SOY CRAZY

LYNNE MILLER

No longer a trickle in natural and organic food stores, sales of soy milk have flooded the dairy aisles of mainstream retailers, buoyed by new merchandising strategies and a government seal of approval regarding the legume's health benefits.

As a result, soy milk has attracted a new wave of consumers -- and, in the past year, generated triple-digit sales increases in various markets.

Supermarket retailers are scrambling to keep their refrigerated cases stocked with this popular product. In some markets, soy milk sells itself with no promotion needed, retailers told SN.

"It's the biggest thing since sliced bread," said John Riley, dairy and grocery buyer for Morton Williams Associated Supermarkets, a nine-store independent chain based in the Bronx, N.Y. "We've seen a 200% increase in sales for this in the past year.

"It used to be a niche business but now it's grown to just about everybody," Riley said.

The numbers tell the story. In dollar growth, soy non-dairy beverages sold in refrigerated cases in mainstream supermarkets saw a whopping 350% increase over a 12-month period that ended in April, according to SPINS/ACNielsen, San Francisco. The product grew at a much more moderate pace in natural products supermarkets -- 59.6% for that period.

In milk, consumers see a convenient way to get soy in their diet. That's become a goal for many, ever since the Food and Drug Administration announced in 1999 that 25 grams of soy protein in the daily diet could lower cholesterol. Doctors encourage patients with elevated cholesterol to give soy milk a try. It also appeals to consumers who are lactose intolerant.

And in recent years, soy milk manufacturers repackaged their product in gable-top cartons for supermarket dairy cases, rather than the more foreign-looking aseptic boxes for sale in the grocery aisles. The change in appearance helped make soy more approachable and consumer-friendly. On its Web site, the leading producer of soy milk said this switch has "proved to be a selling point to supermarkets and consumers."

Though it is about twice as expensive as cow's milk, soy milk has widespread appeal that cuts across income levels, ethnic and minority groups, Riley said. "We don't have to do anything to promote it," he said.

"It seems to appeal mainly to people under 40, though it's crossing that barrier, too," noted Riley, who is hunting for more space for soy milk in his refrigerated cases. "There are a whole lot of people who are using it in addition to milk, and those who use nothing but soy milk."

Even in dairy country, demand for soy milk is growing fast. Over the coming year, Bea James, whole health manager for Edina, Minn.-based Lunds and Byerly's, projects sales of nearly $500,000 -- not for all soy milk, just for the leading brand. At each of the 19 stores in the chain, managers reserve eight to 12 linear feet of refrigerated case space for natural or organic products -- and a third to one half of that space is reserved for non-dairy beverages, including soy milk.

James said her stores helped build demand for the beverage two years ago when the chain launched twice-a-year demonstrations. During those promotions, employees hand out free eight-ounce containers of soy milk to customers. But that's not all. James makes sure customers maintain their awareness by promoting other soy foods in in-store demos. Top-selling products are 64-ounce containers of unflavored soy milk, which has a retail price ranging from $2.49 to $2.99, she said. Also in demand are the 32-ounce vanilla-flavored, and the 64-ounce chocolate-flavored soy milk cartons.

Consumers have warmed to soy milk not only for health reasons but also because the quality has improved, particularly in the last five years, James said. "The flavor is better," she said.

James also thinks the barrage of media attention given to mad-cow disease and foot-and-mouth disease has been a factor driving consumers to buy soy, even though both are livestock diseases that affect the safety and quality of meat, not milk.

She noted a manufacturer of lactose- and dairy-free cheeses, who contacted her recently, cited the public's concerns about those diseases as a force behind the company's sales growth.

Consumers' "overall impression is that [meat is] not safe," James said. "Whenever there's a major crisis with cows, even when it's not related to dairy, it affects sales" of soy milk.

For his part, Bob Roden does not foresee a decline in sales for cow's milk, though he acknowledged recent growth has been negligible. The category manager for dairy and frozen for Lunds and Byerly's, Roden declined to give total milk sales figures, except to say sales have inched up at an average rate of 1.6% in recent years.

Consumers who buy cow's milk evidently prefer products that claim to offer something good for their health. Hormone-free milk products are top sellers, Roden said, noting those beverages enjoy a high profile in the milk section of the dairy case -- they're the first milk product on display. They take up one-third of the milk section per store.

Sales are booming for milk products packaged for convenience, Roden said, noting strong demand for a new line of milk products in pint-sized plastic containers. The line has seen a 151% increase in dollar sales over a period of five months, he said.

Roden doesn't think soy milk has taken business away from cow's milk. Orange juices fortified with calcium and other minerals pose a greater threat, he said, noting milk has lost some case space to chilled juices in recent years.

"People who didn't drink milk before, a small percentage are switching to soy," he said. "It's more non-milk drinkers who are drinking soy milk."

As a service to customers, shelf-stable soy milk products are sold in refrigerated cases at Pratt Discount Foods, an eight-store independent chain based in Shawnee, Okla.

Over the past year, sales increases approaching 300% were reported at some of the company's stores with health food sections, said Gary Graham, merchandiser for the chain. At the conventional stores, sales increases were in the 30% to 40% range. "Probably 50% of the customers who buy it see the need for soy in the diet," Graham said. "That's the easiest way to get it."

The younger crowd -- consumers in their teens and 20s -- represent future growth for the category, Graham said. "The baby boomers are buying it now," he said.

Soy milk has not hurt cow's milk sales, he said, adding the new beverage is "for people who couldn't drink cow's milk to start with."

The dairy industry, facing flat sales in the milk category and feeling the pinch of competition, is fighting back.

In the Washington, D.C., area, members of the National Milk Producers Federation started to notice the proliferation of soy beverages labeled as "soy milk" positioned in close proximity to real milk in mainstream supermarkets. That prompted the association to complain to the FDA, in February 2000, that soy beverage makers were mislabeling their products, which are nothing like cow's milk and "nutritionally inferior," the NMPF said in its complaint.

"The FDA needs to be more diligent in enforcing and clarifying what the labels should be," said a group spokesman.