Evening star., 1931-12-29
EARNINGS OF FOOD
FIRMS MAINTAINED
Cash Positions and Inventory
Reductions Result in
Good ShoWingS.
BY C. NJ. CHESTER, Jr.,

BY c. NJ. CHESTER, Jr.,
President, General Foods Corporation.
The food manufacturing picture fol
1881 Is a relatively bright spot on the
business landscape. Favorable factors
are to be found in strengthened finan-
cial positions and in the unprecedented
need for repleniShing inventories.
A recent survey of the comparative
Nuuid positions of l62 large industrial
companies representing many indus
tries shows that cash and securities
held by I3 leading food products COM
panies in that group had increased
5324 per ce, t over 1880 and 58.79 per
cent over the 1929 figures. The CORE
spending gains for the group Of l62
companies as a whole were 1854 per
cent and l1.99 per cent.
inventories Reduced.
The survey also showed that inven-
tories Of these 13 food companies de-
clined 26.77 per cent from 1880 and
1858 per cent from the 1929 figures,
against declines of 2168 per cent and
1856 per cent for the whole group OF
162 companies.
The unusual depletion of inventories
which promises improvement later on.
A recent investigation of the inventory
situation by General Foods disclosed
that many retailers did not have
enough merchandise on hand to put
on a special sale. The limited stocks
prohibited a normal volume OF busi-
ness. This condition, we find, prevails
with the jobber and retailer alike.
Important Improvements have been
made in food manufacturers inventory
control during the last 10 years, dur
ing which the merger movement in
this industry got under way A COM
parative summary of the profits of cor
porationS in the two depreSsionS, 1920
81 and 1930-31, according to recent
compilation, indicates that in 1921 net
profits of 40 food products manutac-
turing companies suffered decline OF
nearly 124 per cent, whereas the de-
cline for 400 induStrialistS was "a per
cent. Much of the trouble in 1921 was
due to inventory losses, but in 1881,
with a number of strongly organized
mergers in the field, with better con-
troll of all their buying activities, the
food business made comparatively
excellent showing.
Mergers Started in 1925.
In 1925 the food companies began
their merger movement. 1t was un-
doubtedly partial result Of this ac-
tivity that leading food products COM
panies closed the year 1880 and 1881
with only a comparatively moderate
decline in net profits. For the first
nine months of 1881 earnings Of a
group Of l6 food companies declined
IA per cent from the corresponding
period in 1880, while larger group of
205 industrial showed decline OF
47 per cent.
The food industry did not neglect
the important work of research and
promotion in 1881. Indeed research is
of vital importance in times of busi-
ness recession. 1t may well be that
new products and inventions will again
help lead us back to prosperity.
Ten years ago almost overnight there
was created the tremendous radio in
duStry, employing tens of thousands
of people, requiring millions Of dollars
worth Of raw and manufactured ma
terials from other industries.
Fifteen years before it was the rapid
growth of the automobile industry
which helped break the back OF de-
preston, and before that the bicycle
fad did its share in easing business
stagnation.
Influence of Innovations.
Today in the food industry, for ex-
ample, new products and new ideas are
being brought into the market. No
single idea may lead the way to buSi-
ness recovery, but collectively the in
fiuence Of several of these innovations
should be felt
The development of quick frozen
foods, for instance, enjoyed period
of great progress in the last II months.
The Birds-eye quick freezing process
was improved and given greater utility
by the invention of mobile apparatus
which has already proved its prac-
ticability in freezing perishable foods at
sources of supply.
In addition to development OF new
or improved products, leading food COM
panies during 1881 applied themselves
vigorously to improving both dtstribu-
ton and production efficiency. Produc-
ton, however, has already been de-
veloped to a high plane, and in look
ing forward into 1882. the industry gen.
orally seems to recognize that problems
pertaining to marketing will be para
mount issues.
Price Trends Studied.
Another important factor is the trend
of commodity prices. Purchasing
agents will try to call the turn on the
price trends and stock up on raw mate
rials at around bottom levels.
The job of making the advertising
dollar do more efficient work than ever
is another high spot for 1882 to analyze.
And last, and by no means least, the
credit situation will have to be given
thorough consideration.
In summary, 1881 has been COM
paratlvely favorable year for food man
ufacturers. The new year raises many
issues in the form of distribution, pro-
duction, purchasing, advertising and
credit. Most Of my contacts indicate a
confidence that conditions will i'm
prove in the not too distant future.
There seems to be little time spent on
general iorecasting or wishing" but
there is a determined effort to conquer
some Of the many problems which
face us