Chicago Tribune from Chicago, Illinois • 80

Chicaao Tr.Dune. Sunday. January 15. 1954 Section 7 3 Army has an expression for where our economy's headed Dill fJeikirk historic turnaround, leaving depressing stop-and-go economic cycles for a long era of sustained economic growth with low inflation. Jerry Jordan, a former member of President Reagan's Council of Economic Advisers, said in 1981 that, if inflation was brought under control, as it has been, the U.S.

could have a recovery that would "just go on and on and on," just like it did in the 1960s, which many Americans remember as normalcy. WOULD THAT history pay homage to these hopes and expectations? Goodness knows the nation needs another good year of recovery Ino matter how it affects the election, and the economic profession especially needs to regain some credibility it has lost, so people will believe its forecasts again. But if this is economic normalcy, what is economic aberration? Here we have a recovery fed by the biggest budget deficits in history, and many economists are saying inflation has been licked. Here we have a dollar that is so strong that the nation's export industries can't compete in world markets, but many economists believe a high dollar is necessary to keep inflation down and wages stable. Here we have jobs being destroyed by new technology in manufacturing, But many economists are WASHINGTON "Normalcy" is a word invented by Warren G.

Harding during the 1920 presidential campaign to describe a war-torn generation's yearning to return to a more stable time. The linguists pounced all over Harding, but he hadn't misread the people. They were for normalcy, clinging nostalgically to a time vaguely, and perhaps incorrectly, remembered, but theoretically possible in their minds. The concept of "normalcy" is creeping back into the national conscience. If you read recent economic literature closely, you'll find almost everyone is talking about a "normal" recovery proceeding in 1984, with inflation remaining more "normal" than it did during the turbulent 1970s.

According to the consensus forecast, the economy is expected to slow down to a more normal 4 to 5 percent growth this year while inflation remains in check, perhaps rising to a 5 percent annual rate. Unemployment is predicted to continue on the downswing. PERHAPS, WE should be uneasy that these forecasts are coming from the same financial institutions, with their computerized economic models, that foresaw an extremely modest recovery in 1983, only to pushing a program of industrialization they say will create more jobs despite automation. HERE WE HAVE interest rates historically high in relation to inflation, yet many economists are confidently, without as much as a hedge, predicting they will neither markedly slow down the economy in 1984 nor prevent business from investing in new plants and equipment. Here we have young people getting out of college' hoping to put their new skills to use in a good job and settling for a low-paying one, but many economists are amazingly sanguine about job opportunities.

Here we have a world debt situation that is still a terrible problem, but many economists have chosen to forget that it could restrain growth. So there you have normalcy a recovery associated with high interest rates, record budget deficits, a strong dollar, automation, lack of job opportunities, world debt and threat of renewed inflation. If we should escape this situation with a long economic expansion without inflation, it would seem to me that we ought to call it not normalcy but abnormal-cy. I'm afraid that the "situation normal" being predicted is the one and the same they talk about so often in the Army. be surprised by an extremely strong one.

But consumers don't appear skeptical. Thev are spending freely and happily, as if normalcy had returned. They want to believe. The policymakers in Washington want to believe, too. The fiscal 1985 budget that President Reagan will unveil in a few weeks will forecast a return to economic normalcy for years to come, with the increase in inflation-adjusted gross national product projected to be steady and strong, inflation to remain under control and budget deficits declining.

Paul Volcker, Federal Reserve Board chairman, has been saying that the U.S. could be on the verge of a l. i i .3 i. goods. Sara Lee is now clearly the leader and innovator in the estimated $100 million supermarket croissant market, spawning a number of competitors, both frozen and fresh.

"It's representative of a new orientation in which Sara Lee develops differentiate products demonstrating superiority said William Blair Co. analyst Tom Kully. SIMILARLY, the corporate charge for new products and more aggressive marketing has resulted in new growth opportunities for Shasta, which produces a secondary line of flavored carbonated diet beverages. With only 3 percent of the hotly competitive soft drink market, Shasta had to search beyond the traditional carbonated beverage market to meet growth objectives set by Consolidated. As a result several years ago, Shasta bought the licensing rights to Capri Sun, a German noncarbonated punch in a distinctive pouch-like 'T i Consolidated Continued from first Business page son said, "but there aren't any that have come as far from where they were." FURTHER.

ANALYSTS expect Consolidated to sustain an earnings growth rate of 11 to 12 percent for the next few vears. For the fiscal year ended July 2, Consolidated, the nation's fourth-largest food and consumer goods company, posted a profit of $171 million, or $5.66 a share, on sales of $6.5 billion. While some growth will come from small, add-on acquisitions the company says it's not interested in any large acquisitions or further diversificationthe bulk is likely to be generated internally from new products and better market penetration. "We're giving them encouragement to come up with ideas, and we'll provide funds for those ideas," Bryan said. Some operating companies already are showing a shrewd ability to seize market opportunities.

The two best examples are Sara Lee's line of frozen croissants and the Capri Sun line of noncarbonated fruit punch. The croissants, an instant hit after being rolled out nationally last year, were the most successful new product line in vears for the Deerfield-based producer of frozen sweet Shasta is working on other new beverage products. "In the past, research and development and quality control concentrated on our line of regular diet soft drinks," said Shasta President Al Piergallini, explaining the change in mindset. "If you came in today, you would see that work continuing, "but many other activities are taking place. "We believe it's important to consider market segments or other beverage areas where we can leverage our distribution, production and sales operations." THE BIGGEST question mark about Consolidated is its Douwe Egberts subsidiary, the leading coffee producer in the Netherlands with sales of about $1 billion.

In addition to problems associated with high-cost facilities, overstaffing and a ponderous management structure, the company's share of the Dutch coffee market dropped to 50 percent from 60 percent in the past two years. Contributing to that was a shift in coffee distribution in the Netherlands, and an increase in the sales of private labels and generic brands. But Douwe Egberts' problems may be fading. Consolidated recently purchased the remaining 35 percent of the company that had been in the hands of other investors, giving Consolidated 100 percent control. At the same time, Consolidated restructured Douwe Egbert's management through a merger with Consolidated Intradanl subsidiary, a profitable Netherlands-based toiletry and household products company.

In addition, Douwe Egberts is expanding to several other where its market shares are gaining. "I'm very comfortable that Douwe Egberts has rebound possibilities," Bryan said. "If it doesn't rebound, then we get a nice cash flow and the business operates very well." PERHAPS, BECAUSE of such an easygoing public attitude, some ana-, lysts find Consolidated a dull company compared with the likes of Camp-' bell Soup which is undergoing a transformation into a much more aggressive marketing company. Tney believe Consolidated needs an-' other large acquisition, and could do even better in the new products de--partment. Bryan doesn't agree.

"The basis of that dullness, if you want to call it that, is that we aren't out playing games from moment to moment, he said. "It's exciting to pretend you might be selling a company, or buying another one, or playing all the games that are around. We're not interested in that. "It seems to me it's an enormously exciting company, one that's particularly so because it's on the upward slope and it must stay there. And it has high aspirations, and it's meeting them.

And as sure as I'm sitting here, they will keep on meeting them." Tribune plolo by Carl Huaaie e. using a type oi paper ana Consolidated Food Corp. Chairman John Bryan: "It seems to me it's Consolidated an enormously exciting company, one that's particularly so because it on the upward slope and it must stay there. And it has high aspirations, and it's meeting them. And as sure es I'm sitting here, they will keep on meeting them." foil "convenience" packaging that requires no refrigeration, Capri Sun was the first product in the rapidly rowing "10 percent juice" market, remium-priced Capri Sun now claims it controls a leading market share nationally against more recent entries by such heavy spenders as Hi-C a division of Coca-Cola, Hawaiian Punch IR.J.

Reynolds and a growing list of others. "Capri Sun was a good execution difficult based on the growing competition, but the brand is expected to more than double its 1983 revenues of $28 million, thus accounting for more than 11 percent of Shasta's sales. Because of Capri Sun's success, based on good package design," said the business development manager for one leading food producer. COMPANY OFFICIALS and analysts acknowledge Capri Sun's ability to hold the lead will become more 1 "mill I ll Jli 1 ili ill Of This unusual municipal bond fund offers attractive yields that are 100 free of Federal income tax. Professionally managed, it offers strong price stability, even though its net asset value may fluctuate.

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