Bean Counters
by Lynn Petrak
Soy products ramp up competition in the dairy case, luring some milk processors into the mix.
Remember when soy was the stuff of mom-and-pop health stores and special dietary needs sections?
As recently as 10 years ago, soy alternatives to dairy products were found primarily in natural-food markets and available upon request in some foodservice circles. Now, most retail dairy cases are stocked with several varieties of soy-based products that resemble traditional dairy items, including milk-like beverages, cultured products, cheeses and frozen desserts, while a customer at a coffee shop like Starbucks may just as readily ask for a soy latte instead of a drink made with milk. Soy even gets a 60-day jump on June Dairy Month, with National Soyfoods Month in April.
Those in the dairy industry who keep close tabs on the segment say soy alternatives merit ongoing evaluation because of their proliferation. “I’d say it’s growing and there are a lot of reasons people go to it, like health issues, the baby boomers, those who can’t tolerate dairy,” says Molly Murphy, sales and marketing director for Quality Chekd Dairies, a Naperville, Ill.-based organization comprising 40 independent dairy operators, some of whom have begun co-packing soy beverages.
Murphy’s assessment of the climate for soy substitutes is shared by Erik Drake, a product director for New Londonderry, Vt.-based Stonyfield Farm, the prominent yogurt manufacturer that also trades in the soy category. “Soy products have been hot for almost a decade. The success of soy is driven by numerous factors, including a variety of health benefits, the growth of vegetarianism and consumers seeking lactose-free foods,” he says, citing statistics showing that although cultured soy makes up less than 1 percent of grocery sales, it is growing at twice the rate of the general category.
The halo effect of soy as a good-for-you ingredient appeals to consumers following various diet and health regimens. “One of the biggest drivers of growth of the soy industry is the heart-healthy benefit of soy products,” says Doug Radi, director of marketing for White Wave Foods, the Boulder, Colo.-based manufacturer of the Silk® soy product line, now under the Dean Foods umbrella. Radi cites a watershed 1999 claim from the U.S. Food and Drug Administration that soy can play a role in promoting cardiovascular health and that consuming 25 grams of soy protein a day may reduce the risk of heart disease.
Although soy products are purchased by a certain group of lifestyle-influenced consumers, they aren’t just for those who eschew animal-based products altogether.
“In a household, you may have both in the refrigerator,” says Murphy, who cites feedback from some consumers that they put may put milk on their cereal in the morning, but opt for a soy drink later in the day. In other cases, one individual in a household may be lactose intolerant, while everyone else consumes dairy goods.
Quantitative and qualitative evidence backs up anecdotal evidence that the demand for soymilks and other soy alternatives by a widening group of consumers is driving the category from niche to mainstream. According to the Soyfoods Association of North America, Washington, D.C., soyfood sales experienced a 15 percent compound annual growth rate from 1992 to 2003 (the last year tracked), jumping from $300 million to $3.9 billion.
That figure is expected to go even higher. A report by the Cleveland-based market research firm Freedonia Group Inc. indicates the soy market is poised to become an $8.5 billion industry in the next couple of years.
In terms of soy products that parallel dairy items, published research confirms that soy is making, if not bounds, at least small leaps in sales. New York-based Beverage Marketing Corp. recently released a study on the soymilk market, which found that soy beverage volume has grown from less than 10 million gallons in 1990 to nearly 170 million gallons in 2004, with about two-thirds of that volume stemming from soymilk purchases.
Another study, published by the Madison, Wis.-based International Dairy-Deli-Bakery Association (IDDBA) in its 2005 What’s In Store report, pegs nondairy soymilks as second to energy bars within the top soy categories, with $460 million in sales last year reflecting a 13.2 increase over the previous two years.
White Wave Foods commissioned its own survey on soymilks and found that 29 percent of Americans say they currently use or produce soy products, with soymilk as the most commonly purchased item. In that report, 32 percent of respondents said they choose soy products because they are trying to eat healthily; 23 percent pick up soymilk for taste, 16 percent choose it for food allergy purposes and 12 percent say they are trying to improve overall health. Nearly half — 46 percent — of those polled say they believe soymilk protects heart health, while 43 percent say they believe it improves digestion and 26 percent believe it cuts cancer risk.
Beyond soymilk, cultured products made with soy have experienced surges in sales as well. IDDBA reported sales of yogurt and kefir made from soy grew 44.8 percent from 2003 to 2005, while shelf-stable functional drinks jumped a whopping 791.5 percent. Frozen desserts that compete with ice cream rose 7.4 percent in that time span.
Cheese manufacturers, on the other hand, may take heart in the fact that sales of soy-based cheese alternatives declined 5.1 percent over the past year.
Greener Pastures
As the market for soy alternatives evolves and expands, so too has the production of such items. Natural food companies, including larger organizations as well as smaller grassroots processors, still manufacture a number of soymilks, cheeses and the like, but larger brands — including heretofore exclusive dairy manufacturers — have entered this segment. Whether they have chosen to capitalize on growing interest for these items begrudgingly or enthusiastically, there is no denying that it has moved from a small niche to a stand-alone segment.
One example is Dallas-based Dean Foods, which saw the potential of the sector when it acquired White Wave in 2002. “Dean Foods recognizes that consumers have a wide variety of needs and tastes, which is why Dean Foods and WhiteWave Foods offer such a large portfolio of innovative products, including conventional milk, organic milk, value-added milk and soymilk,” Radi says.
Another food conglomerate with dairy ties that has tapped into soy is Minneapolis-based General Mills, whose portfolio includes Yoplait yogurt. General Mills and DuPont teamed up for a joint venture called 8th Continent LLC, which produces a range of soymilks that were launched nationally in 2002. According to third quarter financial reports for fiscal year 2006, sales of 8th Continent-brand soymilks rose 13 percent in the last nine months.
Meanwhile, after exclusively producing dairy foods and beverages, a few Quality Chekd dairies recently started producing soy drinks after repeated requests. “We had several soy manufacturers contact us regarding opportunities for co-packaging and co-branding,” Murphy says.
According to Murphy, those with a stake in soybeans have a good reason to approach dairies to broaden the reach of their products. “We offer distribution, which was attractive to them, and it’s a way to increase volume with reduced costs,” she explains.
Dairy manufacturers, in turn, can benefit from taking a join-‘em approach. “For us, it’s time to stop beating your head against what’s inevitable in the dairy case. Instead of having soy products take shelf space, let’s add more profit to what we make at each location,” Murphy says.
Drake, too, says Stonyfield Farm is well suited to manufacture and market soy alternatives that appeal to its health-conscious, naturally inclined audience base. “We strive to produce the best-tasting and healthiest cultured products available on the market. Our success with dairy-based yogurts made cultured soy a natural next step,” he says, noting that the company’s O’Soy cultured product has 7 grams of soy protein per 6-ounce serving and is a good source of lactose-free calcium.
Along with existing soy businesses, dairies face other competition in vying for the soy alternative buyer. Some juice companies, for instance, have developed soymilks and soy-based smoothies. Odwalla Inc., Half Moon Bay, Calif., last year added soymilks in Plain, Vanilla Being and Choc-ahh-lot varieties to complement its line of fruit beverages. Jamba Juice Co., a San Francisco-based company that operates foodservice outlets for juice-based smoothies around the country, also started offering beverages made with soymilk.
Growing Fields
As a testament to the buzz in the category, several new soy products have been launched in the past year and a half. The Soyfoods Association of North America reports that from 2001 to 2004, U.S. food manufacturers introduced more than 1,600 new foods with soy as an ingredient, averaging 400 new products a year. The association’s survey didn’t offer a breakdown by product type, but indicated that soy-based beverages still comprise a large part of the segment, and that newer soyfood categories like drinkable cultured soy and frozen soy desserts are emerging with “strong and steady growth.”
New soy products developed as alternatives to regular dairy products like milk, cheese, yogurt, ice cream and coffee creamers are not only penetrating more stores and sales locations, they seem to be following trends in the general dairy category in terms of flavor, format and packaging.
In the soymilk arena, for instance, flavor is a focal point of today’s product development. Starting with the base formulation, soymilks are designed — more now than they were in the past — to taste like traditional cow’s milk.
Over the past few years, soybean growers and processors have been working together to refine production techniques, such as removing some of the compounds believed to cause taste issues. “With technology and processing today, that soybean flavor has diminished,” Murphy says.
Longtime soy consumers aren’t as bothered by a “beany” taste, Murphy says, but brand marketers are finding they need to experiment with flavors to expand their scope. “If you want to capture new consumers, you have to come up with flavor alternatives. Regular milk drinkers who try soymilk go for the flavors,” she says, adding that Quality Chekd’s soy co-packers currently produce plain and vanilla varieties.
The Silk product line includes plain as well as popular Chocolate, Vanilla and Very Vanilla varieties for refrigerated soymilk, while the brand’s series of coffee creamers now includes Latte, Mocha and Chai flavors. The 8th Continent brand includes Original, Chocolate and Vanilla flavors.
As in flavored dairy milk, soymilks also are sold in a greater variety of packages. Gabletop cartons with bright, splashy graphics have emerged in the past few years, along with resealable plastic bottles with high-impact printed sleeves. White Wave Foods, for its part, offers half gallon, quart and half-pint sizes of Silk refrigerated soymilk for at-home consumption, but has also delved into single-serve plastic bottles for its refrigerated and shelf-stable soymilks.
Also mirroring general dairy industry trends, the soymilk segment reflects consumer interest in better-for-you options. The 8th Continent brand, for instance, includes light soymilks, with 50 calories and 1.5 grams of fat per serving and, most recently, fat free soymilk in Original and Vanilla flavors.
Last year, Silk rolled out Silk Light® in Plain, Vanilla and Chocolate varieties. “Silk Light is a new alternative for Silk fans watching fat and calories. It’s an all-natural, smooth and creamy soymilk that delivers all the proven health benefits of soy protein, with 50 percent less fat than regular Silk soymilk,” Radi says, noting the light version contains the same amount of calories as skim dairy milk but with fewer carbs and less sugar.
Another parallel in the markets for soy and dairy is the boon of drinkable cultured products and smoothies. One of Silk’s most recent offerings is Silk Live!, a soy yogurt smoothie made with fruit and fruit juice, with soy protein, sold in grab-and-go containers. The probiotic-containing smoothies are available in Strawberry, Raspberry, Mango, Peach and Blueberry. 8th Continent’s answer to such products is its Refreshers product line, offering fruit and soy blends sold in 8-ounce bottles of Strawberry-Banana and Orange-Pineapple-Banana.
Among spoonable cultured products, flavor trends for soy-based items also seem to be tracking developments in the yogurt category. Stonyfield Farm’s O’Soy line includes traditional yogurt flavors like Peach, Strawberry and Vanilla and a new dessert-inspired Chocolate flavor. Silk’s soy yogurts come in mainstream Black Cherry, Blueberry and Peach, as well as bolder varieties like Key Lime.
There are other examples of smaller yogurt manufacturers who offer soy formulations. Springfield Creamery of Eugene, Ore., which produces the Nancy’s brand of cultured dairy and soy products, offers organic cultured soy in Plain, Strawberry and Blackberry flavors. The products are sold in natural food stores and national organic and natural chains, such as Wild Oats and Whole Foods.
Meanwhile, non-dairy frozen desserts, which have been around for nearly 20 years, also go head to head with dairy products at the retail and foodservice level. In grocery stores, both mainstream and natural, soy-based products are taking up more shelf space, as manufacturers roll out new flavors and formats. Cranford, N.J.-based Tofutti Brands, an early stalwart of the soy frozen dessert segment, most recently launched Tofutti Kids dessert bars.
Tofutti’s other tofu-based frozen desserts also seem to be in line with trends in the dairy ice cream and novelty sector. In addition to traditional varieties like Chocolate and Vanilla, Tofutti now sells indulgent, dessert inspired flavors like Chocolate Cheesecake Supreme and New York, New York Chocolate, along with pints of lowfat and no-sugar-added products.
Another manufacturer offering ice cream-like frozen desserts made with soy is Turtle Mountain LLC, a natural foods company based in Eugene, Ore. Its lineup includes decadent flavors like Peanut Butter Zig Zag, Raspberry A La Mode and Chocolate Obsession, along with better-for-you options like its Carb Escape line and fat-free Sweet Nothings novelties.
Meanwhile, as market research has shown, the soy cheese segment has not seen the same energy as soymilks, soy-based frozen desserts and soy cultured products. Soy cheeses remain the domain of smaller specialty manufacturers than larger dairy cheese brands.
Finally, in terms of new products, although soy items are already perceived and promoted as good-for-you, fortified varieties are beginning to enter the category. Silk, for instance, offers Silk Enhanced, produced with extra vitamins and minerals like Vitamin C, Vitamin E, Vitamin K and Vitamin B6, along with more omega-3 fatty acids, vitamin A and phosphorus.  m
Lynn Petrak is a freelance journalist based in the Chicago area.