Other consumer nondurables - Industry Overview

James E. Byron

Before reading this chapter, see "Getting the Most Out of Outlook '94" on page 1. It will answer questions you may have concerning data, sources, and references, and the Standard Industrial Classification (SIC) system. For other topics related to this chapter, see chapters 9 (Textiles), 11 (Chemicals and Allied Products), 12 (Plastics and Rubber), 17 (Production Machinery), 19 (Environmental Equipment), 25 (Information Services), 32 (Apparel and Fabricated Textile Products), 38 (Wholesaling), 39 (Retailing), 43 (Drugs), and 47 (Commodity Futures Trading).

LEATHER AND LEATHER PRODUCTS

Industry shipments of leather and leather products increased in 1993 to an estimated $8.7 billion, a gain of about 2 percent over 1992 in constant dollars. A further increase of about 3 percent is expected in 1994, although import competition continues to be a problem for most of these industries. The leather and leather products group is made up of seven industries; nonrubber footwear (SIC 314), leather tanning and finishing (SIC 3111), gloves and mittens (SIC 3151), luggage (SIC 3161), handbags (SIC 3171), small personal leather goods (SIC 3172), and leather wearing apparel (SIC 2386). The distribution of industry shipments is shown in Tables 1 and 2.

[TABULAR DATA OMITTED]

INTERNATIONAL COMPETITIVENESS

U.S. imports of leather products increased about 6 percent in 1993, to about $13.9 billion. The developing countries, including China, accounted for 71 percent of the total. China was the dominant supplier by far, accounting for 41 percent of the total. With the exception of leather tanning and finishing, all of these industries are extremely labor-intensive. Suppliers in most developing countries maintain a substantial cost advantage over U.S. producers because they pay much lower wages. U.S. exports of leather, nonrubber footwear, and leather products were about $1.38 billion in 1993, up about 4 percent from 1992. Thus, leather and leather product imports exceeded exports by about $12.5 billion, with $9.1 billion of this deficit in nonrubber footwear. By value, the ratio of imports to apparent consumption (products shipments plus imports minus exports) averaged about 67 percent for all leather and leather products in 1993. The leather wearing apparel industry had the highest imports-to-apparent consumption ratio, 83 percent, followed by 76 percent for handbags, 74 percent for footwear, 62 percent for gloves, 58 percent for luggage, and 49 percent for personal leather goods. Leather tanning ranked the lowest at 29 percent.

LEATHER TANNING AND FINISHING

Leather tanning and finishing industry shipments increased more than 9 percent in 1993, to an estimated $2.5 billion from $2.29 billion in 1992. Product shipments also increased from $2.33 billion to $2.56 billion. Measured in constant dollars, industry and product shipments both rose about 7 percent. The quantity of leather shipped by U.S. tanners in 1993 increased about 7 percent to the equivalent of 17 million cattlehides from 16 million in 1992. Included in these totals are leathers produced from hides and skins of cattle, calves, goats, sheep, lambs, cabretta, horses, and other animals, fish, birds, and reptiles.

This industry includes establishments engaged in tanning, currying, and finishing raw or cured hides and skins into leather. Also included are converters and dealers that buy hides and skins or leather and contract with tanners or finishers to process these products. Between 1982 and 1987, the U.S. tanning industry experienced considerable contraction and consolidation. The number of companies declined from 342 to 308, and the number of establishments, including plants, dropped from 384 to 338. Production declined about 25 percent over this period. The largest number of tanning establishments are in New York, Massachusetts, California, Wisconsin, Pennsylvania, New Jersey, and Texas. In 1993, only an estimated 110 establishments of significant size were wet-processing tanners directly tanning raw hides and skins into leather. Industry employment in 1993 was estimated at 11,900, down about 2 percent from 1992. The number of production workers also declined, from 10,200 in 1992 to 10,000 in 1993.

The footwear industry is the tanning industry's largest market, consuming an estimated 53 percent of leather shipments in 1993. About 48 percent of all nonrubber footwear produced in the United States was made with leather uppers in 1992. In mid-1993, upper leather production was up 15 percent over the same period in 1992 because of increased domestic footwear production and strong export demand. Production of sole leather remained unchanged over the period. About 15 percent of domestically manufactured nonrubber footwear is produced with leather soles. A long-term trend toward cheaper synthetic materials has affected use of leather for outsoles. These synthetics have been made even more competitive by new equipment and technology that reduce labor costs in shoe bottoming operations. Production of leather for the handbag and personal leather goods industries declined in 1993, but glove and garment leather production increased. Demand for luggage and attache case leathers was stable.

The fastest-growing and potentially largest markets for leather in the United States are those for automotive and furniture upholstery. In 1987, upholstery leather shipments represented 21 percent of all product shipments by value, up from 7 percent in 1982. Industry estimates indicate that this share has since grown to more than 35 percent in 1993. More than 20 percent of all upholstered furniture is done in leather. Leather is available as an option in most medium-priced automobiles and is a standard interior in high-priced foreign and domestic models. Exports of U.S. automotive upholstery leather continued to grow substantially in 1993, particularly to Japan. U.S. leather is also used almost exclusively in Japanese autos made in the United States.

Production of wet-blue, or partially processed chrome-tanned, cattlehide leather increased about 12 percent in 1993 over 1992, and represents about 32 percent of domestic production. The largest U.S. meat packer operates several wet-blue tanning facilities near its packing plants and is the largest producer of wet-blue leather.

Hide Supply Increases

For the second consecutive year, the quantity of cattlehides derived from total commercial slaughter in the United States increased about 2 percent in 1993 to an estimated 33.5 million hides. Slaughter declined from an all-time high of 43 million head in 1976 to 33.7 million in 1979, increased to 37 million in the mid-1980's, but declined again to 32.7 million in 1991. The supply of cattlehides depends solely on the demand for meat, for cattlehides are only a by-product of the meat-packing industry. A long-term decline in U.S. consumption of red meat discouraged growers from rebuilding cattle herds despite favorable feed-grain prices through most of the 1980's.

Cattle inventory on January 1, 1993 was up 1.3 percent over the same date one year earlier and was expected to increase an additional 1.6 percent by January 1, 1994 to 102.5 million head. This increase, accompanied by a similar increase in the calf crop in 1993 and further withholding by growers of more heifers for breeding stock, will assure that cattle inventory will expand in 1994. A further increase in slaughter to 34 million head is expected in 1994 and an even larger increase should occur in 1995.

Hide and Leather Prices Up

For January-July 1993, the Producer Price Index (PPI) for cattlehides averaged 179.3, up 6.4 percent over the same period in 1992. The index peaked at an all-time high of 217.8 (1982 = 100) in 1990 and then declined about 21 percent to 171.4 in 1992. The index was expected to be up only 4.5 percent for all of 1993. For January-July 1993, the PPI for leather averaged 168.5 (1982 = 100) and was up 3.3 percent over the same period in 1992. The leather index was expected to rise about 2.5 percent in 1993 over 1992. Increased supplies of cattlehides and weaker demand for leather are expected to restrain hide and leather prices during 1994.

[TABULAR DATA OMITTED]

INTERNATIONAL COMPETITIVENESS

Combined exports of raw and wet-blue cattlehides totaled 20.5 million hides in 1993, down about 8 percent from 1992. Expressed as a percentage of total commercial slaughter, the quantity exported declined from 68 percent in 1992 to 61 percent in 1993. Raw cattlehide exports declined about 6 percent, to an estimated 18 million pieces; wet-blue cattlehide exports dropped almost 20 percent to more that 2 million pieces. During the first half of 1993, the largest importers of U.S. raw cattlehides were South Korea (47 percent), Japan (18 percent), Taiwan (12 percent), and Mexico (11 percent). Together, these four countries accounted for 88 percent of the U.S. export total.

The United States is the world's largest hide exporter. Many of the developing countries that produce large quantities of hides and skins, including Argentina, Brazil, and India, restrict exports of domestically produced hides, thus encouraging growth of their own tanning and leather products industries. The restrictions depress the prices foreign tanners and leather products manufacturers pay for raw materials and indirectly subsidize production and exports of leather and leather products, large quantities of which are exported to the United States.

The United States produces more than 4 million calfskins annually and exports almost all of them. The only remaining U.S. calf tanner closed in early 1993. Because of limited supplies of imported raw materials, goat and kid leathers are no longer tanned in significant quantities in the United States. Most of the 3.5 million skins derived from domestic sheepskin slaughter are either tanned into shearlings or garment leather or are exported. The United States imports more than two million pickled sheepskins annually, primarily for producing grain or suede garment leather. Much of this leather is exported to the Far East for manufacture into finished goods. In 1992, less than 10 percent of tanning industry production, as measured by equivalent cattlehide units, came from these types of hides and skins. More than 90 percent of the leather was produced from U.S. cattlehides.

Leather Exports Up

U.S. leather exports increased more than 7 percent in 1993, to an estimated $758 million, in response to rising demand from shoe and leather products producers in the Far East. The United States exports leather to more than 80 countries. During the first six months of 1993, the largest importer, Japan, accounted for 22 percent. Of this, automotive upholstery leather, which is exempt from the global tariff-rate quota Japan imposes on other leather imports, made up more than 84 percent. Hong Kong, a gateway for U.S. leather exports to China, captured a 14-percent share in the first half of 1993, followed by the Dominican Republic, 9 percent; Mexico, 8 percent; and Canada and South Korea, 7 percent each.

Cattlehide and calf leather made up 85 percent of all U.S. exports in the first half of 1993. Wet-blue cattlehide leather, including split leather, accounted for 18 percent. South Korea was the largest importer of U.S. wet-blue leather for the period.

U.S.-produced upholstery leather accounted for 26 percent of total U.S. leather exports for January-June, 1993. Of this amount, Japan, the largest market, took 70 percent. Taiwan and Mexico recorded large percentage increases over the same period in 1992.

First-half 1993 U.S. leather exports to beneficiary developing countries (BDCs), which receive U.S. tariff concessions under the Generalized System of Preferences (GSP) section of the Trade Act of 1974, made up 28 percent of U.S. leather exports for the period, up from 26 percent for all of 1992.

Leather Imports Also Up

U.S. leather imports increased about 17 percent in 1993 to an estimated $738 million. Part of the reason was an increase in U.S. demand for shoe upper leather, which led to increased imports of calf, kid, and cattlehide leathers.

The United States imports leather from more than 70 countries. During the first six months of 1993, the largest suppliers were Argentina and Italy each with a 15-percent share of the total. U.S. leather imports from Argentina were up 24 percent for the six-month period over the same period in 1992. Italy's were up 40 percent. Other suppliers were the United Kingdom, 10 percent; Brazil, 7 percent; Uruguay, 5 percent; and Thailand, 4 percent.

Cattlehide and calf leather accounted for about 80 percent of all U.S. leather imports during January-June 1993. Argentina was the largest supplier. Sheepskin leather accounted for 5 percent and Italy was the largest supplier. Goat and kid leather made up 4 percent and Pakistan and India were the largest suppliers. Pigskin leather accounted for 3 percent, with Taiwan the largest supplier.

For January-June 1993, the BDC's share of total U.S. leather imports was 48 percent, unchanged from 1992. Most developing countries have converted more of their domestic raw material supplies to leather and leather products for export markets. Because tanning capacity in these countries often exceeds domestic raw material supply, many also import hides and skins from the United States and other developed countries.

Trade Agreements

In 1986, the United States reached an agreement to settle a long-standing dispute with Japan over that country's import quotas on leather and leather footwear, which were found to be illegal under the General Agreement on Tariffs and Trade (GATT). Japan replaced these import quotas with legal tariff-rate quotas, whereby the existing tariffs of 20 percent on leather and 27 percent on leather footwear now apply to quantities within the quota and a 60-percent rate applies to imports in excess of quota amounts. The agreement expired in 1991, but Japan continues to enforce the quota system, which offers trade protection to the underprivileged Barukumin, a minority group that historically has worked in Japan's tanning and meat packing industries.

Japan's bovine leather global quotas were an estimated 570,000 square meters in 1993, only 1 percent of Japan's total bovine leather market. Almost all is produced from imported raw cattlehides, most of which come from the United States. Both the U.S. Government and the European Community have addressed the issue of Japan's tariff-rate quota system on leather and leather footwear in the Uruguay Round of multilateral trade negotiations. Japan has offered a moderate increase in the quota on leather footwear but no further liberalization of the quota on leather.

In U.S.-Mexico negotiations on a North American Free Trade Agreement (NAFTA), Mexico would not agree to a U.S. request for immediate reciprocal elimination of both U.S. and Mexican tariffs on leather. As a result, NAFTA would immediately eliminate tariffs on about 72 percent of all U.S. leather exports to Mexico. An additional 13 percent would be eliminated within five years and the balance of 15 percent over 10 years. NAFTA would immediately eliminate tariffs on 97 percent of all U.S. imports of leather from Mexico, although most of Mexico's bovine leather exports to the United States already enjoy duty-free status under the U.S. Generalized System of Preference program.

In September 1990, the Department of Commerce determined that Argentina's cattlehides were selling in Argentina at artificially low prices because of that country's export embargo on hides. U.S. tanners had alleged that the embargo indirectly subsidized exports of low-priced Argentine leather to the United States. The Commerce Department directed the Customs Service to levy countervailing duties (CVDs) averaging 15 percent on almost all types of leather imported from Argentina until further notice. These duties have narrowed the price gap between U.S. and Argentine leathers in the U.S. market and reduced the quantity of U.S. leather imports from Argentina during 1991 and 1992 compared with 1990. However, U.S. leather imports from Argentina for the first half of 1993 were up 24 percent over the same period in 1992, and the U.S. leather industry was also concerned that Argentine leather was being transshipped through other South American countries to avoid the CVDs. The Commerce Department was expected to conduct a compliance review of the CVD order in late 1993.

ENVIRONMENTAL PROFILE

The Environmental Protection Agency (EPA) promulgates and administers environmental regulations affecting the tanning industry. The EPA has established standards to control pretreatment of liquid wastes that tanners discharge indirectly to publicly owned waste treatment facilities. These standards do not require biological treatment, but they require control of sulfides, chromium, and acidity. Most tanners meet these Federal standards, although local restrictions and more stringent standards in some states have forced other tanners to close or to confine production to the processing of wet-blue or crust leathers that reduce the quantity of pollutants.

EPA standards for tanneries that discharge directly into waterways and for tanners constructing new plants require control of conventional pollutants, such as solids and biological oxygen demand, in addition to sulfides, chromium, and acidity. These tanners must operate with EPA-approved National Discharge Elimination System (NDES) permits. Control of these wastes require both primary and secondary (biological) treatment. In the future even tertiary treatment may be required if the EPA tightens the standards or broadens them to include other pollutants such as ammonia, biocides, chlorides, and surfactants. However, control of these waste products can probably be achieved through less costly process modification.

The EPA may also end its exclusion from hazardous waste regulation waste scrap leather, wet-blue trimmings and shavings, and tannery sludges that contain chromium. The reason is that in land disposal the non-toxic trivalent chromium in these products may be oxidized to the toxic hexavalent form. The majority of chromium-containing solid wastes would then be classified as hazardous and require treatment prior to land disposal. The industry has developed and is adopting new tanning systems that will use other non-toxic metal salts to replace some or all of the chromium currently used. Vegetable, synthetic resin, and other organic tanning materials can also be substituted for some of the chromium. Tanning systems that recycle chromium are extensively used throughout the industry to reduce concentrations in the final effluent.

The industry has curbed emissions of volatile organic compounds by adopting low-solvent or solvent-free finishing (coating) technologies. The 1990 Clean Air Act requires a 90-percent reduction by 1994 in all organic compounds from the industry baseline recorded in the 1987 Toxic Release Inventory.

A consent decree with citizen environmental groups requires the EPA to develop new industrial effluent limitation guidelines and pretreatment standards and to revise existing ones. The EPA will initiate a study of the tanning industry in 1994 and publish a report on its findings and recommendations by late 1995. The industry does not concede that revisions to existing leather tanning guidelines are necessary. Rather, it contends that attempts to push manufacturing processes and wastewater technology beyond present levels could severely burden the industry's financial condition without significantly reducing the risk to human health or the environment. Under the Clean Water Act, the EPA has discretion over whether to proceed with guideline revisions based on such cost/benefit risk assessments.

Outlook for 1994

Leather shipments are expected to increase to about 18 million equivalent cattlehide units in 1994, representing constant-dollar value growth of about 6 percent. Increased domestic slaughter will make more hides available for U.S. tanners and restrain leather prices and keep them competitive with substitute materials. U.S. leather exports will continue to grow at a rate of about 10 percent in 1994.

Long-Term Prospects

The industry's longer term outlook appears to be good. The U.S. hide supply will continue to increase and prices could drop slightly. Such conditions provide tanners with more working capital. Low interest rates will continue to stimulate investment in new equipment and technologies that have made the U.S. tanning industry more productive than any in the world. Wet-blue leathers' share of total U.S. cattlehide production will continue to increase. Larger proportions will be further processed in the United States and exported as crust or finished leathers. U.S. Government trade actions could help give the U.S. tanning industry greater access to international raw material and leather markets, thereby improving its opportunities for solid long-term growth.

Additional References

Membership Bulletin, Leather Industry Statistics, 1993 Edition, Leather Industries of America, Inc., 1000 Thomas Jefferson St., NW, Suite 515, Washington, DC 20007. Telephone: (202) 342-8086. Leather, International Journal of the Industry (monthly), and International Leather Guide, 1993, Benn Publications Ltd., Sovereign Way, Tonbridge, Kent TN9 1RW, UK. Telephone: 44(0) 732 364422. Journal of the American Leather Chemists Association, Leather Industries of America Research Laboratory, Campus Station, Cincinnati, OH 45221. Telephone: (513) 556-1200.

SHOES AND SLIPPERS

The nonrubber footwear industry (SIC 314) produces all types of footwear except rubber protective and rubber-soled fabric-upper (the traditional "sneakers") footwear, both of which are classified in SIC 3021. Nonrubber footwear is constructed with leather, vinyl, plastic, or textile uppers or combinations of these materials for both genders and all ages. In 1993, industry shipments increased about 4 percent to an estimated $3.9 billion, from $3.8 billion in 1992. In constant dollars, the increase was more than 1 percent. Unit shipments increased less than 1 percent to 172 million pairs in 1993, from 171 million pairs in 1992. By quantity, the rate of change varied among the industry's four major sectors: house slippers (SIC 3142) were down 5 percent; men's footwear, except athletic (SIC 3143) increased 1 percent; and women's footwear, except athletic (SIC 3144) and footwear, except rubber, NEC(SIC 3149) were up between 3 and 4 percent each.

Production Up

In 1993, production of nonrubber footwear increased almost 1 percent to more than 165 million pairs, from more than 164 million pairs in 1992. This marked the first annual increase since 1988 and only the fourth since 1968, when production peaked at about 642.4 million pairs. Over the subsequent 25-year period, U.S. production has declined at a compound annual rate of about 5 percent. In 1993, production, by quantity, was up for three sectors and down only for slippers.

House Slippers

Shipments of house slippers declined about 5 percent to more than 45 million pairs in 1993. Their product value dropped to an estimated $268 million. Slippers accounted for 26 percent of the quantity but only 7.5 percent of the value of total nonrubber footwear product shipments, primarily because most slippers are produced from lower-cost vinyls and textiles. The ratio of imports to apparent consumption for slippers was about 28 percent by quantity, the lowest of the four sectors.

Men's Footwear, Except Athletic

Men's nonathletic footwear includes dress and casual shoes, work shoes, and boots. Shipments of men's footwear increased about 1 percent, to 43.3 million pairs in 1993 from 42.8 million pairs in 1992. Value increased about 3 percent in 1993 to an estimated $1.84 billion. Men's footwear accounted for 25 percent by quantity and 51 percent by value of nonrubber footwear shipments in 1993. More than 90 percent of men's footwear was made with leather uppers. By quantity, imports as a percentage of total consumption of men's footwear were an estimated 76 percent in 1993.

Women's Footwear, Except Athletic

Shipments of women's footwear increased more than 3 percent to 58 million pairs in 1993. Value increased about 6 percent to an estimated $1.3 billion. Women's footwear accounted for 34 percent by quantity and 35 percent by value. Import penetration for women's footwear was an estimated 90 percent.

Footwear, Except Rubber, NEC

Shipments of footwear for youths and boys, misses, children, infants and babies, and athletic and other miscellaneous types of footwear increased about 3 percent to an estimated 25 million pairs in 1993. Value increased about 4 percent to $250 million. Shipments of footwear in this group accounted for 15 percent by quantity and 7 percent by value. Production of misses' and athletic footwear increased in 1993, but children's and infants' and babies' footwear declined.

Consumption of athletic footwear, including imports and domestic production of rubber-fabric sneakers," reached a high of about 565 million pairs in 1992 but declined about 1 percent in 1993. Athletic footwear represented about 38 percent of combined nonrubber and rubber-fabric footwear consumption of about 1.5 billion pairs in 1993. Imports of juvenile footwear were up about 7 percent in the first half of 1993 from the same period in 1992, but imports of athletic nonrubber footwear declined.

Footwear Consumption Up

Apparent consumption of nonrubber footwear increased about 2 percent in 1993 to an estimated 1.1 billion pairs. Per capita consumption also increased for the third consecutive year by about 1 percent, to 4.43 pairs. Driven by demand for imported nonrubber athletic footwear, per capita consumption increased sharply during the early 1980's, peaking at 4.8 pairs in 1986. Per-capita consumption declined to 4.3 pairs in 1990 and has increased only slightly since then. Per capita consumption of combined nonrubber and rubber/canvas footwear was 5.65 pairs in 1993, down from 1992 because of a drop in "sneaker" consumption of about 6 percent.

Personal consumption expenditures (PCE) on both rubber and nonrubber footwear were up only 0.4 percent in 1993 to an estimated $32.4 billion. However, PCE on footwear in constant (1987) dollars were down almost 2 percent. Inventories at all levels of distribution increased during the year, as both sales and prices at the retail level weakened.

Retailers' outdoor business was good throughout 1993. Lightweight hikers, waterproof boots, outdoor crosstrainers, and sport sandals were in demand and consumption of these types is expected to grow in 1994. Styles shifted away from the athletic look to an outdoor look but incorporated the same comfort technology, such as padded linings, collars, and insoles that made athletic shoes so popular. Water-resistant leather uppers, including suedes, predominated, especially in boots.

Factory Prices, Profits Up

The average factory price for nonrubber footwear increased about 2 percent to an estimated $21.16 per pair in 1993. This was the smallest annual increase in three years and reflected the intense pressure on prices from imported footwear. The producer price index (PPI) for nonrubber footwear was up almost 2 percent for January-June 1993, compared with the same period in 1992.

According to an analysis of publicly held footwear companies, six producers that manufactured athletic footwear overseas earned the most profits in 1992. The entire group of 31 companies saw total sales increase 7 percent and profits rise 22 percent over 1991. Six athletic footwear companies accounted for 60 percent of the group's sales and 80 percent of its profits. Nike was among the top five performers in seven financial ratios and Reebok was similarly ranked in four ratios. But with slower growth in athletic footwear, composite performances for the group were not as solid as they have been. The financial performance of individual companies, particularly among the small and medium-sized manufacturers, was much improved in 1992 over 1991. Median return on sales for the group grew from nearly 3 percent in 1991 to more than 4 percent in 1992, and median return on equity rose from more than 7 percent to slightly more than 11 percent over the same period.

An article in Footwear News (July 1993) indicated that consumers' footwear buying habits had shifted to form, function, and comfort and away from brands. Many were seeking lower-priced goods in strip shopping centers and outlet stores instead of in shopping malls. The same article found that, as a group, 18 publicly held U.S. footwear resource companies (companies that either produce domestically or source abroad) reported a 4.8 percent increase in sales in 1992 over 1991, but a 19.5 percent decline in profits. However, 94 percent of the group's total profits came from the two largest athletic footwear producers. Four companies, including the third-largest athletic producer, recorded losses in 1992. The net profit-to-sales ratio for the group was 4.1 percent in 1992, down from 5.4 percent in 1991. In 1992, the profit-to-equity ratio was 14.1 percent, down from 18.7 percent in 1991. For a group of five footwear retailers, the same survey showed that sales increased 7.8 percent in 1992 over 1991, and profits were up 9 percent.

Plants, Employment Down

The Census of Manufactures for 1987 lists 379 companies operating 471 establishments in the nonrubber footwear industry. In 1966, about 990 plants were in operation. Based on published reports of plant closings, these declines have continued since 1987. Ten closings were recorded in 1992. Many of the plants recently closed were owned by the largest manufacturing and retailing companies which chose to source more footwear from lower-cost producers overseas. In 1993, total employment declined about 4 percent to an estimated 48,200. Production employment declined also by about 5 percent.

About 47.5 percent of nonrubber footwear produced in 1992 had leather uppers, down from 51 percent in 1991. About 15 percent had leather outsoles. Leather upper use was highest in men's footwear (95 percent) and women's footwear (65 percent). Juvenile types averaged about 31 percent and athletics 75 percent.

New Technology

The industry considers new technology essential to increase productivity and lower costs. Increased use of computers has already integrated design, management, manufacturing, and marketing functions, emphasizing such non-price factors as quality and quick delivery in competition with imports. Emphasis has been placed on linking computer-aided design (CAD) and computer-aided manufacturing (CAM) systems and software. As a result, tooling can be produced from CAD data and linked to auto-stitchers, milling, and turning machines. There has been a resurgence of interest in three-dimensional CAD, which produces more accurate shoe patterns and reduces the number of prototypes required.

Computers also enable manufacturers to combine several operations or machines under fewer operators, reducing handling time and improving quality. Computerized robots have also been developed for handling and transferring operations within and between these production modules. Much of this new technology has been developed and used in Europe and, depending on the availability of capital, can be readily transferred to Far Eastern producers. However, the labor-saving benefits of such technology would not be as great for producers with low unit labor costs. The net effect of such technology would be to reduce the costs of U.S. production relative to Far Eastern production, although the latter will continue to maintain a competitive advantage for most footwear.

[TABULAR DATA OMUTTED]

INTERNATIONAL COMPETITIVENESS

Nonrubber footwear imports rose almost 3 percent in 1993 to an estimated 1 billion pairs, from 974 million pairs in 1992. The customs value increased more than 9 percent to $9.4 billion. The unit value of nonrubber footwear imports in 1993 was about $9.39, up from 1992, but still almost 60 percent below the unit value of domestic production.

Imports increased from 175 million pairs in 1968 to 405 million pairs in 1979, when they stabilized during a four-year period of Orderly Marketing Agreements (OMAs) with South Korea and Taiwan. Following expiration of these OMAs in June 1981, imports increased by more than 100 million pairs a year until 1986, reaching 941 million pairs. Following a decline to less than 900 million pairs in 1989, nonrubber footwear imports rose to the record level of 1 billion pairs in 1993. Over the 25-year period since 1968, imports have increased at a compound annual rate of about 7 percent.

During the first six months of 1993, the five largest suppliers, by quantity, of nonrubber footwear to the United States were China (56 percent), Brazil (12 percent), Indonesia (8 percent), Taiwan (almost 6 percent), and the Republic of Korea (4 percent). These five countries accounted for nearly 85 percent of all U.S. nonrubber footwear imports for the six-month period. Although the United States imported nonrubber footwear from more than 90 countries during this period, only four other countries - Italy, Thailand, Spain, and Hong Kong - captured more than 1 percent of U.S. nonrubber footwear imports.

U.S. imports of nonrubber footwear were up nearly 10 percent for the first six months in 1993 compared with the same period in 1992. Imports from China rose 28 percent and were expected to increase by 140 million pairs in 1993 to almost 650 million pairs. More production continued to shift to China from Taiwan and Korea, formerly the two major exporters, because of lower costs. A large measure of technological and financial support for mainland China's rapidly expanding footwear operations comes from Taiwanese manufacturers. Indonesia, up 23 percent, and Brazil, up 16 percent, both recorded substantial export growth to the United States during the period January-June 1993 compared with the same period in 1992. Korea's exports to the United States dropped 45 percent and Taiwan's declined 37 percent.

China accounted for more than 35 percent of U.S. imports of nonrubber footwear with leather uppers during January-June, 1993. In addition, Brazil (23 percent), Indonesia (9 percent), Korea (8 percent), and Italy (6 percent) ranked in the top five suppliers, accounting for more than 80 percent of the total. China and Brazil were the largest suppliers of men's leather footwear. Brazil, China, and Italy were the largest suppliers of women's leather footwear, and China and Brazil were the largest suppliers of juvenile footwear. China (40 percent) and Indonesia (25 percent) were the largest suppliers of leather athletic footwear. China was the largest supplier to the United States in all 19 major gender or material subcategories of nonrubber footwear imports except women's leather footwear, where it ranked second behind Brazil.

U.S. leather footwear imports accounted for 53 percent of all nonrubber footwear imports during January-June 1993, unchanged from the same period in 1992. The import share of footwear with vinyl or plastic uppers for January-June 1993 was 44 percent, and of items with textile uppers 3 percent. The import share with leather uppers has dropped from a high of 59 percent in 1990 due to the substitution of cheaper vinyl, plastic, and other materials for more expensive leather. For January-June 1993, leather's share was highest for athletic and men's nonrubber footwear imports and lowest for juvenile and slipper types.

U.S. manufacturers export ever larger quantities of cut footwear parts to developing countries, where they are assembled and re-exported to the United States as finished or partly finished footwear. Under the U.S. Harmonized Tariff Schedule Heading No. 9802), duties are assessed only on the value-added content. Moreover, U.S. duties on partially finished but unlasted nonrubber footwear are less than 5 percent, compared with 8.5 percent or more for completed leather footwear. Frequently, final manufacturing operations that require less labor, such as bottoming, finishing, and packing are performed in the United States. For January-June 1993, such partially completed leather footwear imports totaled more than 13 million pairs, up about 12 percent over the same period in 1992. The largest suppliers were the Dominican Republic, Mexico, Thailand, India, and China.

Exports Down

U.S. exports of nonrubber footwear declined about 4 percent in 1993 to more than 20 million pairs. Value declined more than 1 percent to an estimated $337 million. The average unit price was about $16.44, up from $15.98 in 1992. U.S. producers compete effectively in high-cost developed country markets, including all of the European Community countries. European demand was steady for U.S. branded men's moccasins, boat shoes, hiking boots, Western boots, and work boots.

The United States exported 10 million pairs of nonrubber footwear valued at $156 million during the first half of 1993. Mexico took more than 16 percent of the total, by quantity, followed by Canada (9 percent), Russia (8 percent), Poland (8 percent), Japan (7 percent), France (5 percent), and the United Kingdom (4 percent).

U.S. exports of nonrubber footwear to Mexico were made up largely of low-priced juvenile types with vinyl uppers. For the first half of 1993, U.S. footwear exports to Russia were up 20 percent over the same period in 1992 by quantity, and included mostly men's and women's leather footwear.

U.S. exports of nonrubber footwear to Japan were unchanged in the first half of 1993 compared with 1992. About 24 percent of these exports were men's leather types, and 43 percent were athletic types. The latter are exempt from Japan's stringent global tariff-rate quotas on leather non-athletic footwear. These quotas and required licensing procedures restrict Japan's leather footwear imports and discourage U.S. manufacturers from developing the Japanese market. Japan's quota of about 7 million pairs annually in 1993 represents only a small fraction of its leather footwear market, which is estimated to exceed 180 million pairs a year.

Trade Legislation

Several attempts by Congress to pass footwear import quota legislation since 1985 failed to survive presidential vetoes, and it is very unlikely that further attempts will be made. Legislation extending the Caribbean Basin Initiative (CBI) passed in late 1990, and continues to exempt footwear and leather products, among others, from duty-free status. Footwear is statutorily exempt from duty-free treatment accorded beneficiary developing countries under the Generalized System of Preferences (GSP) program.

Most U.S. producers were concerned about increased imports from Mexico following the removal of duties on footwear under the North American Free Trade Agreement (NAFTA). NAFTA provides for a 15-year staged reduction of U.S. duties on rubber footwear, including rubber-fabric types. These U.S. duties range from 37 to 67 percent. Most nonrubber footwear, including leather types which are dutiable at 8.5 to 12 percent, would receive a shorter phaseout period of 10 years. NAFTA rules of origin for footwear would require that non-north American parts undergo a tariff-shift at the tariff heading level and that footwear meet a regional content requirement of 55 percent. These strict rules are intended to ensure that third countries could not use Mexico as an export platform or transhipment site to gain duty-free access to the U.S. market. U.S. footwear imports from other Central and South American countries could also increase significantly if accorded duty-free status under Administration-proposed trade initiatives with these countries.

Outlook for 1994

Shipments of nonrubber footwear are expected to increase about 1 percent in 1994, to 174 million pairs. Shipments will increase in three sectors: men's footwear by 2 percent to 44 million pairs; women's footwear by 3 percent to 60 million pairs; and footwear, except rubber NEC, by 1 percent to 25.5 million pairs. Shipments of slippers will decline about 2 percent to 45 million pairs. Imports, by quantity, are expected to increase 1 percent and exports by 7 percent. Consequently, apparent consumption will increase only 1 percent and per capita consumption will remain unchanged. Import penetration will remain unchanged from 1993 at 87 percent of apparent consumption.

Long-Term Prospects

The production of footwear has become a global business. The industry is dominated by imports. Large domestic manufacturers, importers, wholesalers, and retailers continue to divert product sourcing to countries with abundant low-cost labor. Per capita consumption of footwear will continue to decline because of demographic changes as baby boomers age. Consumption of casual footwear will increase as athletic footwear growth slows. Consumer demand will be for high-quality, comfortable footwear with good fit.

The industry's capacity to respond quickly and effectively to such changes in the market has improved significantly. However, success in this area may also help large Asian producers such as China and Indonesia as these countries adopt some of the new technology. Intense competition for leather footwear is also expected from Mexico and other Central and South American suppliers if these areas receive duty-free treatment under newly negotiated trade agreements for footwear. Faced with increased lower-cost foreign competition and static domestic consumption, the industry will have great difficulty achieving real long-term growth.

Additional References

Call the Bureau of the Census at (301) 763-4100 for information on how to order Census documents.) Footwear, Current Industrial Report, MQ31A (quarterly, with annual summary). Bureau of the Census, Industry Division, U.S. Department of Commerce, Washington, DC 20233. Telephone: (301) 763-5895. Nonrubber Footwear Quarterly Statistical Reports, U.S. International Trade Commission, Washington, DC 20436. Telephone: (202) 252-1000. Footwear Manual, 1993, Footwear Industries of America, Inc., 1420 K St. NW, Washington, DC 20005. Telephone: (202) 789-1420. Footwear (weekly), Fairchild Publications, 7 West 34th St., New York, NY 10001. Telephone: (212) 630-3800. American Shoemaking (monthly), World Footwear (monthly), and American Shoemaking Directory, 1993; Shoe Trades Publishing Co., Inc., 61 Massachusetts Ave., Arlington, MA 02174. Telephone: (617) 648-8160.

LUGGAGE AND

PERSONAL LEATHER GOODS

The luggage and personal leather goods industries produce a wide variety of consumer goods, including leather gloves and mittens (SIC 3151); luggage (SIC 3161); women's handbags (SIC 317 1); personal leather goods (SIC 3172); and leather and sheep-lined clothing (SIC 2386).

Combined industry shipments for these five industries declined about 1 percent to $2.3 billion in 1993 from $2.33 billion in 1992. The value of product shipments also declined about 1 percent to $2.12 billion, the result of reduced expenditures for travel/tourist accouterments.

INTERNATIONAL COMPETITIVENESS

Because labor costs represent such a high proportion of total production costs, leather and personal leather goods industries encountered significant import competition, especially from developing countries where wage rates are far below those in the United States. China has rapidly become the dominant supplier to the United States of all these products. In 1993, the value of imports of luggage and personal leather goods declined about 2 percent to an estimated $3.75 billion. By value, the ratio of imports to apparent consumption was 67 percent, unchanged from 1992. The value of exports for the group increased about 4 percent to $288 million and solid export growth was achieved by the leather wearing apparel and handbag industries.

Leather Gloves and Mittens

The U.S. leather glove and mitten industry is composed of two product segments: work gloves and mittens, which account for an estimated 80 percent of domestic production; and dress gloves and mittens, which account for 20 percent. These products are made either entirely of leather or of leather and other materials, such as cotton, wool, and nylon.

Product shipments of gloves and mittens increased about 6 percent in 1993, reaching $143 million. Total employment of 2,600 was up about 5 percent from 1992. Production employment in 1993 increased more than 5 percent to 2,300. Apparent consumption of gloves and mittens rose about 15 percent in 1993 over 1992 to $339 million.

Imports increased about 20 percent in 1993 over 1992, to $209 million, or 62 percent of apparent consumption. Principal sources of imports by quantity were China (83 percent), Hong Kong (5 percent), and the Philippines (3 percent).

Export of leather gloves and mittens rose slightly in 1993 to about $13 million. However, large quantities of these items were cut parts shipped to Mexico for assembly and eventual reentry into the United States as finished gloves. Under section 9802 (formerly 807) of the Harmonized Tariff Schedule, these items are subject to U.S. duty (currently 14 percent) but only on the value-added content.

Luggage

The U.S. luggage industry produces a wide variety of products, including suitcases, briefcases, hand luggage, tote bags, trunks, occupational cases, and musical instruments cases. Materials include leather, plastics, textiles and various combinations. Leather use is highest in attache cases and briefcases.

In 1993, the value of luggage product shipments increased about 1 percent to $1.1 billion. Lower consumer confidence based largely on an uncertain employment outlook prompted many individuals to restrict their travel in 1993 and limit luggage purchases. Although apparent consumption of luggage increased by 1 percent, this was well below the 5 percent annual growth in consumption recorded between 1989 and 1992. The luggage industry's total employment declined about 3 percent in 1993. Production employment increased about 1 percent.

Imports of luggage rose to $1.33 billion in 1993 and represented 58 percent of apparent consumption. By quantity, the largest foreign suppliers were China (66 percent), Taiwan (12 percent), Korea (5 percent), and Thailand (5 percent).

In 1993 U.S. luggage exports declined about 2 percent from 1992 to $139 million. Japan and Canada were the largest markets for U.S. exports.

Handbags

The U.S. handbag industry produces women's handbags and purses of leather and other materials, except precious metals. About 62 percent of the domestic handbags shipped in 1993 were made of leather. Handbag product shipments declined about 10 percent in 1993 to an estimated $336 million. Total industry employment dropped about 5 percent to 5,200. Production employment declined about 10 percent to 3,500. Apparent consumption of handbags in 1993 declined about 2 percent from 1992 to an estimated $1.2 billion.

Handbag imports totaled $906 million and accounted for 76 percent of apparent consumption in 1993. Foreign suppliers with the largest share, by quantity, were China (80 percent), Korea (6 percent), and India (4 percent).

U.S. exports of handbags increased about 18 percent to an estimated $41 million in 1993. Mexico was the largest market by quantity, accounting for about 51 percent. However, most of these exports were cut parts for handbags that were assembled in Mexico and re-exported to the United States as finished goods. Japan was the leading market for finished U.S. handbags, taking an estimated 38 percent by value, or almost $14 million for 1993.

Personal Leather Goods (Flatgoods)

Manufacturers in this industry sub-sector produce such items as wallets and billfolds, french purses, and cases for eyeglasses, cigarettes, and keys. These products are often referred to as flatgoods because they are small enough to fit into pockets or handbags. Flatgoods are made, in whole or in part, of leather, plastics, or textiles, and often of combinations of these materials.

The value of flatgoods product shipments totaled an estimated $321 million in 1993, down about 6 percent from 1992. Total industry employment dropped about 6 percent in 1993 to 5,300, and production employment declined almost 8 percent to 4,200. Apparent consumption of flatgoods declined about 3 percent to $589 million.

Imports of flatgoods in 1993 accounted for 49 percent of apparent consumption. Although this ratio is the lowest for the entire luggage and personal leather goods group, it has increased since 1989 from about 40 percent. In terms of value, the leading foreign suppliers were China (52 percent), and Korea, India, and Italy (each 7 percent).

U.S. exports of personal leather goods totaled almost $21 million and went mostly to Japan and Canada.

Leather and Sheeplined Clothing

Leather wearing apparel manufacturers produce leather coats and jackets for men, women, and children. Shipments also include leather pants, suits, dresses, vests, shirts, and other clothing. Fashion trends generate demand for leather and sheepskin-lined clothing much more then they influence consumption of luggage and personal leather goods products. As a result, consumption patterns for leather wearing apparel can vary widely from year to year. For example, when leather prices rise - absolutely or relative to other materials - U.S. consumers often elect to purchase apparel made of other materials or postpone such discretionary spending altogether until prices decline. Consumers have made this choice several times since the mid-1970's.

Product shipments of U.S. leather wearing apparel increased about 13 percent in 1993 to an estimated $215 million. Industry employment, both total and production, registered gains of 16 percent and 12 percent, respectively.

Apparent consumption of leather wearing apparel declined about 15 percent to $1.16 billion in 1993, primarily because of a large decline in U.S. imports.

In 1993, imports of leather wearing apparel fell about 17 percent to $1.02 billion. The ratio of imports to apparent consumption was 88 percent, down from 91 percent in 1992. Import penetration was the highest of all the industries in this luggage and personal leather products group. By quantity, China was the largest supplier of these products, accounting for 44 percent of total U.S. imports. South Korea was the only other significant supplier with a 34 percent share. in 1993, China's exports to the United States increased an estimated 30 percent, by quantity, while South Korea's declined 40 percent from the same period in 1992.

U.S. exports of leather wearing apparel totaled $74 million, an increase of 13 percent over 1992. Japan, Mexico, and Canada were the largest markets.

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Outlook for 1994

Consumer demand for U.S. luggage and personal leather goods is expected to recover only slightly from 1993. Imports are expected to increase and capture a larger share of the U.S. market in most of these leather products industries. China's low production costs will help it expand its already large share of U.S. imports of luggage and leather products. As a result, U.S. product shipments are expected to increase less than 1 percent in constant dollars. Constant-dollar product shipments in 1994 are expected to show the following changes: gloves and mitten, less than 1 percent; luggage, unchanged; handbags and purses, 3 to 4 percent; personal leather goods, 5 percent; and leather wearing apparel, 6 to 7 percent.

Long-Term Prospects

Consumer demand for luggage and leather products will strengthen as the U.S. economy improves. Increased employment in the white-collar segment of the service sector should lead to increased purchases of leather office products. Leather work glove consumption directly correlates with changes in manufacturing output and should increase. Larger numbers of professional women should lead to higher sales of business cases and luggage. Larger numbers of senior citizens and retirees with higher disposable incomes should stimulate more travel and corresponding increases in luggage sales.

However, relentless competition from abroad will continue, and U.S. manufacturers are unlikely to regain much, if any, of the domestic market lost to imports over the past two decades. Nevertheless, with the help of a favorably valued dollar, innovative and aggressive producers can expect to expand exports and at least share in the future expansion of domestic consumption of luggage and leather products.

Additional References

(Call the Bureau of the Census at (301) 763-4100 for information on how to order Census documents.) Leather Gloves. Luggage, and Miscellaneous Leather Goods, SIC 3151, 3161, 3171, 3172; 1992 Census of Manufacturers, series MC 92(1)-31B, Bureau of the Census, U.S. Department of Commerce, Washington, DC 20233. Telephone: (301) 763-5911. Miscellaneous Apparel and Accessories, SIC 2371, 2384, 2385, 2386, 2387, 2389; 1992 Census of Manufacturers, series 92(1)-23 D. Bureau of the Census, U.S. Department of Commerce, Washington, DC 20233. Telephone: (301) 763-5911. Showcase, Luggage and Leather Goods Manufacturers of American Inc., 350 Fifth Ave., New York, NY 101 18. Telephone: (212) 695-2340. Travelware, Business Journals, Inc., 50 Day St., Norwalk, CT 06954. Telephone: (203) 853-6015.

FOOD AND BEVERAGES

The processed food and beverage industry sector (SIC 20) is the nation's largest manufacturing sector. In 1993, the value of food and beverage industry shipments reached an estimated $404 billion, up more than 2 percent over 1992. Exports rose almost 3 percent, while exports of higher value-added processed foods and beverages rose almost 12 percent, a turbulent international economy notwithstanding. Adjusted for inflation, processed food and beverage sector industry shipments rose slightly more than 1 percent in 1993; between 1988 and 1992, real sectoral shipment value rose about 1 percent annually.

Industry expectations for 1994 are clouded by concerns about the pace of domestic and international economic recovery, a possible softening in export demand, and increasingly acrimonious food processor-food retailer relationships. Adjusted for inflation, total food and beverage industry shipments are likely to rise about 1 percent in 1994. A rebounding U.S. economy and a pickup in export demand would contribute to accelerated industry growth.

In 1993, aggregate food and beverage industry shipments value increased between 2 and 3 percent (nominal), or slightly more than 1 percent in real terms, as a number of factors dampened growth. Consumers continued to express concern about the overall economy by reducing their spending and, in some cases, by changing buying habits and purchase preferences.

For the first half of 1993, personal consumption expenditures (PCE) for food and beverages consumed at home and away from home rose at an annual rate of more than 2 percent over 1992. Interestingly, expenditures outside the home increased more than in-home food purchases. Many consumers, however, responded to unsettled economic times not only by spending less overall, but al so by increasing their purchases of less costly, private-label foods and beverages. In addition, increasing numbers of shoppers have begun trading at "warehouse club" outlets, which stock extra large items at attractive prices.

Most industry analysts consider the U.S. food and beverage processing sector mature and developed. Population growth, economic conditions, and foreign trade patterns affect growth. In 1993, the U.S. population grew by less than 1 percent, consumers were concerned about their economic well-being, and foreign customers struggled with recession.

In addition, an increasing number of food and beverage processors adopted a wholesale pricing strategy centered around lower prices without discounts, merchandise deals, or other purchase incentives. This pricing approach results in smaller gross sales but does not necessarily affect net sales and may even increase them because it reduces promotional costs.

The economic troubles affecting most of the world in 1993 had a dampening effect on U.S. processed food and beverage exports. Total processed food and beverage export value rose only modestly, while exports of lower value-added products, such as meat, poultry, seafood, most dairy products, and grain-based intermediate products declined moderately. Foreign demand for U.S.-produced higher value-added products, such as processed fruits and vegetables, alcoholic beverages, ready-to-eat meals, bakery items, and candy products increased significantly in 1993.

Value-Added

The industry sector is divided here into two groups - higher value-added industries and lower value-added industries - for further analysis. (The Census Bureau derives value added by subtracting the cost of materials, supplies, containers, fuel, electricity, and contract work from the value of industry shipments.) The higher value-added industries manufacture retail-ready, packaged, consumer brand-name products of which at least 40 percent of the industry shipment value is added through sophisticated manufacturing.

Industry analysts attribute the increased foreign demand for higher value-added U.S. products, such as roasted nuts, frozen fruit and vegetables, ice cream, jellies, and canned fruits and vegetables to several factors. A rapidly growing middle class in developing and emerging countries accounted for some of the increased demand. Also, Russia, Ukraine, and other countries of the former Soviet Union had a great appetite for higher value-added foods and beverages, especially alcoholic beverages. Observers believe that some of these shipments moved through brokers and traders in several member states of the European Community.

Mirroring the strength of higher value-added food and beverages abroad, the value of industry shipments of the higher value-added group substantially out-performed lower value-added industries in 1993. The value of industry shipments of the higher value-added group increased an estimated 3 percent and accounted for 50 percent of total value; in contrast, the value of the lower value-added group's industry shipments rose about 2 percent.

Adjusted for inflation, the value of shipments of the higher value-added industry group rose more than 2 percent in 1993. The relatively large increase in real shipments value compared with nominal value change (3 percent) reflects processors' price restraints, new efficiencies, and a changing product mix. The lower value-added industry group did not fare as well; adjusted for inflation, group value of shipments contracted fractionally due to declines in the meat and poultry and the fats and oils industries of 1 percent and 3 percent, respectively.

INTERNATIONAL COMPETITIVENESS

Recognizing that domestic markets are expanding slowly, many U.S. food and beverage processors emphasized export sales in 1993. A weaker U.S. dollar and economic concerns abroad have contributed to record export sales in 1993. As U.S. firms become more skillful in cultivating overseas customers and the international economy improves, exports are likely to increase substantially.

U.S. exports of processed foods and beverages reached an estimated $22.5 billion in 1993, an increase of about 3 percent over 1992. Despite this marginal gain, U.S. processed food and beverage exports continued to out-pace imports, a pattern first established in 1991. U.S. imports of processed foods and beverages edged down an estimated 1 percent in 1993 to $20.8 billion, reversing an increase of more than 5 percent in 1992.

Foreign demand for lower value-added intermediate processed foods and beverages declined slightly in 1993. However, exports of higher value-added products were expected to rise a substantial 12 percent. Because of weakening foreign demand for lower value-added products, which represent the majority of U.S. food and beverage exports, total export value rose almost 3 percent.

Exports of higher value-added processed foods and beverages, including bakery products, breakfast cereal, and chewing gum reached about $7.5 billion in 1993, up nearly 12 percent from 1992. Between 1989 and 1993, exports of these products expanded more than 16 percent annually. Increases in foreign demand boosted the share of higher value-added food and beverage exports relative to total exports from more than 23 percent in 1989 to more than 32 percent in 1993.

In 1993, exports from five industries among the higher value-added group of industries accounted for 47 percent of the total. Processed nuts led the list with a share of more than 10 percent with exports of $776 million, unchanged from 1992. U.S. manufacturers of processed nuts have strong technical and marketing expertise.

[TABULAR DATA OMITTED]

With $729 million in 1993 exports, frozen fruits, fruit juices, and vegetables were second among the top five product categories at nearly 10 percent of the total. Exports of these goods rose almost 5 percent from 1992. U.S. companies operate efficient, large-scale plants to reduce their costs of production. In turn, these enterprises can offer attractive products and prices to foreign purchasers. Major buyers overseas also have developed distribution networks to handle these highly perishable products.

In 1993, U.S. exports of miscellaneous processed foods, including herbal teas, spices, vinegar, and yeast rose nearly 33 percent to $719 million, or more than 9 percent of total U.S. exports of higher value-added processed foods and beverages. Herbal teas represented about 59 percent of this category.

With a 9-percent share of total U.S. exports of higher value-added processed foods and beverages, 1993 exports of canned fruits, juices, and vegetables reached $675 million, up 3 percent. These shelf-stable products went primarily to Canada ($248 million), Japan ($82 million), Taiwan ($31 million), Hong Kong ($31 million), and Mexico ($28 million).

In 1993, dry, condensed, and evaporated dairy products valued at $605 million accounted for 8 percent of total exports of higher value-added processed food and beverages. Exports increased 22 percent. The leading U.S. customers were Mexico ($159 million), India ($53 million), Canada ($50 million), Japan ($41 million), and Taiwan ($25 million). The United States spent $59 million on export subsidies for powdered milk in 1993, compared with $1.8 billion by the European Community for all of its dairy export subsidies.

Despite recessionary economic conditions in many countries and reduced discretionary income, foreign consumers still purchased more U.S. higher value-added foods and beverages because prices of U.S. foods and beverages compared favorably with prices of similar products.

U.S. food and beverage companies continued to place more emphasis on promoting and exporting their products. Firms devoted more resources to exporting because domestic U.S. demand for processed food and beverages is growing less rapidly than during the 1980's. When the economies of major U.S. customers recover, the industry expects its current promotion and export efforts to lead to increased sales abroad.

Exports of higher value-added foods and beverages to five countries - Canada, Japan, Mexico, Germany, and the United Kingdom - represented an estimated $4.3 billion, or about 57 percent of the 1993 export total. These products often involve sophisticated manufacturing processes. Canada, benefitting from the U.S.-Canada Free Trade Agreement (CFTA), purchased $1.9 billion worth of U.S. higher value-added food and beverages, up 10 percent from 1992. By reducing Canadian tariffs, the CFTA has generated additional U.S. exports to Canada. Japan purchased $1 billion in U.S. higher value-added food and beverages in 1993, down from $1.1 billion in 1992, due in part to a worsening of Japan's recession.

Mexico has emerged as a significant market for U.S. higher value-added foods and beverages. In 1993, U.S. enterprises sent an estimated $634 million worth of higher value-added food and beverages to Mexico, up 36 percent from 1992. This reflects the continuing easing of Mexican trade restrictions during the past several years.

Exports from U.S. processed food and beverage industries selling lower value-added foods and feed, such as meat, butter, cheese, flour, animal feed, fats, and oils dipped about 1 percent in 1993 to $15.6 billion. Between 1989 and 1993, exports of these items expanded more than 4 percent yearly. The share of lower value-added food and feed relative to total exports dropped from about 76 percent in 1989 to about 68 percent in 1993.

Three factors influenced the performance of U.S. exports of lower value-added processed foods and feed. First, the European Community (EC), a major competitor, spent $4.8 billion in 1993 to subsidize dairy products, eggs, poultry, and refined sugar, an increase of 22 percent over 1992. By contrast, U.S. export subsidies for lower value-added foods came to about $198 million. Most U.S. export subsidies go to raw commodities, such as wheat.

Second, the food and beverage processing industries of some major U.S. customers, such as the EC, Japan, and South Korea, continued to incorporate new technological and marketing techniques, reformulate products, and modernize plants. Distribution and sales channels have become more efficient. Facing sluggish domestic demand in 1993, foreign food and beverage enterprises sought ways to trim costs and prices, thus displacing some U.S. exports of lower value-added processed food and feed.

Finally, exchange rates played a role in slowing U.S. exports of lower value-added processed food and feed in 1993. Many food and beverage companies in countries with weakening currencies vis-a-vis the U.S. dollar sought to reduce costs by turning to alternative foreign suppliers and reformulated their products.

Japan, Canada, Mexico, South Korea, and the Netherlands, the top five importers of U.S. lower value-added processed foods and feed, accounted for more than 55 percent of total 1993 exports in this category.

In 1993, total imports of processed food and beverages dipped less than 1 percent to $20.8 billion after a rise of more than 5 percent in 1992. The share of higher value-added products was more than 45 percent in 1993, down from more than 46 percent in 1992. Lower value-added goods represented the rest, about 55 percent of all 1993 imports. From 1989 to 1993, imports of higher value-added foods and beverages rose more than 2 percent annually, while those of lower value-added processed food and feed increased about 2 percent yearly.

Imports of higher value-added foods and beverages from five countries - Canada, France, Mexico, the United Kingdom, and the Netherlands - accounted for an estimated $4.5 billion, or 48 percent of the 1993 total. Imports of lower value-added food and feed from five countries - Canada, Thailand, Australia, New Zealand, and Ecuador - represented an estimated $5.3 billion, or 47 percent of the 1993 total.

Personal Consumption Expenditures

U.S. consumer spending for food and beverages appeared to rebound somewhat in 1993, a welcome respite after a lackluster performance in 1991 and 1992. Personal consumption expenditures (PCE) for all food and beverages increased more than 3 percent to $647 billion. Spending for food and drink away-from-home rose 4 percent, while at-home food and beverage purchases gained almost 3 percent.

Adjusted for inflation, PCE for all food and beverages increased 1 to 2 percent in 1993. Away-from-home spending climbed between 2 and 3 percent, as at-home PCE expanded a more modest 1 percent. The estimated 1993 results proved encouraging. Between 1989 and 1992, total food and beverage purchases (in constant dollars) increased only 0.2 percent annually. During the same four-year period, real expenditures for food and beverages consumed at home edged up only 0.1 percent. In contrast, purchases away from home rose almost 1 percent yearly from 1989 to 1992, equalling the real gain in total PCE.

Changing consumer demographics, a slowing growth of population, shifting buying habits, and concerns about the economy affected both the amount and types of outlays for food and beverages. The U.S. population is expanding by less than 1 percent annually, and immigrants constitute about one-fourth of this increase. The population is continuing to age as the size of U.S. households shrinks.

Economic concerns not only caused spending restraint but also prompted greater purchases of less costly private-label products and greater patronage of warehouse-club type operations. More women working outside the home and a higher number of single-person households caused a redistribution of the food and beverage dollar away from at-home outlays and toward away-from-home outlays.

Spending for food and drink is declining as a share of all PCE. In 1993, the portion of PCE devoted to food and beverages accounted for an estimated 15 percent of the total, compared with more than 18 percent in 1982. Between 1982 and 1993, the share of away-from-home food and drink purchases decreased minimally from 5.2 percent to 4.9 percent. In contrast, consumer spending for food and beverages at home dropped considerably more, from 13 percent in 1982 to nearly 10 percent in 1993.

More women in the work force, more single-person and single-parent families, and more travel combined to increase the away-from-home market as a share of total consumer spending for food and beverages. During 1982-93, the away-from-home market expanded from 28.2 percent of all food and beverage purchases to 32.6 percent; the at-home market declined by a commensurate amount.

During the 1980's, consumers became more concerned about health, fitness, and substance abuse. These concerns continued to prevail into the 1990's and affected spending for alcoholic beverages. In 1993, the estimated PCE for alcoholic beverages inched up just 0.3 percent and accounted for 11.7 percent of all food and beverage spending, down from 13.3 percent in 1982.

Adjusted for inflation, expenditures for alcoholic beverages declined 0.5 percent annually between 1982 and 1992. Alcoholic beverage spending is likely to continue its decline now that only 50 percent of business meals is tax deductible. Potentially higher excise taxes on alcoholic beverages to help pay for health-care reform could further reduce consumption.

Population Changes

Population growth, demographic shifts, and household composition affect food and beverage consumption and spending. Total U.S. population increased slowly throughout the 1980's, and modest growth is continuing in the 1990's. Between 1980 and 1990, total population expanded just 0.95 percent annually and grew 1.1 percent from 1991-92. The Census Bureau estimates that total population is likely to increase about 0.9 percent yearly during the remainder of the 1990's.

An expanding immigrant population (mainly from South America and Asia) will have a notable effect on the industry, which must produce foods and beverages that meet the taste standards of different cultures.

Demographic shifts have also affected demand for food and beverages. The U.S. population is aging. From 1980 to 1990, the median age rose from 30 to 33 years. The fastest-growing age group is the 35-and-over set, with the greatest expansion in the 45-54 age group, which is forecast to increase nearly 45 percent during the remainder of the 1990's.

The 35-44 age group is expected to grow almost 16 percent by 2000, as the 65-and-over group increases by almost 11 percent, reaching an estimated 34.9 million people by 2000. The growing number of older consumers suggests that significant gains in consumer expenditures for foods and beverages will hinge on meeting the needs and preferences of older shoppers.

The changing composition of U.S. households also influences consumer expenditure patterns. In addition to becoming older, the average U.S. household is getting smaller. In 1992, the average household numbered 2.62 persons, a 14-percent decline since 1972.

Between 1985 and 1992, the number of U.S. households reached 95.7 million, increasing more than 10 percent; however, single-person households totaled 24 million, up 16 percent since 1985. In addition, one-parent family households also increased 19 percent since 1985. The trend toward smaller households with increasing numbers of single-person and one-parent households is expected to continue.

The combination of an aging population characterized by decreasing household size and greater numbers of single-person and one-parent households suggests that total spending for food and beverages is likely to increase slowly. More single-person and one-parent households indicate expansion of the away-from-home (food service) market at the expense of the retail grocery industry. Food and beverage processors will be pressed to provide products tailored to older and single-person households to minimize the natural appeal of away-from-home eateries. Because domestic market growth will be limited, manufacturers will likely compete very aggressively for market share and intensify export efforts to fatten sales and profits.

Consumers' Expenditure Survey

In 1991, the typical U.S. household spent $4,568 for food and beverages, including alcohol, at-home and away-from-home, according to the Bureau of Labor Statistics' Consumer Expenditure Survey. The typical household committed 58 percent of total food and beverage spending to food and non-alcoholic beverages for at-home use, 35 percent to away-from-home use, and 7 percent to alcoholic beverages purchased at home and away from home.

The typical U.S. household devoted almost 15 percent of after-tax income to the purchase of food and beverages in 1991. Two-person households spent the least, 13.7 percent, of after-tax income on food and drink, followed by three-person and four-person households, which committed 14.1 percent and 14.8 percent, respectively. The smallest and largest consumer units, one-person and five-or-more persons, spent more after-tax income than average for food and drink, 15.6 percent and 17.9 percent, respectively.

Households of five or more persons chose to spend more after-tax income (11.9 percent) for food and nonalcoholic beverages at-home; four-person households spent 9 percent, while two person households spent the least for at-home foods, 7.7 percent of after-tax income.

One- and two-person households committed 6.2 percent and 5.9 percent, respectively, after taxes for away-from-home meals and drinks. Three- and four-person households spent the least of after-tax income, 5.1 percent, away-from-home, while five-or-more-person households spent 5.4 percent.

In addition to allocating more money for restaurant meals, one-person households also spent the most after-tax income on purchases of alcoholic beverages, 1.9 percent, followed by two-person households at 1.1 percent. Three-, four,- and five-person households each spent 0.7 percent on beer, wine, and distilled spirits.

Food and beverage purchase patterns changed somewhat between 1987 and 1991. Consumers elected to dedicate less of their at-home food and beverage budget to meat, poultry, seafood/fish, eggs, fruits and vegetables and dairy products. Some of the spending shifts, especially in the case of meats, eggs, and some dairy products, reflect shoppers' concerns about health and nutrition.

Shoppers spent more of their 1991 food budget for cereal and bakery products and the so-called "other foods" category, which includes products such as most of the higher value-added prepared foods, nonalcoholic beverages, table spreads, and confectionery products. In 1991, consumers spent 46 percent on "other foods" and cereal and bakery products, compared with less than 42 percent in 1987.

Between 1987 and 1991, the Consumer Price Index (CPI) for red meat rose about 21 percent, compared with increases of 17 percent and 14 percent for poultry and fish/seafood, respectively. Per capita consumption of red meat declined almost 5 percent during this period while poultry per capita consumption increased more than 14 percent.

Prices also influenced shoppers' purchases of fruits and vegetables. During the 1987-92 period, the CPI for fresh fruits and vegetables rose 47 percent and 27 percent, respectively; prices of processed fruits and vegetables also increased, but more modestly, 19 percent and 20 percent, respectively. Per capita consumption of fresh fruit declined almost 8 percent as preserved fruit consumption fell by almost 10 percent.

New Food and Beverage Labeling

By May 1994, all U.S. sellers of processed food and beverages must conform to detailed regulations for labeling of nutritional information for their products. The rules, authorized by the Nutrition Labeling and Education Act (NLEA) of 1990, also cover serving sizes, health messages, and descriptive terms such as "light" and "low fat." The new regulations are enforced by the U.S. Food and Drug Administration.

To meet the requirements of the NLEA, most U.S. food and beverage companies have designed new labels to accommodate both NLEA information and commercial messages. Certain processors have completed the changes before the deadline. In turn, these manufacturers have used the new labeling as a selling point to differentiate their products in a crowded marketplace.

The new, more informative labeling regulations may prove especially difficult for many foreign food and beverage processors, particularly companies unaccustomed to such extensive product analysis and disclosure. Some industry analysts view the new requirements as a barrier to trade that could be challenged in the General Agreement on Tariffs and Trade (GATT). Supporters of the rules state that all enterprises, both domestic and foreign, must comply. These observers argue that the NLEA will provide vital consumer information to improve the health of U.S. consumers and that GATT would dismiss any complaint.

In August 1993, the U.S. Department of Agriculture (USDA), which regulates U.S. meat and poultry, issued recommendations on the thawing, handling, cooking, and post-preparation refrigeration of raw meat and poultry. New labels, for both retail consumers, and food service companies, will summarize these suggestions. Simultaneously, USDA will increase the number of meat inspectors, more closely monitor production plants, and accelerate efforts to develop rapid microbiological tests to detect food-borne pathogens. The American Meat Institute estimates that new regulation would cost the entire meat and poultry sector $135 million annually. Several highly publicized deaths from tainted meat contributed to greater public concern about food safety.

Food Retailing

Notwithstanding consumers' overall concerns about the economy, food store and eating/drinking place sales strengthened somewhat in the first six months of 1993. Liquor sales declined, however, by more than 3 percent. Retail sales of all eating and drinking places rose 5 percent during the first six months of 1993, compared with a rise of more than 2 percent in 1992, when restaurant sales rose 3 percent and drinking place sales slumped almost 8 percent. During the first half of 1993, operators of eating and drinking places exercised considerable pricing restraint, which appears to have stimulated sales. For the period, the CPI for away-from-home food sales rose slightly more than 1 percent, compared with an average annual increase of close to 4 percent between 1987 and 1992.

Food store sales also increased by slightly more than 2 percent during the first six months of 1993, compared with a rise of slightly less than 2 percent for all of 1992. The CPI for food-at-home actually declined, about 1 percent for the first half of 1993, compared with an average annual CPI increase of 4 percent. The improved food store sales picture reflects pricing, a growing demand for private-label goods, and the increasing importance of non-traditional food sales outlets.

In 1992, non-traditional grocery sales outlets-hypermarkets, wholesale clubs, so-called deep discounters, and food mass merchandisers-accounted for 7 percent of all commodity volume (ACV) and about 1 percent of competing units, according to Willard Bishop Consulting, Ltd. By 1997, the company estimates, non-traditional outlets will represent more than 11 percent of ACV and 1.5 percent of competitive units.

Owners of food retailing outlets, especially supermarkets, believe that the non-traditional outlets are costing them sales, at least in part because processors and manufacturers sell competitive name-brand items to the warehouse clubs and similar retailers at lower prices. Because the non-traditional food outlets usually buy products in multi-packs or larger sizes than traditional outlets, the cost per product unit is less than for goods packaged in conventional sizes. Savings from shopping at non-traditional outlets can be meaningful if shoppers are able to store larger sizes and quantities and are willing to spend extra travel time in exchange for convenience.

Traditional grocery sellers see the threat to their future and hold processors and wholesalers partially responsible. Conventional retailers may seek ways to penalize processors, who remain unhappy with retailers about expensive slotting allowances and penalties for the substandard sales performance of new products. One way retailers are attempting to cope with weak sales and new competition is by upgrading and expanding their private-label products.

In 1992, private-label food and beverages accounted for a reported 19.4 percent of all retail food and beverages sold. The popularity of less costly private-label items usually increases during periods of economic slowdown or uncertainty.

The quality and packaging of private-label food and beverages has been improving for some time. Modern manufacturing technologies, quality control, and improved packaging are ubiquitous throughout the processed food and beverages industry sector. Private-label products are gaining market shares in segments where they earlier had little appeal, including beer, breakfast cereal, and soft drinks. Many consumers perceive little quality difference between nationally branded items and private-label substitutes. The willingness of large numbers of consumers to pay a premium for nationally branded foods and beverages is in question.

Nevertheless, significant forces restrain the further growth of the market for private-label food and beverages. As the share of private-label processed foods and beverages increases, product development and innovation may slow considerably. Advertising, now funded by manufacturers, will likely decrease and the costs of growing the business will fall almost exclusively on retailers. Manufacturers of private-label foods and beverages can finance research and development for new products only by persuading supermarket customers to pay slightly more for the new items, an outcome probably unacceptable to weary and wary consumers.

Outlook for 1994

Food and beverage processors and retail food store operators approach 1994 with some concern. While inflation is expected to remain under control, processors and retailers are concerned about the pace of domestic and international economic recovery and the expected growth of non-traditional retail food outlets. Processors of name-brand products will strive to stem the flow of less-costly generic goods while retailers will attempt to offset the effects of new, non-traditional competition. Adjusted for inflation, the value of shipments of the food and beverage sector is forecast to rise about 1 percent in 1994.

Processors are also concerned about the passage of NAFTA and the fate of the Uruguay Round of trade talks. Successful conclusion of both trade pacts will mean new export opportunities in future years. However, some processors fear a backlash, which would adversely affect 1994 U.S. export sales in the event of a less-than-successful conclusion of the two sets of trade negotiations. U.S. processors are further concerned about the rate of economic recovery worldwide. For 1994, the value of processed food and beverage exports is forecast to rise about 6 percent to more than $24 billion.

NAFTA would provide at least three significant advantages to the U.S. processed food and beverage industry sector. First, the agreement would begin a series of gradual mutual tariff reductions between the United States and Mexico over a 15-year period. Second, Mexico would abolish all of its import licenses. Lastly, NAFTA would require mutual recognition of distinctive products. For example, Canada and Mexico would both recognize the uniqueness of bourbon and Tennessee whiskey, a condition predicated upon the elimination of Mexican tariffs on these alcoholic beverages. Only bourbon and Tennessee whiskey distilled in the United States according to U.S. laws and regulations would be sold in Canada or Mexico. In return, the United States would provide similar treatment to Canadian whiskey and Mexican tequila and mezcal.

After many difficulties and delays, the Uruguay Round of multilateral trade negotiations gained new momentum in 1993. Nevertheless, processed food and agricultural issues remain a major hurdle to agreement among the 111 member countries of the General Agreement on Tariffs and Trade (GATT).

The European Community (EC) and, in particular, France, have strong doubts about restricting their food and agricultural export subsidies and reducing barriers to imports from the United States and other countries. Imported processed foods and beverages face a common external tariff throughout the EC. The EC also assesses variable levies on the specific ingredients of imported processed food and beverages to raise prices of these products to levels prevailing in the EC.

A successful conclusion to the Uruguay Round would translate into considerable new export opportunities for U.S. manufacturers of processed foods and beverages. Most of the industry would benefit from a successful GATT agreement by allowing food and beverage manufacturers to invest more easily in GATT-member countries. The proposed investment rules would offer more clarity about the level of business risk for food and beverage companies. For example, a GATT agreement probably would not permit countries to seize assets without compensation, demand export requirements, or set domestic content regulations.

Since 1985, die share of private-label food and beverages sold in the United States has risen consistently, to more than 19 percent of total grocery food and beverage sales and 1992. Perhaps sales of private-label food and beverages will exceed 25 percent of the total in 1994. Many consumers will still search for the best combination of price and value. Industry analysts are debating, on the other hand, whether large numbers of consumers will return to nationally branded goods once the economy improves significantly.

Despite growing sales of private-label food and beverages, important factors may limit further expansion of the market. Many consumers think nationally branded foods and beverages offer greater consistency of quality than private-label substitutes. Major manufacturers of foods and beverages support their products through advertising, marketing, and promotion expenditures to maintain brand loyalty. Private-label goods do not have these advantages.

As the share of private-label processed foods and beverages increases, product development and innovation may slow considerably. Supermarket chains with their own factories do not have incentives to spend money on new product development and innovation for private-label goods because they cannot recover these expenditures over limited production cycles. Manufacturers of private-label foods and beverages could only finance research and development for new products by persuading their supermarket customers to pay a bit more for new products.

Long-Term Prospects

Over the next five years the processed food and beverage industries are likely to grow slowly; adjusted for inflation, the value of aggregate industry shipments is forecast to rise about 1 percent a year. Industry growth is likely to be less robust during the early years and rise to higher levels as the U.S. and international economies improve and the expected benefits of the pending NAFTA and Uruguay Round trade agreements begin to materialize.

U.S. alcoholic beverage processors must contend with the sales-dampening effects of prospective Federal excise tax increases. Some of the costs of the new national health-care system may be financed by excise tax increases on distilled spirits. Brewers and winemakers also are concerned that escalating health-care costs will bring about excise tax hikes for beer and wine.

Additional References

(Call the Bureau of the Census at (301) 763-4100 for information on how to order Census documents.) 1987 Census of Manufactures and 1989-91 Annual Surveys of Manufacturers, Meat Products, Dairy Products, Canned, Frozen, and Preserved Fruits, Vegetables, and Food Specialties, Grain Mill Products, Bakery Products, Sugar and Confectionery Products, Fats and Oils, Beverages, and Miscellaneous Food Preparations, U.S. Department of Commerce, Bureau of the Census, Washington, DC 20233. Telephone: (301) 763-2510. Population Projections of the United States by Age, Sex, Race and Hispanic Origin: 1992 to 2050, Series P-25, No. 1092, U.S. Department of Commerce, Bureau of the Census, Washington, DC 20233. Telephone: (301) 763-5002. Agricultural Export Transportation Workbook, U.S. Department of Agriculture, Agricultural Marketing Service, February 1993, Washington, DC 20250. Telephone: (202) 690-1335. Agriculture in a North American Free Trade Agreement, U.S. Department of Agriculture, Economic Research Service, 1301 New York Ave. NW, Washington, DC 20005. Telephone: (800) 999-6779. CAP Reform: A New Era for EC Agriculture, AIB-674, U.S. Department of Agriculture, Economic Research Service, 1301 New York Ave. NW, Washington, DC 20005. Telephone: (800) 999-6779. Canada: The Market for U.S. Food and Farm Products, U.S. Department of Agriculture, Foreign Agricultural Service, Office of Agricultural Affairs, U.S. Embassy, Ottawa, P.O. Box 5000, Ogdensburg, NY 13669. Telephone: (613) 238-5335 ext. 267. Consumer and Producer Price Indexes, Bureau of Labor Statistics, U.S. Department of Labor, Washington, DC 20212. Telephone: (202) 606-6950 and (202) 606-7700. Consumer Expenditure Survey, Bureau of Labor Statistics, U.S. Department of Labor, Washington, DC 20212. Telephone: (202) 606-6900. Dairy Products Annual Summary 1992, May 1993, U.S. Department of Agriculture, National Agricultural Statistics Service, Agricultural Statistics Board, Washington, DC 20250. Telephone: (800) 999-6779. Dairy: Situation and Outlook, July 1993, U.S. Department of Agriculture, Economic Research Service, 1301 New York Ave. NW, Washington, DC 20005. Telephone: (800) 999-6779. FDA Consumer, U.S. Department of Health and Human Services, Food and Drug Administration, 5600 Fishers La., Rockville, MD 20857. Telephone: (301) 443-3220. Food and Agricultural Export Directory 1992, U.S. Department of Agriculture, Foreign Agricultural Service, Room 5922-South Building, Washington, DC 20250. Telephone: (202) 720-7937. Food Cost ... From Farm to Retail in 1992, AIB-669, U.S. Department of Agriculture, Economic Research Service, 1301 New York Ave. NW, Washington, DC 20005. Telephone: (800) 999-6779. Food Marketing Review, 1992, December 1993; Food Marketing System in 1991-92, December 1992, U.S. Department of Agriculture, Economic Research Service, 1301 New York Ave. NW, Washington, DC 20005. Telephone: (800) 999-6779. Mexico: The Market for U.S. Food and Farm Products, U.S. Department of Agriculture, Foreign Agricultural Service, Office of Agricultural Affairs, U.S. Embassy, Mexico City, P.O. Box 3087, Laredo, TX 78044. Telephone: O11-52-2) 211-0042. NAFTA Opportunities: Processed Foods and Beverages, International Trade Administration, U.S. Department of Commerce, Washington, DC 20230. Telephone: (703) 487-4650. Personal Consumption Expenditures, Bureau of Economic Analysis, U.S. Department of Commerre, Washington, DC 20230. Telephone: (202) 606-9727. Survey of Current Business, Bureau of Economic Analysis, U.S. Department of Commerce, Washington, DC 20230. Telephone: (202) 606-0777. U.S. Milling and Baking Industries, AER-611, U.S. Department of Agriculture, Economic Research Service, 1301 New York Ave. NW, Washington, DC 20005. Telephone: (800) 999-6779. American Bakers Association, 1350 St. NW, Suite 1290, Washington, DC 20005. Telephone: (202) 789-0300. American Society of Bakery Engineers, 2 Riverside P1., Suite 1733, Chicago, IL 60606. Telephone: (312) 332-2246. American Institute of Food Distribution, Inc., Food Institute Report, 28-12 Broadway, Fair Lawn, NJ 07410. Telephone: (201) 791-5570. Bakery Production and Marketing and Bakery and Production Marketing Newsletter, Delta Communications, Inc., 455 N. Cityfront Plaza Dr., Chicago, IL 60611. Telephone: (312) 222-2026. Breakfast Cereals And How They Are Made, 1990, American Association of Cereal Chemists, 3340 Pilot Knob Rd., St. Paul, MN 55121. Telephone: (612) 454-7250. Cheese Reporter, 6401 Odana Rd., Madison, WI 53719. Telephone: (608) 273-1300. Cheese Market News and Dairy Foods, Delta Communications, Inc., 455 N. Cityfront Plaza Dr., Chicago, IL 60611. Telephone: (312) 222-2000. Dairy Field, Stagnito Publishing Co., 1935 Shermer Rd., Suite 100, Northbrook, IL 48010. Telephone: (708) 205-5660. Dairy Producer Highlights 1992, National Milk Producers Federation, 1840 Wilson Blvd., Arlington, VA 22201. Telephone: (703) 243-6111. Dry Milk Products Utilization and Production Trends and Whey Products, 1992 Utilization and Production Trends, American Dairy Products Institute, 130 North Franklin St., Chicago, IL 60606. Telephone: (312) 782-4888. Foodbusiness and Food Processing, Putnam Publishing Co., 301 East Eire St., Chicago, IL. 60611. Telephone: (312) 644-2020. Galbraith, Steve, The Confectioners: Semi-Sweet Prospects in a Sour Packaged-Foods Environment, Sanford C. Bernstein & Co., 767 Fifth Ave., New York, NY 10153. Telephone: (212) 756-4592. Independent Bakers of America, 1233 Potomac St. NW, Washington, DC 20007. Telephone: (202) 333-8190. Latest Scoop and Milk Facts 1992, International Dairy Food Association, 888 16th St. NW Washington, DC 20006. Telephone: (202) 296-4250. Maxwell, John C., Jr., The Cold Cereal Industry in 1992, Food and Beverage Monthly, The Liquor Industry in 1992, The Petfood Industry in 1992, Wheat First Securities, 707 East Main St., Richmond, VA 23211. Telephone: (804) 782-3630. Milling and Baking News, Sosland Publishing Co., 9000 West 67th St., Merriam, KS 66202. Telephone: (913) 236-7300. Prepared Foods 1992 New Products Annual, Delta Communications Inc., 455 N. City Front Plaza Dr., Chicago, IL 60611. Telephone: (312) 222-2000. Pugh, Les, Amid Disinflation and Concentration, Only an Elite Will Flourish, Food Processing in the 1990s: A Global Menu for Success, A Renaissance: Arresting the Food Sector Decline, Salomon Brothers, Inc., 7 World Trade Center, 36th Floor, New York, NY 10048. Telephone: (212) 783-7943. Private Label, 2125 Center Ave., Fort Lee, NJ 07024. Telephone: (201) 592-5898. Progressive Grocer, MacLean Hunter Media, 1351 Washington Blvd., Stamford, CT 06902. Telephone: (203) 325-3500. Snack Food, Stagnito Publishing Co., 1935 Shenner Rd., Suite 100, Northbrook, IL 60062. Telephone: (708) 205-5660. Supermarket News, Fairchild Publications, 7 West 34th St., New York, NY 10001. Telephone: (212) 630-4000. What's in Store: Dairy, Deli, Bakery and Cheese Center Trends, August 1993, International Dairy-Deli Association, 313 Price P1., Suite 202, Madison,5. Telephone: (608) 238-7908. Willard Bishop Consulting Ltd., 840 South Northwest Highway, Barrington, IL 60010. Telephone: (708) 381-"3.

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