THE MORNINGSTAR GROUP INC.
5956 Sherry Lane, Suite 1800
Dallas, Texas 75225-6522

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

May 18, 1995

NOTICE IS HEREBY GIVEN that the Annual Meeting of the
Stockholders of The Morningstar Group Inc. will be held at the Stouffer
Renaissance Dallas Hotel, 2222 Stemmons Freeway, Dallas, Texas, on May 18,
1995, at 9:00 a.m., local time, for the purpose of considering and voting upon
the following matters:

1. The election of five (5) directors;

2. The ratification of the appointment of Arthur
Andersen & Co. as independent auditors of the
Corporation for the ensuing year; and

3. Such other business as may properly come before the
meeting or any adjournment thereof.

The transfer books will not be closed, but only stockholders
of record at the close of business on April 12, 1995, will be entitled to
notice of and to vote at the meeting. A complete list of the stockholders
entitled to vote at the meeting shall be open to the examination of any
stockholder, for any purpose germane to the meeting, at the offices of the
Corporation during the ten days preceding the meeting and will also be
available for inspection at the meeting.

You are cordially invited to attend the meeting. Even if you
plan to attend, you are respectfully requested to date, sign and return the
enclosed proxy at your earliest convenience in the enclosed return envelope.
You may revoke your proxy at any time prior to exercise.

By Order of the Board of Directors,

/s/ MICHAEL J. CRAMER
Michael J. Cramer
Secretary

Dallas, Texas
April 20, 1995
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THE MORNINGSTAR GROUP INC.
5956 Sherry Lane, Suite 1800
Dallas, Texas 75225-6522

PROXY STATEMENT

This proxy statement is furnished to the stockholders of The
Morningstar Group Inc. (hereinafter referred to as the "Corporation" or
"Registrant") in connection with the solicitation of proxies to be used in
voting at the Annual Meeting of Stockholders to be held on May 18, 1995, and is
being first mailed to the stockholders on or about April 20, 1995. THE
ENCLOSED PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
CORPORATION.

A person giving the enclosed proxy has the power to revoke it
by giving notice to the Secretary in person, or by written notification
actually received by the Secretary (including by delivery of a later dated
proxy card), at any time prior to its being exercised. You may also revoke a
previously given proxy by appearing at the meeting and voting at the meeting.
Your appearance at the meeting will not, in and of itself, constitute a
revocation of any proxy previously given.

The Corporation will bear the cost of soliciting proxies.
Solicitation may be made by mail, telephone or telegraph or personally by
officers, directors and regular employees of the Corporation. It may be that
further solicitation of proxies will be made by telephone or oral communication
with some stockholders of the Corporation following the original solicitation.
All such further solicitations will be made by regular employees and officers
of the Corporation, who will not be additionally compensated therefor, and the
cost will be borne by the Corporation.

VOTING SECURITIES OUTSTANDING, SECURITY OWNERSHIP OF
MANAGEMENT AND PRINCIPAL STOCKHOLDERS

As of April 12, 1995, 14,920,797 shares of common stock of the
Corporation were outstanding, and each share is entitled to one vote. Only
holders of stock of record at the close of business on April 12, 1995, will be
entitled to vote at the meeting.

Except as set forth below, the following table sets forth as
of April 12, 1995, the number of shares of common stock of the Corporation held
by each entity who is known to the Corporation to own beneficially more than
five percent (5%) of the outstanding shares of the Corporation's common stock.
Unless otherwise noted, the entity named has sole voting and investment powers
over the shares reflected opposite its name. (HMC/Morningstar, L.P. is
referred to as "HMCM" throughout this proxy statement.)

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Amount and
Name and Address of Nature of
Beneficial Owner Beneficial Ownership Percent of Class
------------------ -------------------- ----------------

HMCM
c/o Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, TX 75201 . . . . . . . . . . . . . 7,478,892 (a) 50.12%

Goldman-Sachs &Co.
85 Broad Street
New York, NY 10004 . . . . . . . . . . . 2,107,000 (b) 14.12%

Wand/Morningstar Investments, L.P.
c/o Wand Partners Inc.
30 Rockefeller Plaza
Suite 3226
New York, NY 10112 . . . . . . . . . . 840,401 (c) 5.63%

Ryback Management Corporation
7711 Carondelet Avenue
Box 16900
St. Louis, MO 63105 . . . . . . . . . . 800,000 (d) 5.36%

- ---------------------

(a) The following information is based on a Schedule 13G dated February
10, 1994, filed with the Securities and Exchange Commission (the
"Commission") by Thomas O. Hicks; Hicks, Muse & Co. (TX) Incorporated,
now Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse"); HMC
Partners, L.P. ("HMC Partners"); and HMCM, as supplemented by
information provided to the Company by HMCM. The address of the
principal business office of each reporting person is 200 Crescent
Court, Suite 1600, Dallas, Texas 75201. As of December 31, 1993,
HMCM owned, beneficially and of record, 3,473,100 shares of common
stock. In addition, pursuant to a Stockholders' Agreement (see
"Related Party Transactions -- Stockholders' Agreement"), holders of
4,005,792 shares of common stock have agreed to vote their shares of
common stock in favor of HMCM's nominees to the Board of Directors.
HMC Partners is the sole general partner of HMCM, Hicks Muse is the
managing general partner of HMC Partners, and Mr. Hicks is the
controlling shareholder of Hicks Muse. Accordingly, each of HMCM, HMC
Partners, Hicks Muse and Mr. Hicks may be deemed to beneficially own
all such shares of common stock. Each of HMCM, HMC Partners, Hicks
Muse and Mr. Hicks disclaims beneficial ownership of the shares of
common stock not owned of record by such person.

HMCM has sole voting and dispositive power with respect to the
3,473,100 shares of common stock owned of record and beneficially by
it and, by virtue of the Stockholders' Agreement, has shared voting
power with respect to the remaining 4,005,792 shares beneficially
owned by it. Each of HMC Partners, Hicks Muse and Mr. Hicks may be
deemed to have the same voting or dispositive power with respect to
such shares as HMCM.

(b) The following information is based on a Schedule 13G dated February
10, 1995, filed with the Commission by The Goldman-Sachs Group, L.P.
("Goldman Sachs"); Goldman, Sachs & Co. and Goldman Sachs Equity
Portfolios, Inc. on behalf of GS Small Cap Equity Fund, as
supplemented by

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information provided to the Company by Goldman Sachs. The address of
the principal business office of Goldman Sachs and Goldman, Sachs &
Co. is as set forth above. The address of the principal business
office is Goldman Sachs Equity Portfolios, Inc., 32 Old Slip, New
York, New York 10005. Goldman Sachs is the parent holding company
for Goldman, Sachs & Co., a registered investment advisor, and Goldman
Sachs Equity Portfolios, Inc., a registered investment company.
Goldman Sachs and Goldman Sachs & Co. have shared voting power with
respect to the 2,107,000 shares beneficially owned by them and Goldman
Sachs Equity Portfolios, Inc. Goldman Sachs Equity Portfolios, Inc.
may be deemed to have shared voting or dispositive power with respect
to 1,579,800 shares beneficially owned by it.

(c) The following information is based solely on a Schedule 13G filed with
the Commission on March 24, 1993 by Bruce W. Schnitzer, Wand
Partners, Inc. ("Wand Partners") and Wand/Morningstar Investments L.P.
("Wand/Morningstar"), as supplemented by information provided to the
Company by Wand/Morningstar. The address of the principal business
office of each reporting person is 30 Rockefeller Plaza, Suite 3226,
New York, New York 10112. As of December 31, 1992, Wand/Morningstar
owned, beneficially and of record, 840,401 shares of common stock.
Wand Partners serves as the general partner of Wand/Morningstar. Mr.
Schnitzer owns 66% of the issued and outstanding common stock of Wand
Partners and serves as the Chairman and Treasurer. As a result of the
foregoing relationships and stock ownership, Wand/Morningstar, Wand
Partners and Mr. Schnitzer may each be deemed, pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and
the rules and regulations promulgated thereunder, to beneficially own
the shares of common stock held by Wand/Morningstar. Each of Wand
Partners and Mr. Schnitzer disclaims beneficial ownership of the
shares of Common Stock owned by Wand/ Morningstar. Wand/Morningstar
has sole power to vote or to direct the vote and sole power to dispose
or to direct the disposition of all shares of common stock owned,
beneficially and of record, by it. By virtue of their deemed
beneficial ownership of the shares of common stock owned directly by
Wand/Morningstar, Wand Partners and Mr. Schnitzer may each be deemed,
pursuant to the Exchange Act and the rules and regulations promulgated
thereunder, to have sole power to vote or to direct the vote and sole
power to dispose or to direct the disposition of such shares of common
stock.

(d) The following information is based on a Schedule 13G dated January 25,
1995, filed with the Commission by Ryback Management Corporation. As
of December 31, 1994, Lindner Fund, Inc. was the beneficial owner of
800,000 shares of common stock. Lindner Fund, Inc. is an investment
company registered under the Investment Company Act of 1940, as
amended, and is managed by Ryback Management Corporation, an
investment adviser registered under the Investment Advisers Act of
1940, as amended. The address of the principal business office of
Ryback Management Corporation is 7711 Carondelet Avenue, Box 16900,
St. Louis, Missouri 63105. Lindner Fund, Inc. has sole power to vote
or direct the vote and sole power to dispose or direct the disposition
of all shares of common stock owned, beneficially and of record, by
it.

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The following table and notes thereto set forth, as of April
12, 1995 (unless otherwise noted below), the number of shares of common stock
of the Corporation beneficially owned by all directors and nominees for
directors of the Corporation, the Named Executive Officers (as defined under
"Executive Management Compensation") and all directors and executive officers
of the Corporation as a group. Unless otherwise noted, the person named has
sole voting and investment power over the shares reflected opposite his name.
The Corporation has been provided such information by its directors, nominees
for directors and executive officers.

Amount and
Nature of
Beneficial Percent
Name of Beneficial Owner Ownership of Class
------------------------- --------- ---------

C. Dean Metropoulos . . . . . . . . . . . . . . . . . 420,500 (a) 2.74%
Clifford L. Marquart . . . . . . . . . . . . . . . . . 307,514 (b) 2.02%
John R. Muse . . . . . . . . . . . . . . . . . . . . . 56,618 (c) *
Charles W. Tate . . . . . . . . . . . . . . . . . . . 23,382 *
Jack W. Evans . . . . . . . . . . . . . . . . . . . . 39,006 *
Jim L. Turner . . . . . . . . . . . . . . . . . . . . 39,006 *
All Directors and
Executive Officers as a group (7 persons) . . . . . . 598,512 (d) 4.01%

- ---------------------
* Represents less than 1%.

(a) Includes (i) presently exercisable options to purchase 400,000 shares
of common stock held by Mr. Metropoulos; (ii) 3,500 shares of common
stock held directly of record by Mr. Metropoulos; (iii) 4,000 shares
of common stock held by an immediate family member; and (iv) 13,000
shares of common stock for which Mr. Metropoulos is either the
custodian or trustee. Mr. Metropoulos disclaims beneficial ownership
of any common stock not directly held of record by him.

(b) Mr. Marquart resigned as a director, Executive Vice President and
Chief Operating Officer of the Corporation and as an officer of its
subsidiaries on January 16, 1995.

(c) Includes (i) 50,848 shares of common stock held directly by Mr. Muse;
(ii) 1,000 shares of Common Stock held by Mr. Muse's wife; and (iii)
4,770 shares of common stock held by various trusts for which Mr. Muse
is the custodian.

(d) Excludes 307,514 shares of common stock beneficially owned by Mr.
Marquart.

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PROPOSAL FOR THE ELECTION OF DIRECTORS

At the annual meeting, five directors are to be elected to
serve for one-year terms and until their respective successors are elected and
qualified. The Corporation does not have a nominating committee; the Board of
Directors has nominated the persons named below to stand for election as
directors at the annual meeting. Each of the persons nominated presently
serves as a director of the Corporation. It is intended that the
attorneys-in-fact named in the proxy card will vote FOR the election of the
five nominees listed below, unless instructions to the contrary are given
therein. These nominees have indicated that they are able and willing to serve
as directors. However, if some unexpected occurrence should require the
substitution of some other person or persons for any one or more of the
nominees, it is intended that the attorney-in-fact will vote FOR such
substitute nominees as the Board of Directors may designate. All directors
elected at the Annual Meeting will hold office for their respective terms and
until their respective successors are elected and qualified.

The information appearing in the following table and the notes
thereto, with respect to the principal occupation or employment of each of the
nominees during the past five years and their present directorships, has been
furnished to the Corporation by the respective nominees. Unless otherwise
stated, the Corporation is the organization in which the nominee holds the
position indicated.

Date Term
Name and Principal Occupation Age Expires Director Since
----------------------------- --- ----------- --------------

C. Dean Metropoulos 48 May 1995 December 1993
Chairman of the Board, President and
Chief Executive Officer

Jack W. Evans 72 May 1995 May 1991
Chief Executive Officer and
President of Jack Evans Investments, Inc.

John R. Muse 44 May 1995 March 1991
Managing Director and Principal
of Hicks, Muse, Tate & Furst Incorporated

Charles W. Tate 50 May 1995 August 1991
Managing Director and Principal of the New York
affiliate of Hicks, Muse, Tate & Furst Incorporated

Jim L. Turner 49 May 1995 May 1991
Chairman of the Board and President of
Dr Pepper Bottling Company of Texas

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C. Dean Metropoulos is the Chairman of the Board and Chief
Executive Officer of C. Dean Metropoulos & Partners of New York, a private
investment firm, having served since its inception in November, 1993. From
1983 to June 1993 Mr. Metropoulos was Chairman and Chief Executive Officer of
Stella Foods, Inc., a national manufacturer, marketer and distributor of
specialty cheeses. Mr. Metropoulos was elected President and Chief Executive
Officer of the Corporation on March 17, 1994.

Jack W. Evans is the Chief Executive Officer and President of
Jack Evans Investments, Inc. and a director of Brinker International. Prior to
forming his private investment firm in October 1990, Mr. Evans was Chairman,
President and Chief Executive Officer of the Cullum Companies, the parent
corporation of the Tom Thumb grocery store chain, from June 1983 until his
retirement in October 1990. Mr. Evans also served as Mayor of the City of
Dallas from 1981 to 1983. Mr. Evans serves as a director of Randall's Food
Markets, American Title Company and Texas Utilities.

John R. Muse is Executive Vice President, Managing Director
and Principal of Hicks Muse, a private investment firm, having served since its
inception in May 1989. From 1984 to 1989, Mr. Muse was Managing Director of
Prudential Securities Incorporated in Dallas, Texas, where he served as head of
investment/merchant banking activities for the southwestern region of the
United States. Mr. Muse serves as a director of Hat Brands, Inc., Life
Partners Group, Inc., Neodata Corporation, and Trident NGL, Inc.

Charles W. Tate is an Executive Vice President, Managing
Director and Principal of Hicks Muse, a private investment firm, having served
since joining Hicks Muse in 1991. Prior to joining Hicks Muse, Mr. Tate was
employed for 19 years by Morgan Stanley & Co. Incorporated and last served as a
Managing Director in Morgan Stanley's Merchant Banking Division. Mr. Tate
serves as a director of Berg Electronics, Inc., DESA International, Inc., Hat
Brands, Inc., G. Heileman Brewing Company, Inc., and Wirekraft/Burcliff
Industries, Inc.

Jim L. Turner is the Chairman of the Board and President of Dr
Pepper Bottling Company of Texas, one of the largest independent bottling
companies in the United States. Prior to joining Dr Pepper Bottling Company of
Texas in March 1985, Mr. Turner was a senior vice-president (bottling
operations) of the Dr Pepper Company from February 1982 to March 1985. Mr.
Turner serves as a director of G. Heileman Brewing Company, Inc.

COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

The Corporation has a standing Audit Committee, the members of
which are Messrs. Jack W. Evans (Chairman) and Jim L. Turner. Two meetings
were held by such committee during the year ended December 31, 1994. The
principal functions performed by such committee included nomination of the
independent auditors of the Corporation, review of the proposed scope of the
independent audits and the results thereof, review with management personnel of
the independent auditors' observations on financial policy, controls and
personnel, and conferring with the chief financial officer concerning the
audit.

The Corporation has a standing Compensation Committee
consisting of Messrs. Jim L. Turner and Jack W. Evans (Chairman). The
committee acted four times by unanimous consent during the last fiscal year.
The functions performed by such committee included making a recommendation to
the Board of Directors as to the salaries and bonuses of the three most senior
executive officers and administering the Corporation's stock option plans.

During 1994, the Corporation had a standing Executive
Committee consisting of Messrs. C. Dean Metropoulos, Clifford L. Marquart and
John R. Muse. On January 16, 1995, Mr. Marquart resigned as a director and an
officer of the Corporation. Mr. Bach served as a member of the Executive
Committee until

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his resignation March 17, 1994. Mr. Metropoulos was appointed to the Executive
Committee on March 17, 1994. No meetings were held by such committee during
the last fiscal year and the committee did not vote by unanimous consent during
the past fiscal year. The functions performed by such committee include
managing the business affairs of the Corporation during the interval between
regular and special meetings of the Board of Directors. The committee is
subject at all times to the control and direction of the Board.

The total number of meetings of the Board of Directors held
during the year ended December 31, 1994 was five. The Board of Directors voted
by unanimous consent three times during the last fiscal year. During 1994, no
director of the Corporation attended less than 75% of the total number of
meetings of the Board of Directors and all committees on which such director
served.

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EXECUTIVE MANAGEMENT AND DIRECTOR COMPENSATION

EXECUTIVE COMPENSATION

The following table sets forth all compensation, including bonuses,
stock option awards and other payments, paid or accrued by the Corporation
during the fiscal years shown below, to or for the Chief Executive Officer and
the three other most highly compensated executive officers (the Chief Executive
Officer and such other officers collectively being the "Named Executive
Officers") of the Corporation.

SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
----------------------------------- -----------------
Name and Other Securities Awards All
Principal Annual Underlying Other
Position Year Salary ($) Bonus ($) Compensation($) Options(#) Compensation($)(b)
- -------- ---- ---------- --------- --------------- ---------- ------------------

C. Dean Metropoulos 1994 177,884 450,000 112,479(c) 600,000 -0-
Chairman, President and 1993 - - - - -0-
Chief Executive
Officer (a) 1992 - - - - -0-

James A. Bach 1994 136,691 -0- -0- -0- 752,651
President and Chief 1993 469,438 166,196 -0- -0- 4,421
Executive Officer(d) 1992 396,699 145,892 -0- -0- 1,990

Clifford L. Marquart 1994 391,771 -0- -0- -0- 5,895
Executive Vice President 1993 391,406 144,321 -0- -0- 4,643
and Chief Operating
Officer (e) 1992 335,907 121,641 -0- 18,000 2,212

Tracy L. Noll 1994 116,398 -0- -0- 28,617
Vice President and 1993 239,963 86,525 -0- -0- 7,239
Chief Financial
Officer (f) 1992 203,467 74,576 -0- 16,000 5,874

- ----------------------

(a) Mr. Metropoulos was elected President and Chief Executive Officer of
the Corporation on March 17, 1994.

(b) "All Other Compensation" includes (i) premiums of $530.76, $3,769.46
and $568.86 paid by the Corporation for insurance for Messrs. Bach,
Marquart and Noll, respectively; (ii) contributions by the Corporation
to its 401(k) savings plan of $2,126.18, $2,126.18, and $3,189.27 on
behalf of Messrs. Bach, Marquart and Noll, respectively; (iii)
severance payments of $749,994.44 paid by the Corporation to Mr. Bach;
and (iv) $24,859.20 representing salary paid to Mr. Noll for vacation
earned but not taken upon his resignation.

(d) Mr. Bach resigned as a director, President and Chief Executive Officer
of the Corporation and as an officer of its subsidiaries on March 17,
1994.

(e) Mr. Marquart resigned as a director, Executive Vice President and
Chief Operating Officer of the Corporation and as an officer of its
Subsidiaries on January 16, 1995.

(f) Mr. Noll resigned as Vice President and Chief Financial Officer of the
Corporation and as an officer of its subsidiaries on June 17, 1994.

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STOCK OPTION PLANS

On February 15, 1994 the Compensation Committee of the
Corporation's Board of Directors approved the issuance of options to purchase
600,000 shares of common stock of the Corporation to C. Dean Metropoulos,
Chairman, President and Chief Executive Officer of the Company. The exercise
price for these options is $6.50 per share, which was the fair market value of
the options at the date of issuance. One-third of these options became
exercisable on the date of issuance, while the remaining options vest in equal
amounts over two years. The options expire ten years after the date of their
issuance. As of December 31, 1994, no options had been exercised.

The following table reflects information with respect to
option exercises during 1994 and unexercised options granted under the
Corporation's stock option plans and held by the Named Executive Officers at
December 31, 1994.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
DECEMBER 31, 1994 OPTION VALUES

Value of Unexercised
Number of Securities Underlying In-the-Money Options
Shares Unexercised Options At Fiscal Year End At Fiscal Year End
Acquired Value -------------------------------------- ------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------

C. Dean Metropoulos -0- -0- 400,000 200,000 $200,000 $100,000

James A. Bach 395,374 1,012,157 -0- -0- -0- -0-

Clifford L. Marquart -0- -0- 319,514 6,000 $1,365,326 -0-

METROPOULOS ADVISORY AGREEMENT

On October 13, 1993, the Corporation entered into an Advisory
Agreement pursuant to which C. Dean Metropoulos agreed to provide advisory
services to the Corporation. The term of this Agreement is three years and may
be terminated by either party at any time. Subsequent to the execution of the
Advisory Agreement, Mr. Metropoulos was elected to the additional position of
President and Chief Executive Officer of the Corporation. As compensation for
his services, the Corporation pays Mr. Metropoulos a monthly fee of
approximately $29,000 plus all reasonable expenses incurred in connection with
his services. During 1993, the Corporation paid a total of approximately
$290,000 in monthly fees and reimbursed approximately $6,000 in expenses
pursuant to this agreement.

COMPENSATION OF DIRECTORS

During 1994, Messrs. Evans and Turner received $1,000 for each
meeting they attended and $1,000 per month as compensation for their services
as directors. The remaining directors, who were affiliates of the Corporation,
received no compensation for their services as directors. The Corporation
reimbursed all of its directors for expenses reasonably incurred by them in the
discharge of their duties. The Corporation expects to continue such director
compensation policy.

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COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION

During the year ended December 31, 1994, the members of the
Compensation Committee of the Board of Directors were Mr. Evans and Mr. Turner.
Neither Mr. Evans nor Mr. Turner served as an officer or employee of the
Corporation or any of its subsidiaries during fiscal 1994.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

As the members of the Compensation Committee of the Board of
Directors, it is our responsibility to review compensation matters related to
the most senior executive officers of the Corporation and to administer the
Corporation's stock option plans. Based on our review of those matters, the
Compensation Committee makes its recommendations to the Board of Directors for
approval.

The Compensation Committee believes that senior executive
compensation should be closely aligned with the performance of the Corporation
on both a short-term and long-term basis. To that end, the Compensation
Committee's policy is that the compensation for senior executives should
consist of three components: (i) an annual base salary, (ii) the potential to
earn bonuses, the amount of which is dependent on the Corporation's operating
performance, and (iii) stock option awards designed to align stockholder
interests with those of management by providing long-term incentives for the
Corporation's key employees. The number of stock options granted to employees
generally is made after reviewing proposals made by the Chief Executive Officer
and consideration of the relative responsibilities of the option recipients,
past grants made to the recipients.

In making compensation decisions, it has been the practice of
the Compensation Committee to meet with the Chief Executive Officer of the
Corporation at such times as he believes appropriate to review compensation
matters relating to the most senior executive officers of the Corporation. The
Chief Executive Officer typically has presented the Compensation Committee with
his proposals as to the appropriate compensation level for the most senior
executive officers (including himself). The Compensation Committee reviews the
Chief Executive Officer's proposals in light of compensation surveys prepared
by outside compensation consultants and with a view to ensuring that the
proposed compensation balances rewards for short-term and long-term corporate
performance. Based on its review of the Chief Executive Officer's proposals,
the Compensation Committee recommends senior executive compensation packages to
the Board of Directors for approval. The Chief Executive Officer, as part of
his responsibility for the day-to-day operations of the Corporation, has the
authority to establish compensation for executive officers other than the most
senior executive officers and for all other employees of the Corporation.

It has been the policy of the Compensation Committee that the
annual salary of the most senior executive officers should be competitive, but
not at the highest level earned by executives having comparable
responsibilities at other companies of similar size as measured by revenues,
however this group is not necessarily comprised of the Food and Kindred
Products Company reflected on the Performance Graph on page 12 hereof.

For the year ended December 31, 1994, Mr. Bach's compensation
(salary, bonus and severance) was determined by reference to the terms of his
employment agreement. The cash compensation paid to Mr. Metropoulos for
serving as President and Chief Executive Officer of the Corporation during 1994
was determined by reference to the terms of his advisory agreement and the
attainment of specified earnings targets. The stock options granted to Mr.
Metropoulos during 1994 were granted in accordance with the Compensation
Committee's policy of providing long-term incentives to the Corporation's
employees. With the

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exception of the options granted to Mr. Metropoulos, no stock options were
awarded to the Named Executive Officers during 1994 as the Committee determined
that such Named Executive Officers had sufficient incentives by virtue of
options previously granted. For the year ended December 31, 1994, other than a
bonus of $450,000 paid to Mr. Metropoulos, no bonuses were paid to the Named
Executive Officers. For the year ended December 31, 1994, the compensation
paid to Messrs. Marquart and Noll was determined by reference to the terms of
their respective employment agreements. Mr. Bach resigned as a director,
President and Chief Executive Officer of the Corporation on March 17, 1994 and
Mr. Noll resigned as Vice President and Chief Financial Officer of the
Corporation on June 17, 1994.

The new $1 million compensation limit prescribed by Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), is not
expected to apply to or limit any of the Company's compensatory deductions for
1995. With the exception of options granted to Mr. Metropoulos, the Company
presently intends to take the necessary steps to conform its compensation plans
to comply with the rules promulgated under such Section 162(m) of the Code to
avoid such limitation.

Jack W. Evans, Chairman
Jim L. Turner

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THE MORNINGSTAR GROUP INC. STOCK PRICE PERFORMANCE

The following graph depicts the Corporation's stock price performance
from April 24, 1992 (the date on which quotations for the Corporation's common
stock first appeared on the NASDAQ National Market System) through December 31,
1994 relative to the performance of the NASDAQ Stock Market (US Companies) and
the NASDAQ Food and Kindred Products Index (published by the Center for
Research in Security Prices of the University of Chicago Graduate School of
Business). The following graph also illustrates the performance of the NASDAQ
Stock Market (US Companies) Index and the NASDAQ Food and Kindred Products
Index from December 31, 1989 through December 31, 1994. All indices shown in
the graph have been reset to a base of 100 as of April 24, 1992, and assume an
investment of $100 on that date and the reinvestment of dividends paid since
that date.

[GRAPH]

12/29/89 12/31/90 12/31/91 4/24/92 12/31/92 12/31/93 12/31/94

The Morningstar Group 100.0 109.1 67.0 68.3
Nasdaq Stock Market (US Companies) 75.2 63.8 102.4 100.0 119.1 135.9 132.9
Food and Kindred Products 79.4 83.1 106.6 100.0 113.2 120.9 104.3

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RELATED PARTY TRANSACTIONS

STOCKHOLDERS' AGREEMENT

In connection with the completion of the Corporation's public
offering all the pre-offering stockholders of the Corporation entered into a
stockholders' agreement (the "Stockholders' Agreement"). During the term of
the Stockholders' Agreement, each party to the Stockholders' Agreement has
agreed to vote such stockholder's shares of common stock for the election to
the Corporation's Board of Directors of all nominees of HMCM, and has granted
to HMCM a conditional irrevocable proxy in order to ensure compliance with the
voting provisions of the Stockholders' Agreement. The holders of a majority of
the Corporation's outstanding shares of common stock are parties to the
Stockholders' Agreement. The Stockholders' Agreement will be effective until
the earliest to occur of (i) HMCM and holders of at least 662/3% of the shares
of common stock subject to the Stockholders' Agreement consenting to the
termination thereof, (ii) HMCM and its affiliates ceasing to own at least 5% of
the Corporation's outstanding shares of common stock or (iii) February 5, 2002.

During the term of the Stockholders' Agreement, in the event
the Corporation proposes to file a registration statement under the Securities
Act of 1933, as amended, the Corporation will notify the parties to the
Stockholders' Agreement and will, subject to certain exceptions (including
limitations imposed by any underwriters in connection with any offering),
include in such registration statement the aggregate amount of common stock
requested by such holders. The Corporation will pay all expenses incurred in
connection with such registration of such selling stockholders' common stock,
with the exception of fees, discounts and commissions payable to any
underwriter.

John R. Muse is a director, officer and stockholder of Hicks
Muse and Charles W. Tate is a director, officer and stockholder of Hicks Muse.
Messrs. Muse and Tate are also directors of the Corporation. See "Voting
Securities Outstanding, Security Ownership of Management and Principal
Stockholders" and "Directors and Officers - Information Concerning Nominees and
Directors".

FINANCIAL ADVISORY AGREEMENTS

In March 1991, the Corporation entered into a financial
advisory agreement with Hicks Muse pursuant to which Hicks Muse rendered
financial advisory services to the Corporation in connection with the
negotiation and financing of the 1991 restructuring and continues to provide
financial advisory services to the Corporation. The financial advisory
agreement obligates the Corporation to offer Hicks Muse the opportunity to
provide the Corporation with financial advisory services as necessary for
future transactions on terms to be agreed upon between the Corporation and
Hicks Muse. Pursuant to the financial advisory agreement, Hicks Muse has
performed a variety of financial advisory services for the Corporation,
including, among other things, assisting the Corporation in negotiating its
senior credit facilities, negotiating with underwriters in anticipation of the
public offering, recruiting independent directors for the Corporation's Board
of Directors, analyzing potential acquisitions and divestitures, and
consolidating its insurance programs. The initial term of the financial
advisory agreement expires April 30, 2002 and the agreement continues from year
to year thereafter unless terminated by either party. As compensation for such
services, the Corporation has agreed to pay Hicks Muse a fee of $28,500 per
quarter during 1995, together with all reasonable expenses incurred in
connection with its financial advisory services. During fiscal 1994, the
Corporation paid Hicks Muse an aggregate of approximately $114,000 pursuant to
the financial advisory agreement.

On February 1, 1993, the Corporation and Hicks Muse entered
into a letter agreement pursuant to which the Corporation engaged Hicks Muse as
its exclusive financial advisor with respect to the

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March 31, 1993 acquisition of Favorite Foods, Inc. a subsidiary of Nestle
U.S.A. Inc. As compensation for its services, upon the closing of the
acquisition, Hicks Muse received a fee of $420,000.

The Corporation and Hicks Muse entered into a letter agreement
pursuant to which the Corporation engaged Hicks Muse as its exclusive financial
advisor with respect to the April 13, 1994 disposition of Velda Farms Inc. As
compensation for its services, upon the closing of the transaction, Hicks Muse
received a fee of $300,000.

PROPOSAL FOR RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors of the Corporation has appointed Arthur
Andersen & Co. as independent auditors of the Corporation. Arthur Andersen &
Co., certified public accountants, have been the independent auditors of the
Corporation since April 1988. Although not formally required, the appointment
of the independent auditors of the Corporation has been directed by the Board
of Directors to be submitted to the stockholders for ratification as a matter
of sound corporate practice. If the stockholders do not ratify the appointment
of Arthur Andersen & Co., the appointment of the independent auditors will be
reconsidered by the Board of Directors. If the stockholders ratify the
appointment, the Board of Directors, in its discretion, may still direct the
appointment of new independent auditors at any time during the year if the
Board of Directors believes that such a change would be in the best interest of
the Corporation.

The affirmative vote of the holders of a majority of the
shares of the common stock present in person or represented by proxy at the
meeting is required for ratification of the appointment of the independent
auditors. Votes "withheld" or abstaining from voting are counted for quorum
purposes, but since they are not cast "for" a particular matter, they will have
the same effect as negative votes or votes "against" a particular matter.
Broker non-votes (shares not voted by broker-dealers because they are not
authorized to vote in absence of instructions from beneficial owners) are
counted for quorum purposes, but will have no effect on the outcome of the
election of directors.

A representative of Arthur Andersen & Co. will be present at
the meeting. Such representative will be given the opportunity to make a
statement if he desires to do so and will be available to respond to
appropriate questions.

The Board of Directors favors a vote for the proposal to
ratify the appointment of Arthur Andersen & Co. Unless a contrary indication
is specified, the shares presented by the enclosed proxy will be so voted. In
the event the appointment of Arthur Andersen & Co. should not be ratified by
the stockholders, the Board of Directors will make another appointment, to be
effective at the earliest feasible date.

SHAREHOLDER PROPOSALS

Shareholder proposals to be included in the Company's Proxy
Statement relating to the 1996 Annual Meeting of Shareholders of the Company
must be received by no later than January 5, 1996 at the Company's principal
executive offices, 5956 Sherry Lane, Suite 1800, Dallas, Texas 75225-6522,
Attention: General Counsel. Shareholders of the Company who intend to nominate
candidates for election as a director or to bring business before the meeting
must also comply with the applicable procedures set forth in the Company's
Bylaws. See "Shareholder Nomination of Director Candidates." The Company will
furnish copies of such Bylaw provisions upon written request to the Secretary
of the Company at the aforementioned address.

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OTHER MATTERS

The Board of Directors knows of no other matters to be
brought before the Annual Meeting of Stockholders; however, if any additional
matters are properly brought before the meeting, the persons named in the
enclosed proxy form will vote the proxies in their discretion in the manner
they believe to be in the best interest of the Corporation.

VOTING REQUIREMENTS

With regard to the proposal for the election of Directors, votes may
be cast for or votes may be withheld from each nominee. Directors will be
elected by plurality vote. Therefore, votes that are withheld will be excluded
entirely from the vote and will have no effect. Abstentions may not be
specified with respect to the election of directors and, under Delaware law,
broker non-votes (as explained below) will have no effect on the outcome of the
election of directors. In general, a broker who holds securities in street
name has limited authority to vote on matters submitted at a shareholders
meeting in the absence of specific instructions from the beneficial owner. In
the absence of instructions from the beneficial owner or authorization from the
National Association of Securities Dealers, Inc. (the "NASD") to vote on
specific matters without the necessity of obtaining instructions from the
beneficial owner, a broker will specify a "non-vote" on particular matters.
For purposes of Delaware law, a broker non-vote is counted as present for
quorum purposes, but is generally excluded entirely from determining whether a
particular matter has been approved. Typically, however, brokers are permitted
by the NASD to vote for the election of directors without instructions from the
beneficial owner.

As discussed under "Related Party Transactions --
Stockholders' Agreement," HMCM, through shares owned directly by it and through
shares it has the power to vote pursuant to a conditional irrevocable proxy,
controls more than a majority of the outstanding shares of common stock of the
Corporation, and has indicated that it will vote in favor of the nominees to
the Board of Directors, thus ensuring the election as a director of each
nominee named herein.

If no directions are specified in any duly signed and dated proxy card
received by the Corporation, the shares represented by that proxy card will be
counted as present for quorum purposes and will be voted by the
attorneys-in-fact named in the proxy FOR the election of the director nominees
recommended by the Board of Directors and in accordance with the discretion of
the named attorneys-in-fact on other matters properly brought before the Annual
Meeting.

SHAREHOLDER NOMINATION OF DIRECTOR CANDIDATES

Any shareholder of record who is entitled to vote for the
election of directors at a meeting called for that purpose may nominate persons
for election to the Board of Directors subject to the following notice
requirements.

A shareholder desiring to nominate a person for election to
the Board of Directors must send a written notice to the Secretary of the
Company setting forth (i) as to each person who the shareholder proposes to
nominate, all information required to be disclosed in solicitations of proxies
for election of directors, or as otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act (including such person's written consent
to being named in the proxy statement as a nominee and to serving as a director
if elected) and (ii) as to the shareholder giving the notice (A) the name and
address of such shareholder as it appears on the Company's books and (B) the
class and number of shares of the Company that are owned of record by such
shares of the Company that are owned of record by such shareholder. To be
timely, notice of persons to be nominated by a shareholder as a director at a
meeting of shareholders must

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be delivered to or mailed and received at the principal executive offices of
the Company not less than 120 days before the first anniversary of the
preceding year's annual meeting.

The enclosed form of proxy has been prepared at the direction
of the Corporation, of which you are a stockholder, and is sent to you at the
request of the Board of Directors. The proxies named herein have been
designated by your Board of Directors.

The Board of Directors of the Corporation urges you, even if
you presently plan to attend the meeting in person, to execute the enclosed
proxy and mail it as indicated immediately. You may revoke your proxy and vote
in person if you are in fact able to attend.

THE MORNINGSTAR GROUP INC.
By Order of the Board of Directors

/s/ MICHAEL J. CRAMER
Michael J. Cramer
Secretary

Dallas, Texas
April 20, 1995

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10-K REPORT AVAILABLE

A copy of the Corporation's annual report on Form 10-K, as filed
with the Securities and Exchange Commission, will be furnished without
charge to stockholders on request to:

Michael J. Cramer
The Morningstar Group Inc.
5956 Sherry Lane, Suite 1800
Dallas, Texas 75225-6522

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NOTICE OF ANNUAL
MEETING AND
PROXY STATEMENT

THE MORNINGSTAR GROUP
INC.
THE MORNINGSTAR 5956 SHERRY LANE, SUITE 1800
GROUP INC. DALLAS, TEXAS 75225-6522
BY ORDER OF THE BOARD
OF DIRECTORS

Michael J. Cramer
Secretary
Dallas, Texas
April 20, 1995

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PROXY

THE MORNINGSTAR GROUP INC. ANNUAL MEETING
MAY 18, 1995 CONTINUED FROM OTHER SIDE

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES AND FOR
PROPOSAL 2. This Proxy will be voted as specified. IF NO SPECIFIC DIRECTIONS ARE
GIVEN, ALL OF THE VOTES ATTRIBUTABLE TO YOUR VOTING SHARES WILL BE VOTED FOR THE
NOMINEES.

1. Election of Directors.
Nominees: C. Dean Metropoulos, John R. Muse, Charles W. Tate, Jack W.
Evans and Jim L. Turner

(Mark only one)
/ / VOTE FOR all nominees listed, except as marked to the contrary above
(if any). (to withhold your vote for any individual nominee
strike a line through the nominee's name in the list above).
/ / VOTE WITHHELD from all nominees.

2. RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN & CO. AS INDEPENDENT
AUDITORS of the Corporation for the ensuing year.

FOR / / AGAINST / / ABSTAIN / /

If any other business is properly brought before the meeting, the undersigned
acknowledges that the above named proxy will vote in his discretion on such
other business.

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

- --------------------------------------------------------------------------------

P R O X Y

THE MORNING STAR GROUP INC.

ANUAL MEETING
MAY 18, 1995

The undersigned having received the notice and accompanying Proxy Statement
for said meeting hereby appoints MICHAEL J. CRAMER with full power of
substitution, as the undersigned's proxy and attorney-in-fact to vote at the
annual meeting May 18, 1995 or at any adjournment thereof all shares of The
Morningstar Group Inc. which the undersigned may be entitled to vote. The above
proxy is hereby instructed to vote as shown on the reverse side of this card.

This proxy must be dated and signed
exactly as shown hereon.

Dated: ________________________, 1995

_____________________________________

Executors, administrators, trustees,
etc., should give full title as such. If
the signer is a corporation, please sign
full corporate name by duly authorized
officer.