumption rates promise brighter results HAl START The cold weather pattern of early 1977 had its adverse impact but that could well be negated by considerably more impressive output and sales for forthe forthe forthe the remainder of the year With the busiest season approaching in fact both soft drink manufacturers and the nations nation's brewers can look ahead with more confidence in terms of the overall financial outcome for forthe forthe forthe the current twelvemonth PACKAGE PROBLEMS A number of states and localities have recently voted in favor of bottle bills or mandatory mandatory mandatory man man- deposit for beverage containers The prime motivation for such legislation is to force the increased use of returnable containers in the beer and soft drink fields If the American consumer continues his consciousness of preserving the environment there will b be still more emphasis on this type of law in the future In fact a abill abill abill bill has been introduced in Congress for a federal law mandating deposits on soft drink and beer containers and the chances for its eventual passage are good POSSIBLE LE EFFECTS The brewers appear better able to cope with such legislation than do the soft drink bottlers largely because there are fewer bottlers of malt beverages than of soft drinks Thus for the brewers there is some insulation from possible chaos resulting from a change in the law Also a dramatic switch in containers would be a temporary tem tem- albeit costly phenomenon term Longer-term implications are less disturbing for the beverage business itself Most l major soft drink producers do not manufacture their containers furthermore they actually produce and sell more syrup than bottled products So it is the container makers who would shoulder the burden over the longer term 1977 STIMULI Several positive elements in inthe inthe inthe the picture reinforce our optimistic op op- expectations The prime mover of better results of course will be the stronger domestic economic pace Recent readings of the leading economic indicators which many times foreshadow upcoming upcoming upcoming up up- coming trends are pointing toward more optimistic results Among other favorable factors are the good supply and price situation in the sugar industry and the population influx into the southern states where consumption rates are especially brisk The spectacular spectacular spectacular spec spec- price rises in coffee bode well for sales of other beverages Also encouraging for gains is the rising level of personal incomes incomes the greater amounts of leisure time and the further development of existing beverage territories on the part of the major companies The Research Department of Babson's Reports Inc is at this thus time advising clients to retain the common stocks of most leading beverage companies in portfolios for capital appreciation appreciation ap ap- ap purposes For foor investors with adequate cash reserves purchase is recommended of Heublein Inc and Jos Schlitz Brewing Both Roth are listed on the N. N Y Stock Exchange A 1 detailed report of either of these fine companies can be obtained free of charge harge by writing to Babson's Reports Inc Wellesley Hills Mass |