OH, SOY

MARYELLEN LO BOSCO

Once upon a time, soy milk and veggie burgers were food for health nuts. Today, these supermarket stalwarts are food for everyone.

Soy- and grain-based products in the form of nondairy drinks, burgers, breakfast links and dinner loaves, to name a few, are poised to roll in as the next natural-foods tsunami.

A number of factors are pushing the wave, including the nation's continued concern about dietary fat and cholesterol; decreased consumption of meat in some demographics; greater public awareness of milk allergies; and recent publicity about the benefits of soy. Soy protein has been touted lately in the media as a component in lowering cholesterol, decreasing the risks of certain cancers, and easing menopausal symptoms.

Moreover, according to the National Institute of Diabetes and Digestive and Kidney Diseases of the National Institutes of Health, Bethesda, Md., between 30 and 50 million Americans are lactose intolerant, with an estimated 95% of African Americans affected.

Recent media attention to milk allergies has heightened consumer awareness about lactose intolerance and positively affected sales of lactose-free milk as well as other milk alternatives, such as soy and rice milk.

Retailers are finding that sales of meat and milk alternatives are increasing year to year, and that consumers are demanding more of these products.

"Soy products are going to be the next big trend," said J.B. Pratt, president of Pratt Foods, Shawnee, Okla. "I feel this is a huge overlooked category in the mainstream." Pratts currently devotes about 12 feet of space to shelf-stable soy milks in its four Wellmarket stores, and makes it available on an in-and-out basis in the other stores. In addition, all the stores carry frozen breakfast items -- sausage, bacon and meat pattie look-alikes -- as well as frozen veggie burgers.

Moreover, there are soy foods up and down the grocery aisles, from soy bean oil and salad dressing to chili and diced "chicken." Pratts stocks a wider variety of items in the Wellmarket stores.

Recent statistics from SPINS Distributor Information and ACNielsen Scan Track: SPINS Natural Track confirm that meat and milk alternatives are growing categories. For the 12-month period ended June 1998, nondairy beverage sales in the mainstream supermarket channel rose to $56 million, up 51% from the previous period. Sales in natural products channels (including Wild Oats and Whole Foods) were $148 million, up 25%.

Frozen and refrigerated meat alternatives in the mainstream were $166 million, up 31%, compared with $84 million in the natural products channel, up 20%.

"The strong and sustained consumer demand for dairy alternatives, current low levels of distribution for the category within the supermarket channel and continued public interest in the benefits of soy are all driving sales," said Paddy Spence, president of SPINS, the San Francisco-based provider of marketing information for the natural products industry. Spence further noted the emergence of a new product segment -- functional nondairy beverages that are nutritionally enhanced. He predicted "explosive" growth in this area in the coming months.

Food Emporium, Bronx, N.Y., a division of A&P, Montvale, N.J., carries up to 25 SKUs of nondairy milk alternatives, according to Harold Berthold, director of grocery merchandising. "It does very well," he said. The retailer gets soy and rice milk directly, from Haddon House in N.J.

Also doing well are frozen veggie burgers and other meat alternatives. Food Emporium carries about 20 to 25 SKUs of burgers, including Boca Burger, Gardenburger, Morningstar Farms, Amy's, Green Giant and Dr. Praeger brands. Also popular are Morningstar breakfast items.

Food Emporium promotes frozen products about once a month but has not been actively promoting the beverages.

Bob King, category manager for frozen food and dairy at Ukrop's, Super Markets, Richmond, Va., reports steady, double digit growth in the meat alternatives category.

"It's a slow, steady growth," he said. "There's a lot of consumer recognition of soy and other healthy alternatives, and they don't taste bad, especially when you load them with condiments. We carry Gardenburger, Boca Burger and items from Morningstar, like breakfast links and 'chicken items' in patties and nuggets."

King noted that it is difficult to merchandise these items, since it is sometimes unclear where the best placement is. Many retailers merchandise frozen meat alternatives together, regardless of meal occasion. Often these items will be near the breakfast set. Other retailers may split them up. For example, Food Emporium has its Gardenburger in the frozen meat section.

Currently, bigger Ukrop's stores devote one door to frozen meat alternatives, adjacent to the breakfast door. "We definitely could devote twice the space," King noted. "There's nothing that helps it jump out, and we need to bring more awareness to it."

He also said that his stores recently put Silk, a refrigerated soy beverage made by White Wave, into the dairy after getting numerous requests.

"There's a growing awareness of lactose intolerance," he said. "Lactaid [a milk that contains a digestive enzyme that breaks down lactose into simpler sugars] has increased in the past couple of years. People are becoming more aware of the problem and some are getting off dairy completely."

Wild Oats Markets, Boulder, Colo., devotes from 8 to 12 feet of space to soy- and grain-based milks, according to Michelle Walker, new products coordinator for grocery, dairy and frozen. The store carries SKUs from five major manufacturers, she said.

"The category is extremely popular and probably in the top ten as far as volume goes," she said.

As for frozen nonmeat items, Walker observed that there's "an endless supply" and that the category is very active.

"Every day I get calls for meat substitutes and meat analogs," she noted, saying she has to turn many people away now. According to Walker, many manufacturers are creating items that look and taste more like meat.

Wild Oats devotes about half a door to frozen nonmeat alternatives. "We could devote more to it, but we want to manage it as a category. We want products that are available through good distribution and that support themselves," Walker explained.

A midwestern wholesaler who did not wish to be identified noted that natural foods supermarkets buy directly from manufacturers, or they are supplied by United Natural Foods, Dayville, Conn. For that reason items like soy milk are much cheaper in Wild Oats or Whole Foods than they are in the stores he supplies, the wholesaler noted.

Currently, natural foods vendors will not sell to the midwestern wholesaler. "They are not interested in going through wholesalers," he said. "[The manufacturers] have set up an original channel with certain distributors in certain areas, and they do not want to compete with them or take business away from them," he said.

"We could save stores and consumers money if they went through us. But [the manufacturers] would have to hire a broker or a sales force. What they fail to realize is that we are a cooperative and we have close to no markup, while distributors have a 25% markup."

Pratt told SN that he gets most of his natural products from distributors but would like to get more from his wholesaler.

"I am encouraging our wholesaler to put in as many soy-based products as possible, and I'm hopeful we will get the soy milks in soon," he said.

Regardless of how retailers obtain soy products, increasing emphasis on their nutritional value may prompt grocers to highlight and promote them more often. Pratt has already begun this process in his stores.

He recently used April, National Soy Foods Month, as a platform to begin heightening customer awareness of soy products. During that month, green and white shelf tags indicating "soy" were placed throughout the stores. The shelf tags have stayed up.

In addition, Pratt has taken educational and point-of-sale material from the Soy Foods Association of North America, Washington, and customized it for his stores.

"We ran specials on soy products during the month of April and had a month-long Wellmarket ad," Pratt told SN. Since then, he's had soy products on special on a regular basis.

"Our customers don't know that soy is an ingredient in many products. That's why we tagged the shelves."

SN also spoke with Peter Golbitz, president of Soyatech, Bar Harbor, Maine, and past president of the Soy Foods Association, who said that the organization plans to step up its promotional activities with retailers. "We see retailers as the key link to consumers, and they need as much information as possible about what these products are and how to merchandise them," he said.

The Association is planning to send 1999's promotional kits to 3,000 retailers, including supermarket buying offices. According to Golbitz, the soy industry is capturing only about one tenth of potential soy milk sales. "In order to make the next quantum leap in awareness and acceptance, soy milk needs to be in the dairy," he said, predicting that companies who are now making soy milk in aseptic packages will expand into fresh.

Source: Spins Distribution Information and ACNielsen ScanTrack: SPINS NaturalTrack, for the 12-month period ended June 1998