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Show ; SIP i mmkm ENCOURAGING SOFT DRINK PROSPECTS In the face of several operating hurdles existing during 1980, the soft drink firms generally turned in very respectable financial results. During the period, rising raw material costs in particular for sugar coupled with adverse weather conditions in key growing areas kept profit margins under pressure. In addition to these woes, the companies had to contend with the ill effects of an economic contraction in the U.S. Yet in spite of all, year-to-year revenue and profit advances in the first three quarters were gratifying. When final tallies for 1980 are available, we anticipate that full-year gains will be reported generally. More important, though, 1981's outlook is bright and favors a continuation of the advances. SYRUP MAKERS While there are numerous firms involved in soft drink bottling, a lesser number manufacture the syrups, which are then sold to an established network of franchised bottlers. These syrup producers themselves can have broad interests. For example, activities of PepsiCo Inc., include household goods transportation, snack foods, wines, sporting goods, restaurants, and trucking. Likewise, bottlers may maintain several brand franchises. Because of this diversity, investors should ascertain the source and relative contribution of an individual company's revenue and profits in order to assess the pattern of progress accurately. FOREIGN BATTLEGROUND Increasingly, the American soft drink giants must look to foreign markets during the decade of the eighties. While the U.S. accounts for an estimated 40 percent of world soft drink sales, this market is considered mature. By contrast, overseas markets are a more favorable prospect for increases in-creases in per-capita consumption. Indeed, the domestic firms are becoming established in such markets, and even now returns from abroad are very important. For example, Coca-Cola the largest factor in the soft drink market gets close to half of. its revenues from abroad. Owing to the shifting mix of population in U.S. markets, the Research Department of Babson's ; Reports continues to look to the overseas sectors as the future area of growth for the major soft drink firms. NEW PROFIT PRODUCTS In addition to their well-established brands, the soft drink firms are constantly con-stantly striving to widen their product mix. For example, giant Coca-Cola Co., after ten years of product development, has introduced a new post-mix iced tea for fountain service. And bottled waters have gained substantial popularity in the U.S. Several soft drink firms have representation in the bottled water field which has excellent growth prospects, in our opinion. Overall, we feel the new(-er) |