Natural Foods Merchandiser

No End Seen To Soy Sales Trend

Sales of refrigerated soy milk continue to accelerate at least 20 percent per year, and industry experts see nothing that will impede this rapid growth.

Demographic trends indicate that the market holds enormous growth potential as more population segments are drawn to healthier foods for a variety of reasons.

The highly publicized endorsement by the Food and Drug Administration in 1999 that soy protein helps to lower cholesterol gained notice among consumers and sales spiked instantly. But there's more news that will continue to help swell soy milk's market share.

The most significant statistic is that more than half the U.S. population has never tasted soy milk. And, according to Stake Technology, owner of Sunrich, a major soy milk manufacturer, soy milk consumption is still less than 1 percent of all milk-product consumption.

Stake Technology, of Norval, Ontario, Canada, also reports other trends that will influence soy milk sales:

  • Consumer demand for all organic products is growing—and the leading brands of soy milk are made with organic soybeans. The overall organic products market is estimated at $5.8 billion and experts predict 17 percent growth for at least the next three years. Even with receipts in the billions, organic foods sales account for only 1 percent of all U.S. food sales.
  • Lactose intolerance extends across all ethnic groups and appears to increase with age. The percentages of people older than 40 who are lactose intolerant break down as follows: African-Americans, 70 percent; Asians, 70 percent; Hispanics, 60 percent; Caucasians, 40 percent.
  • As the female population ages, more women will be looking for products such as soy milk to help them reduce osteoporosis risk and buffer the effects of menopause.
  • Environmental consciousness is growing among consumers, and people are recognizing that soybeans are an important renewable resource that contribute to healthy lifestyles.

Retailers who leverage these trends will see sales in all soy categories grow, experts say.

Sales Trends
During the last two years, market studies reveal phenomenal growth of soy milk in both natural products stores and in traditional supermarkets.

According to SPINS, a San Francisco-based research firm, sales of refrigerated soy milk in traditional supermarkets increased by 57 percent to $242 million for the 12-month period ending Oct. 31, 2001.

According to Nutrition Business Journal, soy milk sales in natural foods stores, natural foods supermarkets and convenience stores increased by about 25 percent in 2001 to more than $660 million.

Other nondairy beverages and products also are showing significant growth. Sales of rice, oat and almond milks, for example, increased 19 percent in natural foods supermarkets and 94 percent in mass market stores during 2000. Soy yogurt and kefir sales increased by 65 percent in natural channels and 172 percent in grocery chains.

The most significant growth in the soy category will continue to be in products defined traditionally as dairy items—milk, yogurt and ice cream, explains Steve Allen, vice president of new business development for Nestlé USA in Los Angeles. While sales of meat substitute items, such as soy burgers, and bars are growing, they won't be as significant, Allen says.

Still, based on market statistics, the overall potential for soy products appears to be enormous. In its 2001 report, "Consumer Attitudes About Nutrition," the United Soybean Board, based in Washington, D.C., found that only 27 percent of consumers were eating soybean products once a week. Research by the Natural Marketing Institute showed only 25 percent of consumers using soybean products.

Manufacturing Trends
Manufacturers continue to take notice of the growing popularity of soy products. During 2000, more than 300 new soy-based food products were introduced to the marketplace. Consumer demand for healthier products is the driving force.

"As an ingredient, soy is now ranked as important as vitamin C in functional foods and beverages," says Mary Thompson, vice president and general manager of Cargill Soy Protein Products in Minneapolis.

Recognizing the sales potential, major manufacturers and ingredients companies are engaging in more research. The research is aimed at improving the flexibility and applicability of isolated soy ingredients for use in a wider variety of foods.

A primary goal is to improve flavor of soy products. Initially, consumers complained about the taste of soy milks. Improved flavor in second-generation soy milks, better blends and flavorings and better consumer education on chilling and serving have helped overcome negative consumer perceptions.

Adding calcium and vitamins to soy milk helped the products gain consumer acceptance. When first developed, soy milk was not intended to be a substitute for cows' milk. But as consumers started to show more interest in the products, manufacturers began fortifying.

As more soy milk is manufactured, increasing supplies, industry experts predict retail prices will decline. At the same time, marketers are predicting cows' milk prices will continue to increase. According to the Soyfoods Center, based in Lafayette, Calif., retail prices for both varieties of milk will be nearly the same in about five years, and that should help spur more consumer interest.

Given manufacturers' enthusiasm for soy and growing competition in the industry, retailers are likely to see more marketing help in the future.

Retailers Respond
Soy milk started gaining popularity in the 1980s as more people became aware of the benefits of healthy, organic foods. Once only found in stores that catered to Asian customers, natural foods stores started carrying soy milk in the early 1980s. Eden Foods, based in Clinton, Mich., introduced the first recognizable brand in 1983 and that launched the soy milk era.

Even though soy milk sales grew steadily, the product was packaged in aseptic boxes and was difficult to find outside of natural stores until the mid 1990s. Then, in 1996, White Wave Inc., of Boulder, Colo., introduced refrigerated soy milk in standard gable-top cartons. That innovation allowed its Silk product to be carried in the dairy cases of grocery stores and brought soy milk to the mass market. By 2000, Silk could be found in more than 24,000 supermarkets across the United States.

In December 2001, Suiza received approval from the U.S. Justice Department to purchase Dean Foods—a move that was opposed unsuccessfully by White Wave. In the natural store category, strong sales of soy milk are found in both shelf-stable and refrigerated products. Small natural foods stores also sell as much soy milk as the large natural foods supermarkets.

The majority of growth, however, has come from the dairy case in grocery chains. And that's where experts say most sales growth will come from in the future.

While major food manufacturers have embraced soy milk, the growing popularity hasn't thrilled the dairy industry. In February 2000, the National Milk Producers Federation filed a complaint with the FDA seeking to banish the term soy milk. The dairy group argues that the liquid extracted from soy beans is not milk and that soy manufacturers are taking advantage of dairy terminology. The FDA has yet to make a statement about the federation's complaint.

Grant Ferrier is the editor-in-chief of Nutrition Business Journal.

Natural Foods Merchandiser volume XXIII/number 4/p. 24, 26

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