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Falling soy sales call for awareness efforts, Mintel

By Lorraine Heller , 13-Nov-2007

A significant number of American consumers have never thought of buying soy products, suggesting there is space for a major awareness campaign to help boost flagging sales, says Mintel.

A new report by the market researcher reveals that sales of foods and beverages containing soy have slowed significantly over the past five years, and if current trends continue, the market is expected to see a small decline through 2012.

 

 

 

Soy-based Food and Drink - US- October 2007 places current retail sales at $1.4bn, or $1.9bn with Wal-Mart and natural food store sales taken into consideration. Although this is 16 percent higher than 2002 sales in current prices, it is only a modest increase of two percent after factoring inflation.

 

 

 

Challenges

 

 

The taste of soy products also remains a major barrier to sales, with 41 percent of consumers still reporting that they do not like the way soy-based foods and drinks taste.

 

 

 

In addition, a full 40 percent of consumers said they have never thought about buying soy products, a major sign to industry that there is room for raising consumer awareness of the ingredient and its benefits.

 

 

 

Some 27 percent of non soy-users report liking the products that soy-based foods generally replace, such as milk, meat or cheese, suggesting that soy is considered an inadequate replacement. This, according to Mintel, emphasizes the need for soy protein that can be used in original dishes without compromising on taste.

 

 

 

Additionally, 23 percent of respondents to Mintel's survey said they find soy foods too expensive. "The industry needs to price soy-based products competitively with products such as meat, milk, etc, in order to increase penetration," wrote Mintel.

 

 

Another main threat to the soy market is competition from other categories, such as granola bars, cereal bars and other nutritionally-fortified snacks.

 

 

 

The market also took a major hit when the American Heart Association retracted heart-health claims linked to soy, said Mintel. In addition, mixed research results on the menopausal benefits of soy have resulted in sales remaining virtually flat over the five year period.

 

 

 

Opportunities

 

 

According to the new report, a major way to promote soy would be to target men with special products designed to meet their needs. Mintel suggests a soymilk-based energy drink that could contain taurine, ginseng and guarana. It also suggests highlighting the importance of protein for building strong muscles.

 

 

 

Mintel suggests positioning such products as 'better-for-you' afternoon snacks for active men over 25. They should be sold in a single-serving bottle in easily accessible locations of the grocery store, convenience stores and drug stores, it said. These could also be cross-merchandised with other products that could include nutrition bars or soy burgers.

 

 

 

In addition, Mintel's research finds that 20-30 percent of consumers use soy to supplement meat in their diet or to reduce it.

 

 

 

"New product developers may strike a chord with consumers by creating a combination meat and soy product. It would enable consumers to link the healthy attributes of soy with the taste and texture of meat. Innovative products in this area may be able to move the soy market to the next level in sales," said Mintel.

 

 

 

Ethnic consumers are also an area of opportunity for manufacturers of soy products. According to the report, developing new meat alternative products specifically designed to meet the flavor and texture preferences of this population segment may also boost soy food sales.

 

 

 

Hispanic households are almost twice as likely to use meat alternatives as white households. While Asian households are significantly more likely than average to use tofu - a meat alternative frequently used in oriental dishes - black households index high on using breakfast items, chicken/poultry, deli, and hot dogs, compared to average households, said Mintel.

 

 

 

More advertising in black communities may increase market penetration since half of black consumers said they do not purchase soy goods because they just have not thought about it. In addition, fewer blacks find the taste of soy objectionable compared to other races.

 

 

 

Mintel also suggests the potential of developing innovative upscale soy products for higher-income consumers, as respondents with incomes of $75K - $99K are eating less soy now than they were one year ago.

 

 

 

Segment sales

 

 

Soy-based energy bars make up the largest segment of the soy food market, accounting for 37 percent of total sales. However, competition from other categories, such as cereal bars, has resulted in the soy energy bars seeing a 17 percent decline during 2002-2007.

 

 

 

Soymilk sales grew 52 percent during the period, with segment sales reaching $464m in 2007, led by Dean Foods' Silk.

 

 

 

Soy-based meat substitutes declined 15 percent after measuring for inflation during 2002-07. The category was significantly impacted by a $23m loss from major player Gardenburger.

 

 

According to Mintel, other soy-based foods hold promise, having grown 17 percent during 2005-07. Among the most active in terms of sales are cereal products with soy, which grew 20 percent by addressing the need for protein- and fiber- rich breakfast foods that are also low in calories and fat.

 

 

 

Mintel forecasts that the total market for soy-based food and drink will rise from $1.4bn in 2007 to $1.5bn in 2012, a decrease of 0.3 percent at an inflation-adjusted annual rate.

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