Where is the Soyfood Market Headed?

by Nancy Chapman

Soyfood sales are soaring. Four factors that help a food category grow explain the extraordinary performance of soy.

1. Research supports health benefits and more consumers know it.
2. The media can't write enough soy stories.
3. FDA may approve a health claim for soy protein and heart disease reduction.
4. New and traditional food companies flood the market with novel soy products.

As the Executive Director of Soyfoods Association of North America, I have seen our membership grow 40% in one year. This organization represents the broad continuum of the soyfoods market -- connecting growers, bean processors, soyfood manufacturers, retailers, and consumers, as well as media, industry consultants, and researchers.

My remarks will convey the excitement about soy and educate you on:

• the growth in soyfoods and the factors underlying market changes;
• new products and their availability;
• the mainstreaming of soyfoods in retail stores, restaurants, and home kitchens.

OPPORTUNITIES

The opportunities for the soyfood market begin with a well-suited bean that more and more consumers want.

Nutritional Composition of the Bean: Soybeans are high in protein (38% by weight) that has a protein equivalency to animal protein. Soy is an excellent source of fiber (15% by weight). Soybeans are high in iron, calcium, zinc, B vitamins, and vitamin E. The isoflavone content of soybeans may convey additional health benefits.

Broader Consumer Demand: The country is seeing a change in demographics as the baby boom generation turns 50. This large group of consumers, now more interested in longevity and good health, continue to drive trends in the marketplace. According to Nutrition Today, this generation, believing that food is an important factor in achieving these goals, is consuming more dietary supplements, organic foods, and vegetarian foods, and is responsible for the introduction of functional foods. The double-digit growth in Asian populations in the U.S. has increased demand for the traditional soyfoods as well as those with a more Western touch. Ethnic food companies are maneuvering towards the general market, while general foodservice operations, supermarkets and quick-serve restaurants offer more exotic cuisine. Already 45% of Americans eat Asian foods over the course of any one month, according to a FoodNet survey. An ADM survey found 97% of colleges and universities now offer meatless entrees on their menu. This demand translates into 1997 sales of soyfoods that are estimated at $1 billion, up from $300 million in 1980, according to Soyatech, Inc., Bar Harbor, ME.

Interest of the Media: Soy's tremendous versatility, both for food uses and non-food uses, makes it a real attention-getter. However, the surprising amount of positive research into the health benefits of soy has made it an especially attractive story to the media. Through a news clipping service, the Soyfoods Association has collected about 2,000 news clippings related to soy (for food use) in the last year alone.

Positive Promotion of Soy Protein and Soyfoods: Several groups coalesced in promoting the health benefits and the new uses of soy. The United Soybean Board and numerous state soybean boards have underwritten numerous projects targeting schools, food manufacturers, nutrition professionals, and retailers with the good news about soy.

Health Professionals Embrace the Benefits: Nutritionists and doctors are more frequently recommending regular consumption of soy as part of a healthy diet to combat pre-menopausal symptoms, lower cholesterol levels, and to help prevent breast cancer for those at high risk. Dietitians educate both vegetarians and health conscious consumers on how to buy, use, and enjoy soy in a daily diet.

New Products for Consumers: The soy industry has been creating new beans and new products to meet rising consumer demand. A sample of better textured and better flavored soy products include: Vitasoy all-natural soy beverage with brown rice syrup, Cafe Westbrae (soy coffee drink), White Wave Lemon Broil Tempeh, Soy Boy Caribbean Organic Tofu, Smoke & Fire Thai, BBQ, and Smoked Tofus, Health is Wealth Pizza Tofu Munchies (frozen), and LightLife Lean Breakfast Links. At every Natural Products Expo, there are at least six new companies exhibiting.

BARRIERS

The road to the summit has not always been smooth. Demand out-pacing supply and non-definitive research results have erected barriers for some markets.

Limited Availability: Traditionally, soyfoods have been viewed as products for vegetarians, hippies, and nature lovers, without acknowledgment of consumers who are generally health-conscious and interested in fitness. A change in attitude about soy is evidenced by the fact that veggie burgers can now be found in some very mainstream restaurant chains like Applebees, Subways, and TGI Fridays. Burger King even carries a veggie burger in parts of Europe. In addition, most grocery stores now carry at least one or two different brands of veggie burger such as the Harvest Burger (Pillsbury), Gardenburger (Wholesome and Hearty Foods), or Garden Veggie Patty (Worthington). The addition of natural food sections in regular grocery stores has also increased the visibility of soyfoods. Likewise, many institutional food programs, such as school lunch, add soy to reduce cost and lower fat content while boosting nutritional value.

Non-Definitive Research Conclusions: Many studies on soy have shown quite encouraging results with regard to cholesterol lowering, breast cancer, prostate cancer, menopausal symptoms, osteoporosis, and memory loss, but definitive clinical trials have not been completed. Researchers generally agree that it is simply too early to tell whether soy or its isoflavones can reduce the risk of breast and prostate cancer, osteoporosis, and hot flashes, according to the Center for Science in the Public Interest's September issue of Nutrition Action Health Letter. Meanwhile, the soybean grower groups continue to support research that will help to close the knowledge gaps. The National Institutes on Health have also taken an interest and are supporting specific areas of research in heart disease and cancer.

Health Claims on Competitive Products: The approved health claim for soluble oat fiber and reduced heart disease exploded the market for oat products, some being look alikes for soyfoods, e.g. oat miso and oat tempeh.

PRODUCT DIFFERENTIATION

The full array of soyfoods divides into traditional products, meat alternatives, blended meat products, functional foods, and dietary supplements.

Traditional Soyfoods:

• Tofu: cooked, pureed soybeans drained to produce a milky liquid. The liquid is then mixed with a coagulant to form a high-protein custard-like food.
• Soymilk: ground soybeans are mixed with water to form a milky liquid.
• Tempeh: whole, cooked soybeans are infused with a culture to form a dense, chewy cake used in place of meat.
• Miso: fermented soybean paste used as a soup stock and seasoning.
• Natto: fermented, cooked soybeans with a sticky, viscous coating.
• Edamame: tender, young soybeans, salted and cooked. Sold in pods, shelled, canned, or frozen.
• Soy flour: both fatted and de-fatted flour used widely in baked goods.

Meat alternatives, also called meat analogs or meat substitutes, are made entirely from soy to look like meat products. They include mock chicken, beef, ground beef (tvp), hot dogs, sausage, pepperoni, bacon, turkey, veggie burgers, and deli slices; such as, bologna, ham and turkey.

Blended products combine meat with soy protein to produce a lower fat product that resembles meat products. These products are popular with food service operations.

Functional foods include sports beverages, performance bars, smoothies, and baked goods with soy flour.

Dietary supplements include lecithin, soy protein isolates (powder) and concentrates.

MARKET FOR TRADITIONAL SOYFOODS

Sales of traditional soy products such as tofu, soymilk, soy sauce, miso, and tempeh grew at a rate of 11% per year from 1980 to 1997, according to Senechal, Jorgenson, Hale and Company in Massachusetts. The 1997 Health Focus Trend Report found five percent of shoppers used soyfoods such as tofu, at least once a week, up from three percent in 1993. Retail sales of soymilk grew more than 700 percent in 10 years, from $20 million in 1985 to upwards of $140 million in 1995 according to Soyatech, Inc. The 1998 Soy Protein Market Potential Survey, conducted by the United Soybean Board, predicts an annual growth rate of 4.5% for soy flour.

Customers of traditional soyfoods generally include individuals with lactose intolerance, menopausal women, Asian Americans, vegans (who eat no animal products), vegetarians, and partial vegetarians. About 7% of the population describe themselves as vegetarian, according to a 1992 Yankelovich survey. Of this group, most are women over the age of forty who have children under the age of 18. Another, and hugely growing, segment is made up of a younger crowd: 14-29 year-olds, 30% of whom are full or partial vegetarians.

Production capacity is increasing to meet this demand. For example, the new Vitasoy/Nasoya plant in Massachusetts has the capacity to produce 25 million pounds of Nasoya tofu, one-third of all US domestic demand and more than 5 million gallons of Vitasoy soy milk annually. Eden Soy and Natural Products have also expanded operations this year.

New products steadily enter the market. White Wave Silk soymilk beverage and dairyless cultured soy yogurt debuted at the Food Marketing Institute Convention in May. ADM recently introduced a non-Dairy frozen dessert. Rella and Soya Kaas have created great tasting tofu cheeses in numerous traditional flavors, such as smoked Mozzarella and cheddar.

MARKET FOR MEAT ALTERNATIVES AND BLENDED MEAT PRODUCTS

Sales of meat alternatives and blended products expand as the per capita beef and pork consumption has declined by 54% and 45% respectively over the last 20 years. The market for meatless meat in the U.S. and Canada hit $180 million in 1995; $265 million in 1996; and is projected to reach $376 million by the end of 1998 (American Way, Dallas, TX). The marketing firm, Datamonitor, predicts the market size will reach over a billion dollars by the year 2001. Of the meatless products available, frozen veggie burger patties are experiencing the largest growth, comprising nearly 1/3 of total frozen burger sales in 1995-1996. Sales rose 32%, while meat burger sales rose 12%. Other products such as imitation bacon, sausage, ground beef, and deli slices are becoming increasingly popular. Popularity of meatless pre-made frozen entrees is also on the rise.

Customers for meat alternatives, or at least 80%, are NOT vegetarians. Again, the aging baby boomers (non-vegetarians and vegetarians alike) looking for healthy eating options are driving the market. The younger crowd of vegetarians is also taking to meat alternatives, according to an ADM survey. Seekers of low fat meat products select the blended meat and poultry hot dogs, luncheon meats, sausages, and nuggets.

New products emerge rapidly and are a booming segment of the soy industry. Aside from veggie burgers, some new products include: Tofurkey (Turtle Island Foods), now also available in deli slices; Natural Touch Nine Bean Loaf; Mon Cuisine Vegetarian Salisbury Steak, and breaded chicken-style cutlet; and LightLife meatless deli slices, Tofu Pups, and Wonderdogs. Brato Dogs, a pork/soy blended product developed by Midland with support of the Iowa Soybean Promotion Board, has gained approval from two-thirds of participating students in school food service operations in three Iowa towns.

MARKET FOR FUNCTIONAL FOODS

Sales for functional food products, many soy-based, reached $175.1 million in 1997, and is expected to grow to $314.1 million by 2002, according to Technomic Foodservice Digest. Business Communications Co. found the 1997 market for functional beverages alone reached $92.7 million, and predicts it to top $196 million by 2002.

Customers for soy-based functional foods such as energy bars and soy protein smoothies represent two groups: 1) younger, often athletic types who use them as a meal replacement or as a snack before or after exercise, and 2) older women who seek disease prevention through quick meals.

New Products such as Protein Technologies Incorporated Health Source soy beverages entered the dairy cases of California test markets this spring aimed at women concerned about osteoporosis, menopause, and heart disease. GeniSoy Protein Products include protein bars, powders, and shake mixes have moved from the health food store to natural food sections of mainline supermarkets.. Several energy bars contain isolated soy protein, including, Balance, Break Thru Bar (Glen Foods, Inc.), Think! (Ph.D., Inc.), and Spiru-Tein Protein Bar (Nature's Plus). Nutrition Foods (Ralston Purina) recently came out with its Health Source® line of soy-based, protein-rich beverages, and yogurt-like snacks. Better Than Milk® is a new brand of soy beverage mix, and Blue Sky, Balance, Fresh Samantha, and Odwalla all have smoothies with added soy protein.

MARKET FOR DIETARY SUPPLEMENTS

Sales of dietary supplements experienced an overall annual growth of 21.8% in 1997, but in the second quarter of 1998, sales for retail dietary supplement companies have grown 51.2 %, compared with the same quarter last year, according to Natural Business Journal.

Customer base - According to Whole Foods magazine, the category of natural products for women is very strong, especially for dietary supplements. Many of these supplements cater to active working women and older women concerned about prevention of heart disease. Other women use soy supplements to combat premenopausal symptoms.

New and old products fill an expanding shelf space in supermarkets, pharmacies, health and natural food stores. Solgar offers a powdered drink mix, high in phytoestrogens found in soy, that act like synthetic estrogen, but without the side effects. The Schiff Company also manufactures a soy protein powder called Women's Natural Replacement. Schouten USA, Inc. has a new product, high in isoflavones, called SoyLife®. Lucas Meyer, Inc. markets several soy-derived concentrates that may be used to fortify and enrich different food products such as cereals, snacks, and energy drinks. As a dietary supplement, they are used to boost memory and learning, support cholesterol control, and protect against liver damage.

STEPS TO GROW THE MARKET

Growth in sales of soyfoods seems inevitable. But competition from oats, rice, and other grains to provide food or ingredients to the health-hungry consumer is fierce. Several future events can determine how fast and steep the growth curve for the soy industry will be. Possible future headlines might read:

• FDA grants a health claim for soy protein and heart disease reduction. The agency should complete review of a petition for the soy and heart disease health claim by mid-November. If granted, food labels and food advertisements will aggressively promote this claim to the 25 to 50% of adults with above average blood cholesterol.
• Researchers reach scientific consensus that soy reduces the risk of osteoporosis, prostate cancer, and breast cancer. Promising research results relating to the role of soy in human health and nutrition has triggered the interest of the National Cancer Institute and the USDA Phytonutrient Laboratory at the Beltsville, Maryland Agricultural Research Center. Several voluntary health groups are also examining cholesterol-lowering, and possible cancer preventive effects of soy.
• The U.S. Department of Health and Human Services announce that the public should consume more plant foods, especially soy. In late 1999 or early 2000, the federal government will publish the revised Dietary Guidelines and the Healthy People 2010, Objectives for Health that will no doubt point to the benefits of more plant-based foods in the diet and may single out soy.
• New and tastier soy products are available in supermarkets and restaurants in your neighborhood - just ask if you can't locate them. Soyfoods appear as Italian (pizza, ravioli, manicotti), Thai, Southern (BBQ tofu and tempeh), Indian and Mexican foods. Manufacturers have introduced quick-prep foods, snack foods, and pre-prepared foods for time-pressed consumers. Manufacturers and retailers need to give consumers recipes, cooking and storage instructions, and food safety tips.
• The U.S. Department of Agriculture issues new rules that will permit more flexibility in foods available through feeding programs. The National School Lunch and Breakfast Programs might lift the restriction of the amount of soy in meat products. The WIC program may permit states to offer pregnant women, infants, and children soy milk. The Food Safety Inspection Service might expand its definition of low-fat meat products to include more soy ingredients.

Now is the time to invest in soy and reap the benefits.

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