My problems are not different, however, from those of the great majority of my fellow soft-drink bottlers, over 3,800 in number, who own their own bottling plants in communities, large and small, all over the United States. I subscribe fully to the statement submitted on behalf of the total bottling industry by Mr. Thomas F. Baker, executive vice president of the American Bottlers of Carbonated Beverages.

I am sure that your committee has already heard from many representatives of the food industry, of which the soft-drink industry is a part, on the bill as a whole, and I do not want to go over the same ground.

I want to confine my comments to one particular section of the bill, section 3(c) (1) which, if enacted, because of its potential effect on my investment in returnable bottles, would, in my judgment, put my investment in my business, my life work as it were, and the businesses of my fellow soft-drink bottlers, in serious jeopardy.

That section provides authority to the Secretary of Health, Education, and Welfare (acting on behalf of the Food and Drug Administration) should he find such action necessary to establish fair competition between competing products (soft drinks for example) by enabling consumers to make a rational comparison with respect to price and other factors, to promulgate regulations establishing reasonable weights or quantities, or fractions or multiples thereof, in which that commodity shall be distributed for retail sale.

In other words, an administrative body would be given broad, virtually uncontrolled authority, to prescribe the size of the bottles or other containers in which I may distribute the soft drinks produced at my plant.

This, to me, is like presenting that official with a loaded gun which he can shoot off at any time, and destroy my business and that of my fellow bottlers. The reason for my fears in this regard, as a soft-drink bottler, are because of the feature, peculiar to my business, as distinguished from other segments of the food industry, that we rely, almost entirely, on the returnable bottle for the distribution of our products.

Although the original cost of such a bottle-some $10 a gross-is greater than that of a one-way bottle or a can, the overall economy of the package is larger, because of the fact that on an average a returnable bottle can make as many as 24 trips in and out of a bottling plant. Although it is hard to be specific, returnable bottles can have a useful life of several years before replacement is necessary.

The soft drink business is, as I am sure you know, a high-volume, low-cost business which provides an inexpensive refreshment to a mass market, and the use of returnable bottles is absolutely essential to keeping the price low for the consumer.

Soft drinks are now distributed in many size returnable bottles. This development has been the result of consumer demands and resulting competitive pressures for varying size packages, depending on circumstances, whether a desire for a single drink from a vending machine, or for a bottle which will hold many servings for thirsty children at home. In my own plant, for instance, there are no less than six size bottles in which the various products handled in my plant are bottled.

If regulations were promulgated specifying the sizes in which my bottles could be bottled, from and after a certain date, my investment in all nonconforming bottles would be forthwith destroyed, and I would have on short notice to replace them with new bottles, of other sizes, not to mention making necessary adjustments or replacements at considerable expense to my machinery and my trucks and my vending machines, and the cost of the new cases and cartons I would have to purchase.

It is hard to know how much that loss would amount to. That it would be substantial is obvious; that it might even throw me in bankruptcy would be a real possibility.

The total investment in my plant in Albany is around $1,100,000, of which approximately 43 percent is an investment in returnable bottles.

My business, as you will appreciate, is a highly seasonable one, which necessitates a large inventory of bottles to take care of demand during the hot summer months. I am budgeting the purchase of approximately $100,000 this year for new bottles for replacement purposes and to take care of increased sales. I do not want unduly to belabor the point, but if, on top of these expenditures, I had to replace even one-third or one-half of my bottle stock at one time, I doubt if my business could stand the strain, and I might feel that total

liquidation of my business at a substantial loss from what it is now worth, would be the only prudent course.

Even if, should the bill become law, the Secretary does not immediately promulgate any such damaging regulation, the threat thereof would always remain, and this would have the undoubted result of making it more difficult to find money for investment in a business subject to such a threat of unpredictable and costly action.

This can only mean that passage of the bill would seriously depreciate the present equity that I and my fellow bottlers have in their businesses, making them less easy to dispose of should circumstances make it necessary to do so.

In conclusion, section 3(c) (1) of the bill represents a very real threat to the soft drink bottlers in the United States, almost all independent, local businessmen, and to their very large investment in returnable bottles, which could, if the section is enacted as part of the bill, be in large part wiped out at some future time by administrative fiat pursuant to a broad and vague delegation of authority.

I want to express my appreciation to the committee for this opportunity to point out the possible impact of this portion of the bill on an important industry. of which I am proud to be a part, and to its potential consequences on a large number of businessmen such as myself in all parts of the United States.

Senator NEUBERGER. The committee is adjourned.

(Whereupon, at 10:46 a.m., the hearing was adjourned.)

FAIR PACKAGING AND LABELING

THURSDAY, MAY 6, 1965

U.S. SENATE,

COMMITTEE ON COMMERCE,

Washington, D.C.

The committee met at 9 a.m., in room 5110, New Senate Office Building, the Honorable Maurine B. Neuberger presiding

Senator NEUBERGER. The committee will come to order.
Who was the last witness yesterday?

Mr. BAKER. I believe I was, Madam Chairman.

Senator NEUBERGER. We do not have the right list, but you may proceed.

SUMMARY STATEMENT OF THOMAS F. BAKER, EXECUTIVE VICE PRESIDENT AND GENERAL MANAGER OF AMERICAN BOTTLERS OF CARBONATED BEVERAGES, WASHINGTON, D.C.; ACCOMPANIED BY R. L. CALLAHAN, JR., LEGAL COUNSEL OF SAME

Mr. BAKER. Madam Chairman, my name is Thomas F. Baker, executive vice president and general manager of the American Bottlers of Carbonated Beverages, the national association of the soft drink industry. Our offices are located at 1128 16th Street NW., Washington, D.C.

Accompanying me here at the table is Mr. R. L. Callahan, Jr., our legal counsel, in case he can be of assistance with questions, should they develop later.

We are most grateful for the opportunity to appear before this committee to present the views of the soft drink industry with respect to the legislative proposal entitled the "Fair Packaging and Labeling Act." In accordance with the wishes of Senator Magnuson, we have submitted to the committee copies of our extended statement which sets forth our position at some length and in detail. It shall be our intention at this point to briefly summarize that prepared statement, highlighting those unique aspects of the soft drink industry's operations which cause us the most concern in the light of the regulatory framework S. 985 proposes to establish.

If there are no objections, Madam Chairman, we would appreciate it if the complete statement can be inserted in the record at this point. Senator NEUBERGER. It will be so inserted following your summary

statement.

Mr. BAKER. Thank you.

At the outset, we should indicate quite clearly that the soft drink industry's opposition to the enactment of the Fair Packaging and Labeling Act does not in any way connote an opposition to the basic

objectives of fair packaging and labeling of consumer goods which S. 985 is designed to achieve. We are opposed to this bill solely because we earnestly believe that it represents needless and unduly restrictive legislation. While we do not pretend to believe that the modern marketplace or the supermarket is in any sense a utopia, we do feel that the need for the rigid regulatory framework envisioned by this bill has not been demonstrated.

No one can seriously argue with the announced aims of the framers of S. 985 to secure the consumer in his right to be adequately informed with respect to the nature, content, and price of the products which are offered for his purchase. At the same time, it is abundantly clear that the imposition of rigid Government controls, with attendant curtailing of the right of the businessman to exercise his own judgment in marketing his wares, is unwarranted and uncalled for.

We must confess that we are somewhat puzzled by the statements of proponents of this bill, who with one breath praise the great majority of manufacturers who are ethical and honest in their dealings while with the next they subject the entire business community to censure for the misdeeds of the unscrupulous few. Certainly we all recognize the regrettable existence of the occasional cheat in the marketplace. At the same time, we earnestly submit that it is no solution to that problem to restrict the honorable practices of all who do business in that arena.

Experience has shown that the consumer will not long purchase products which are misrepresented to him. As anyone who competes for the sales dollar can testify, it is the repeat sale which makes or breaks a business enterprise. The man who relies on fraud and deception to make the initial sale will soon be out of business altogether. In addition to this normal attrition, it would appear that other consumer safeguards are available under present law. Recent Government reports reflect significant strides through use of existing statutes and regulations to curb practices which are allegedly geared to deceit or deception of the consumer. In this context, let me read to you a passage which appears in the April 1965 issue of the FDA Report on Enforcement and Compliance. This comes from page 10.

Food and food product seizures reported last month (March 1965) reached a total of 424,240 pounds. Five actions resulted in seizure of 24,791 pounds of foods for economic reasons. These included 1,632 1-pound cans of coffee and more than 2,000 1-ounce containers of spice on charges of short weight; 9,289 12-ounce cans of mixed nuts on charges of misleading vignettes on the labels and deceptively shaped cans to imply greater volume of contents; 15,332 cans of tomatoes on charges of misbranding; and 2,422 pounds of preserves on charges of omitting name and place of business of manufacturer, packer, or distributor and inaccurate statements of the quantity of the contents on the labels.

At the same time it reports these enforcement actions, FDA also lists voluntary actions by industry to improve consumer protection. During the first quarter of 1965, the agency noted approximately 5,604.900 pounds of food and 923,000 pounds of drugs were voluntarily destroyed or diverted by industry in the interest of consumer protection. In addition, the FDA goes on to report plant improvements totaling $9,379,000 were made by industry to enhance the consumer safety factors in their manufacturing operations.

We feel that this is concrete proof of the fact that private enterprise is not oblivious to the rights of consumers. It is significant,

moreover, to note that FDA reports 219 voluntary industry actions as opposed to 54 Government-initiated seizure actions during March 1965. All of this was under existing FDA regulations.

We are, of course, acutely aware of the fact that consumer representatives are active in espousing the proposal which is presently under consideration. However, we have serious reservations with respect to the real need of this legislation to accomplish the objectives which we all recognize as valid ones. The limited time available to us now and the soft drink industry's very real concern over the potential impact of this legislation on its members, precludes dwelling on this phase of our statement at any greater length. Instead, we shall attempt in these remaining minutes to present for your consideration certain of the unique problems of the soft drink industry which S. 985 largely ignores.

At the outset, it must be clearly understood that the single most important factor in the operation of our industry is its container. As a matter of historical fact, soft drink bottlers have relied upon the returnable glass container as the package for their goods. This is a bottle designed to be distributed to the consumer with a deposit charge normally approximating one-fourth of the cost of the container, which deposit is refunded when the empty bottle is returned. Through this system, the bottler is able to use the same container over a normal life expectancy of 20 to 24 trips. This enables him to minimize his packaging cost and in turn benefits the consumer through the low price of the product which this system makes possible.

There is another aspect to this situation which should be recognized. As a result of the repeated use of the same containers they tend to become familiar, easily identifiable items to the consumer, and in most cases these uniquely designed bottles are specifically developed for that purpose. If the consumer felt the container was in any way designed, shaped, or labeled to deceive him, he would surely stop buying that product.

In this respect the returnable glass container, as used in this industry, provides a built-in safeguard against the alleged difficulties which S.985 is designed to prevent.

The use of the returnable container, with its low cost and easy identification factors, is not without problems which this bill is likely to compound. As a result of its long-continued reliance on the reusable bottle, the soft drink industry has accumulated a vast inventory of these containers in what is known as the float. These are the bottler's glass containers which are in his warehouse or plant and those out in the trade which have not yet been returned to him for reuse. Our best estimate is that there are a total of about 28 million gross of these bottles in existence today. The value of this float is approximately a quarter billion dollars.

This figure represents the individual bottler's ownership of these containers and it is estimated to run as high as 40 percent of his total capital investment. It must be remembered in this context, that the soft drink industry is composed of about 3,900 local bottlers doing business in every State of our Union. These small businessmen must be distinguished from the large nationwide companies which franchise their activities. The individual bottler is the one who purchases