THE GLOBAL MARKETPLACE

Watershed years for the world — and for Ralston Purina. Soviet communism collapses, the Berlin Wall is broken, Japan's economic power increases, and U.S. corporations survive by adapting to a changing marketplace.

America now shares the economic stage with former enemies in Europe and Asia. Eastern Europeans seek to build market economies — one of the greatest social and economic experiments in human history. Foreign investors purchase U.S. real estate, corporations and factories. The concept of a common European market comes closer to reality.

Domestically, the 1980s begin with the worst recession of the post-war era. Unemployment reaches 10 percent, a level not seen since the Great Depression. Short-term interest rates exceed 15 percent, and inflation peaks at a rate of more than 10 percent. By 1982, the economy begins a period of growth with low inflation. The Dow Jones Industrial Average exceeds 1,000, then 2,000, and finally 3,000, with volume routinely exceeding 100 million shares daily. An October 19, 1987, crash rocks Wall Street, but there is no repeat of the Great Depression. The market regains all it lost and moves sharply higher by the end of the decade.

"Synergy" replaces "diversification" as a rationale for business combinations, and the result is another wave of mergers. The corporate-equity environment takes on predatory characteristics as companies are privatized by the leveraged buyout, or LBO, whereby a company thought to have a greater value is purchased — often through the issuance of "junk" bonds.

The American workplace continues to evolve as the U.S. economy shifts from heavy manufacturing to service industries. Management gurus publish a library of corporate survival books. AT&T is broken up; Sears and GM face crisis situations; and IBM loses its predominance in the computer industry, as the shift from mainframes to personal computers occurs. Apple, Compaq and other computer firms become multi-billion dollar companies. The microchip brings tremendous power to the personal computer. Wal-Mart becomes the nation's largest retailer. Power shifts from manufacturers to sophisticated retailers. Customers demand value, quality and service at the right price.

The "Me" Generation surfaces. Social trends include yuppies, cellular phones, anti-smoking laws, recycling, shopping malls and warehouse clubs.

As competitors like Standard Brands, Beatrice, General Foods and Nabisco fall victim to the buy-out craze, Ralston implements an aggressive plan to revitalize all dimensions of the company.

In no other period does Ralston's direction change so dramatically. Ralston begins the transformation by selling its Foodmaker restaurant operations, Van Camp and the St. Louis Blues hockey franchise. It acquires Continental Baking Company, the largest wholesale baker of fresh bakery products in the U.S., from ITT in 1984. In June 1986, Ralston pays $1.415 billion for the battery products operations of Union Carbide Corporation. It is money well spent. One month later, Ralston sells Purina Mills to a subsidiary of The British Petroleum Company. In so doing, Ralston effectively sells the very origins of its existence as an animal-feeds business. This divestiture, however, enables Ralston to focus on its consumer-packaged-goods businesses and its stable of leading brands. Ralston becomes, in effect, a holding company, with Continental Baking Company, Eveready Battery Company, Ralston Purina International, Grocery Products, and Protein Technologies International subsidiaries operating independently. Ralston acquires Beech-Nut Nutrition Corporation in 1989.

Ralston Purina International increases its pet food and cereal operations in Europe and the Far East. Pro-Visions Pet Specialty Enterprises is created to address the growing pet specialty segment. Super-premium and store-brand pet foods emerge as mass merchandisers battle for the consumer dollar.