European Stars And Stripes (Newspaper) - March 2, 1986, Darmstadt, Hesse                                Sunday March 2, 1986 the stars and stripes Page 19 also rans May be cola war7 casualties new York not the Ever intensifying marketing War Between coca cola co. And Pepsico inc. Offers proof of an old adage when elephants fight the ants get stomped on. While fighting each other for More of the soft drink business Coke and Pepsi have grown at the expense of second tier brands. Now competitive pressure on the Industry s also rans is about to intensify possibly threatening the existence of some. Coke has agreed to acquire or Pepper co., the nation s fourth largest soft drink concern and Pepsi has arranged to Pur Chase seven up co., the third largest. This would give the two Industry giants control of More than 80 percent of the mar Ket compared with about 67 percent now. Coke would have a Market share of 46 per cent up from 39, and Pepsi would have 35 percent up from 28. Both deals Are expected to face antitrust scrutiny from the Justice department and the Federal Trade commission. Left far behind Are a variety of other soft drink concerns none with More than 5 percent of the Market. They Are . Rey nolds industries which markets Canada dry and Sunkist Royal Crown cola co., which makes the third ranked cola and a Host of smaller companies. As the cola War escalates say Industry executives and analysts the Small companies Are going to find it harder to compete for product space on crowded store shelves to offer the expensive Price promotions that Are part of soft drink marketing and to afford the splashy advertising that can set products apart in an image conscious Industry. Executives of some Small soft drink companies shrug off the latest developments As just More of the problems they have always had to Cope with. We re used to it sighed Jerry Vance investor s guide by William a. Doyle q. How Are the Dow Jones Stock aver Ages computed to determine their daily changes who selects the stocks in those averages a. Each of the four Dow Jones averages is compiled by adding up the prices of the stocks used As components in that partic ular average and then dividing by its Divi  the widely followed Industrial average has 30 components and As i write this a 1.090 divisor the transportation average has 20 components a 1.053 divisor the Utility aver age has 15 components a 2.437 divisor the composite average which combines the other three has 65 components and a 4.635 divisor. The divisor is adjusted downward every time one of the components is split or has a Stock dividend of More than 5 percent. The divisor is also adjusted either up or Down when there is a substitution of stocks used in an average. A change in these averages from one Day to the next or from one hour to the next provides a pretty Good indication of the Overall change in Stock prices. Keep in mind however that the Dow Jones and other Stock averages and indexes simply measure general Stock mar Ket trends. On a Day the averages Are up stocks you own might be Down. The decisions on what stocks Are used in Dow Jones averages Are made by the Edi tors of the Wall Street journal which is published by Dow Jones & co., inc. Q. After the Dow Jones Industrial aver age plunged on wednesday Jan. 8, television and radio commentators accused the press of overreacting by writing that was the biggest one Day decline in history. One to pundit castigated newspapers for scare headlines and said smugly i thought the drop was t nearly As bad As the great crash of 1929." i heard the same thoughts on my car radio and two to shows. Have the electronic journalists declared War on newspapers beverage drinking per capita . Consumption in Gallons per year Coffee soft drinks 1964 68 72 76 80 84 Chicago to Mcune graphic source . Department of agriculture economic research service vice president for sales at Canfield Bever age co. Of Chicago which holds less than 1 percent of the National Market. It never seems to get any  but others issued dire warnings that the Coke and Pepsi deals if they survive antitrust scrutiny could wipe out some of the weaker brands and Lead to higher retail prices and a major restructuring of the Industry. These Are just fundamentally bad deals for the Industry and certainly for the con Sumer said James Calder a lawyer for Royal Crown which holds about 4 percent of the Market. What will happen to Royal Crown is that it will cease to be an effective competitor he said. It will be forced from the Market or reduced to an ineffective regional  when you eliminate the smaller competitors that keep the big companies honest you re going to have an increase in retail prices added Calder a partner at the new York firm of Willkie Farr & Gallagher. Even big companies that have the re sources to compete might decide they have had enough. I would look for Rwjr to get out of the business said Emanuel Gold Man an analyst at Montgomery securities in san Francisco. Goldman suggests that Canada dry and Sunkist might be attractive properties to Coke and Pepsi or others and that Rey nolds might be Able to sell them at a healthy profit. At the least increased competitive pres sure would Force smaller companies to be come More innovative in product development packaging and marketing. Time after time innovation wins the Day said Jesse Meyers publisher of beverage digest an Industry publication. For example Industry experts Point to Canfield which has prospered with its diet chocolate fudge soft drink. Coke and Pepsi have a lot of brands and they hit a lot of segments but there is still a lot of Opportunity out there said Vance. There is definitely a segment for anybody who s willing to fight for  Meyers also noted that a number of companies have successfully specialized in cer Tain flavors including Detroit based ver nor s and a a Root Beer. If you be got a taste for Ginger ale it begins and ends with Vernor a said Mey ers. And year in and year out whether the Root Beer Market expands or contracts a a grows and  the soft drink companies Are not the a. You need Only eyes and ears to real ize some have. However i like to think that most have not and retain their integ Rity by straight reporting. In my Trade i see a lot of newspapers. Every newspaper Story i read correctly said that the 39.10 Point drop in the Dow Jones Industrial average on Jan. 8 exceeded the 38.33 Point fall on oct. 28,1929. And those newspaper stories stressed the fact that the Djina fell Only 2.5 per cent to 1526.61 on Jan. 8, compared with its 12.8 percent plunge to 260.64 on that Day of the 1929 crash. That stands to reason because that Dow average is Way higher than it was in 1929. I la rely on the printed words and num Bers of newspaper Stock Market reporting Over the fleeting glimpse and sound of to and radio any time. In fairness however it must be said that Many hopefully most air wave commentators do the Best they can with financial news. Only the Odd Ball boobs on the tube act smug As they try to turn their programs into show Biz with misstatements of fact. Q. I bought 400 shares of Stock at $2.50 each and the broker charged me a $77 commission on this $1,000 Deal Mak ing my total Cost $1,077. I called the broker and asked How come. He hemmed and hawed and finally said the commission charge was 20 cents a share. I said that would be $80. Then he said of it s 19 /2 per share and that amounts to $78." i finally gave up and decided to write to you. What can i do How is this charge determined a. Short of taking your future broker age commission elsewhere you can t do anything. Each brokerage firm determines its own commission rate schedule. Some charge More than others. Typically the percent age amount of the commission declines As the amount of Money in the transaction increases. But there Are variations on that at different brokerage houses. Your mistake was not asking for a copy of that brokerage s commission schedule before you bought the Stock. Technically brokerage commissions Are  but unless you re a big and Active customer you can t successfully Haggle for lower charges. Q. When i ask the folks at the Bank to give me an explanation of the annual percentage rate on a loan they simply turn to their books and give me an exact figure for that  yet they Are unable to Tell me the method by which it is computed. Exactly what is apr and How is it calculated a. Apr is the True Cost of borrowing Money stated on a yearly percentage basis that sounds simple enough but it gets mighty complicated. Except in the Case of a one year simple interest loan apr is always higher than a loan s stated interest rate. If you borrow $ 1,000 at 8 percent from Only ones being forced to adapt to Industry consolidation. Many of the bottlers that produce and distribute the smaller brands under franchise agreements with the Bever age producers could find themselves caught in the Coke Pepsi squeeze. The bottler network will change dramatically said Calder who cites the prob lems faced by Many Royal Crown bottlers As an example. About 34 percent of Royal Crown s volume is handled by bottlers who also bottle seven up he said. Indeed pairing up with seven up bottlers has been a major part of Royal Crown s strategy for keeping up with the majors. Between Royal Crown and seven up bottlers have brands with a combined Market share of about 13 percent which enables the bottler to reach necessary economies of scale and have sufficient clout to get shelf space and promotion Calder said. But with seven up to be owned by Pepsi seven up bottlers would be under pressure not to handle a cola Brand that competes with Pepsi s flagship product. What will happen said Calder is that the seven up and re bottlers who to a great extent will be controlled by Pepsi will get  he said the bottlers could be pressured into Selling their Royal Crown franchises. Within years there will not be a bottler network out there making re and some other products he said. Others agree that Royal Crown which is owned by Victor Posner the Miami Beach financier faces problems but they note that it had a Chance to solve them by Pur chasing seven up which was put on the Block by Philip Morris inc. Last year. There was a Clear Call for re and seven up to get together said Meyers. Some generous Friend or relative and repay that loan with $1,080 at the end of one year your for was 8 percent the same As the loan s interest rate. However if you borrow $1,000 from a Bank or other commercial Lender at 8 percent and repay in 12 monthly instalments of $90 each your apr was 14.5 percent. That s because you did t have the use of the full $ 1,000 for the entire year As each repayment reduced the amount of the loan. Calculations of apr is done through Complex formulas. As i write this 1 have a financial encyclopedia open to a Section devoted to just that three full pages of Small Type including algebraic equations that would stump anyone Short of a mathematical Whiz. King features columnist Doyle welcomes written questions but he can provide answers Only through the column. You can write to him in care of the stars and stripes Apo 09211, . Forces Stock pulse 1 United press International copyright 5986 Friday feb. 28 nose composite most actives by volume Stock div vol close earns be old Bankar 4,480,300 17% ism 3,245,501 150% $10.67 14.0 2.9 Ohio de 2,800,500 19% 2.45 8.0 9.9 at to 2,799,500 22% 1.37 17.0 5.3 Western Art 2,730,400 10 0.95 11.0 in carb 2,705,500 19 a esd 2,116,200 56 1.46 38.0 3.9 Ches Pond 2,034,200 40% 2.35 17.0 4.9 Eastern air 1,818,100 8% Pfizer 1,756,200 55% 3.44 16.0 3.0 nose composite largest net changes Stock close Cage earns be old lbs 13b /2 113/4 $ 0.81 171.0 2.2 Lof 70 /2 6 /2 5.71 12.0 2.0 celanese 192 a 5 /4 13.70 14.0 2.5 ism 150% 5 10.67 14.0 2.9 Cap cite 249 4 /2 10.87 23.0 0.1 Tribune 66% 4 3.06 22.0 1.5 Al milk 81 3% 5.84 14.0 3.1 Disney 139v4 3% 5.24 27.0 0.9 digital ept 168% 3% 6.54 26.0 Alap 9.44 98 /2 3% 9.6 amex composite most actives by volume Stock div vol close earns be old Wickes 2,960,400 4v $ 0.78 6.0 Delmed 1,698,200 i Ozarka 1,008,200 17 /2 0.05 345.0 1.1 wangle 1,007,800 20 /2 0.8 Texas air 935,300 28 /2 2.49 11.0 Phlp Tel 912,800 4 /2 0.76 6.0 5.3 key pharm 616,400 15% Forest lbs a 496,600 30 /2 0.95 32.0 dome Petro 434,200 1% am into 413,000 7v 0.33 24.0 amex composite largest net changes Stock close Cage earns be old Telon Rich 563 12 $ 0.08 7206 Aff pub 46 a 4 /2 1.69 27.0 0.9 Martin pros 56vt 3 /2 0.77 73.0 anytime 63 3 /4 2.90 22.0 1.0 far Mil Al 23 a 2% 1.20 20.0 Lumex 19 /2 2% 0.52 38.0 0.4 Olla 38 2 /2 0.23 165.0 1.0 forded 141 2 /2 9.9 amrut 52% 2% 6.8 Alamito 124v2 2 a 10.78 12.0 be Price to earning ratio old dividend yield def deficit Sefc yield in Stock earnings latest 12 months unaudited