THE SOY SOLUTION

AMITY K. MOORE

Despite slow integration and sporadic distribution, sales of shelf-stable nondairy milk substitutes have continued to rise.

Grocery retailers and manufacturers attribute the increase to soy-based milks and a growing awareness of the health benefits associated with soy. (Sales of shelf-stable dairy milks have remained flat.)

While soy-milk sales in natural-food stores are more than double sales in the mainstream, supermarkets are working to get out from behind the curve.

For example, Cub Foods, a division of Supervalu, Minneapolis, has doubled the space allocated to shelf-stable, nondairy milk substitutes in its "Naturally Cub" departments, according to Dale Monson, director of Minnesota merchandising at the chain.

"Soy and rice milk have shown excellent sales increases at Cub Foods. Many of our customers are aware of the health benefits attributed to the use of soy milk," he added. These reported benefits include a reduction in the risk of heart disease, osteoporosis and certain types of cancers, as well as the alleviation of menopausal symptoms in women.

According to SPINS, a San Francisco-based company that tracks sales of natural products in conjunction with ACNielsen, the nondairy beverage category had a 55% increase in mainstream supermarkets for the year ended February 1999. Total dollar sales for that 12-month period were $76 million.

While sales in supermarkets were strong, sales were up 19% in natural-product stores in the nondairy beverage category for the same period, with $168 million in sales. (SPINS counts the Whole Foods and Wild Oats "super-natural" chains as natural-product stores.)

Not surprisingly, the lion's share of the category, which includes soy, rice and other nondairy beverages, is in soy milk. Sales were $49 million in the mainstream, and $105 million in the natural channel.

The disparity between natural-food stores and supermarkets makes sense in one way, because soy-based products have long been targeted at consumers who prefer natural food. But there is also a lack of product knowledge and adequate distribution in supermarkets, which may contribute to lower sales in that channel.

SN spoke with two large mainstream wholesalers -- Fleming Cos., Oklahoma City, and Spartan Stores, Grand Rapids, Mich. -- and found that neither company was paying much attention to shelf-stable dairy or nondairy products.

"We're just starting to look at them," said Mary Dechow, a spokeswoman for Spartan.

"We're not seeing very much movement," noted Shane Boyd, manager of communications at Fleming.

Similarly, Minyard Food Stores, Coppell, Texas, reported that it carries dairy and nondairy shelf-stable drinks, but the category is a small part of the chain's business.

"We still don't do well with any of it except the chocolate-flavored from Hershey's. The basic shelf-stable milks -- we don't even scratch the surface with them," said a Minyard source who wished to remain anonymous.

In his stores, shelf-stable milk and nondairy beverages are merchandised alongside canned, evaporated and condensed milks. The section is usually found near baking needs, the source said.

Supermarkets may be losing sales on shelf-stable beverages for another reason: poor placement. According to some manufacturers and food retailers, it would be better to merchandise many of these products, mostly found in the grocery aisle, in or near the dairy case.

"Historically, we've had it in different places. I would prefer that it go along with primary usage, which would be adjacent to cereals. There is some benefit to having it closer to the dairy as well, since it is a substitute for milk," said Annie Hunt, director of category management for Wild Oats Markets, Boulder, Colo. She noted that a lot of Wild Oats units use Metro shelving near the dairy department to merchandise nondairy alternatives.

When asked about using shippers near the dairy department, Ron Pieper, vice president of sales at Imagine Foods, Palo Alto, Calif., said his Rice Dream and Soy Dream products weigh too much.

"The problem [with shippers] is that a case of Rice Dream or Soy Dream weighs about 27 pounds. The OSHA rules are that freestanding shippers shouldn't be more than 50 pounds total. It would be hard [for us] to come up with any kind of shipper display that can pay for itself because you [can't even put out two full cases]," he explained.

Instead, Imagine encourages cross promotion of its products with cereal. Recently the company cross promoted Rice Dream with Kashi cereal. Kashi, an all-natural cereal manufacturer, put a coupon on the front of the box. The coupon offered Kashi cereal purchasers a quart of Rice Dream for free, Pieper said.

Other retailers and manufacturers agreed with Hunt and Pieper that the cereal aisle and the dairy case are prime candidates for placement of shelf-stable milk and nondairy alternatives.

Understanding that soy milks, in particular, may be purchased for health reasons could generate additional opportunities and sales, said Hunt. "It's an ingredient and it's a beverage," she noted.

Because of the perceived health benefits of soy, soy-milk products might be best merchandised in a wellness section, suggested Linda Gilbert, president of HealthFocus, Des Moines, Iowa.

Nonetheless, the grocery jury is still out about the best placement for shelf-stable milk alternatives, and testing continues.

For example, according to Peter Golbitz, president of Soyatech, Bar Harbor, Maine, Hannaford Bros.' Sack-N-Save formats in that state have recently moved nondairy alternatives to the natural-food section, located near produce. Previously, these products were merchandised in the grocery aisle.

Wild Oats is in the process of increasing the space allotted to nondairy alternatives. "We are remerchandising the soy and rice [milk products] so that we present the soy in its full splendor. We're going to have twice the space for soy that we have for rice [milk]," Hunt said.

In contrast, other retailers, such as Central Market in Austin, Texas, haven't made any changes despite high-volume sales.

"People who are going to buy it know where it is. It seems to me that most people who are into the soy and the rice [milk] must have a reason to start using it in the first place," said Jane King, dry grocery foodie at Central Market.

King said Central Market runs advertising and pricing specials in its weekly fliers. The store will offer certain brands of nondairy shelf-stable milks for 99 cents a quart. King also demos various soy drinks with cereals every couple of months.

Wild Oats also uses its monthly flier to raise awareness about the soy, rice and multigrain milks that it stocks. "We tend to focus on soy at this point, because it's a growing part of the business," Hunt said.

Meanwhile, some grocers like Bristol Markets, El Segundo, Calif., don't advertise the products at all, said Jon Inouye, dairy clerk, who also handles frozens and shelf-stable beverages at the retailer.

Nonetheless, Inouye said that "We've noticed that sales have been higher. A lot of people come in here looking for soy milk because it's lactose-free, but we don't advertise the soy milks."

Soy milk is merchandised on a permanent endcap near the frozen and meat departments, Inouye added.