Food companies hope to profit from new federal diet guidelines
Can the feds get Americans to trade in a sizzling rib-eye for a soggy block of tofu? It's a question Kraft Foods (KFT), Kellogg (K), and Hain Celestial Group (HAIN) are keen to answer since the U.S. Agriculture Dept. in January began encouraging Americans to eat more soy.
In coming months, Americans will be inundated with commercials pushing everything from soy-infused chili to corn dogs, as food companies try to position the bean curd as a healthy protein alternative. The trick will be getting consumers past the "ick factor," says Tripp Hughes, who oversees soy products at Organic Valley, which makes organic soy milk and coffee creamers. Soy is an integral part of Asian diets, but it has never been widely accepted by Americans even though they routinely eat it—perhaps unwittingly—in processed foods that use soy oil such as sauces, salad dressing, baked goods, and snack foods.
Soy has come a long way since Hong Kong soymilk maker Vitasoy first brought its products to San Francisco's Chinatown in 1979. Back then it was gobbled up mostly by vegetarians and hippies. With the introduction of refrigerated soy milk in supermarkets, and a Food & Drug Administration proclamation that it is heart healthy, soy moved out of the shadows in the late 1990s.
Big Food soon noticed soy's double-digit sales growth, and Kraft and Kellogg both acquired companies that made soy-based veggie burgers. In January the USDA included soy in its revised dietary guidelines, and the Soyfoods Association of North America is hoping its time has finally come. "We've been preparing for an opportunity to bring soy foods to the mainstream," says Executive Director Nancy Chapman.
The recession has not been kind to the other, other white meat. The $5.5 billion industry has been in a slump for the past two years, according to industry tracker Soyatech. Many soy products are organic, which means they often carry a hefty price tag, and the downturn took its toll on sales. Plus, soy foods have gotten some bad press because high consumption has been linked in some studies to hormonal cancers in women and even so-called man boobs. New, trendier products, such as coconut and rice milk, have been taking up precious shelf space once devoted to soy drinks. "The category is getting squeezed by a lot of new alternative beverages," says Hughes.
Many Americans ignore USDA guidelines. "We hear consumers cite Oprah far more than the USDA, so we don't expect a huge increase in soy consumption based on government advice," says Melissa Abbott of Hartman Group, which studies consumer behavior.
Even so, soy foodmakers view the USDA's nod as opportunity knocking, and they're answering with new products, marketing campaigns, and educational sites like Vitasoy USA's "Tofu U," which offers an idiot's guide to handling and cooking bean curd. (Sample tip: "Drain the water from the package. Feel free to water your plants with it!") Chapman says her association has beefed up its marketing budget by 20 percent this year, launched a Twitter account, and is working with retailers like Kroger (KR) and Whole Foods Market (WFMI) to pitch soy products. "We don't expect everyone to eat veggie burgers," she says. "We just want people to be aware of them."
Among the newer soy products being hyped are kid-friendly veggie corn dogs from Hain Celestial's Yves Veggie Cuisine and frozen dinners such as the new Three-Bean Chili from Kellogg's MorningStar Farms. Chapman is trying to get restaurant bars to replace peanut bowls with edamame, soybeans boiled in their pods and sprinkled with salt. Food scientists also are looking for ways to make soy products taste less like soy. Organic Valley adds a hint of vanilla even to its unsweetened soy milk.
Solae, a joint venture between chemical giant DuPont (DD) and agribusiness outfit Bunge (BG) that proselytizes for soy, has seen a 35 percent increase in new-product development so far this year, according to Michele Fite, Solae's global marketing vice-president. Solae is trying to persuade food companies to incorporate crunchy soy nuggets in energy and weight-loss bars. "Not everyone likes getting all their protein from eggs and bacon," Fite says.
The bottom line: Food processors say soy products will experience their fastest growth for uses other than as meat and milk substitutes.