Conditions in the U.S. food marketing system generally improved in 1989. Sales rose about 7.5 percent to an estimated $686 billion. Competition among manufacturers for scarce shelf space in retail foodstores continued strongly. The food marketing system introduced 12,000 new grocery products in 1989, but food processors cut down on direct consumer advertising. Food processors ' and retailers' debt rose by nearly $70 billion in 1989, largely due to the financing of massive leveraged buyouts and mergers announced in 1988. Merger activity slowed in 1989. After-tax profits for food processors fell sharply due to higher interest payments. The balance of trade deficit in the U.S. processed food sector declined from $2.7 billion to $2.3 billion, reflecting strong export demand in 1989.