Three major food companies are jockeying to bring soy mainstream, even though other functional foods are currently faltering.
In January, Kraft Foods bought Boca Burger and formed a new Boca Foods division around the $40 million company. At the same time, General Mills cut a deal with DuPont Industries to develop soy foods, and Kellogg launched its first soy-based cereal, Smart Start Soy Protein, and earmarked $10 million to $14 million to market Worthington Foods, the meat substitute company it bought last November for $307 million.
This soy surge follows an October announcement by the Food & Drug Administration that food labels may carry the claim that soy protein helps reduce coronary heart disease.
The FDA ruling “is a good catalyst” to boost soy product sales, says Laura Huskins, an analyst at Adams, Harkness & Hill, Boston. “If large food companies put claims on their labels where consumers can’t miss them, that’ll go a long way to educating consumers about soy.”
Small companies like Worthington and Boca couldn’t spend enough to tout soy’s health benefits very widely. But their new owners “have the muscle to get it out there, and that’s half the battle,” Huskins says. Each brand could get around $50 million in marketing support – not to mention the possibilities of wider distribution and better shelf placement – from Kraft and Kellogg.
Soy-based food sales could hit $2.5 billion this year and grow 15 percent to 20 percent annually for the next five years, reports DuPont.
General Mills’s deal with DuPont’s Protein Technologies International division includes joint development of soy foods, gives the Mills access to proprietary soy technology for certain categories, and makes DuPont a preferred supplier. Wilmington, DE-based DuPont claims its May ’98 petition prompted the FDA to allow soy health claims.
Expect heavy sampling as marketers tackle the perception that soy doesn’t taste good. That’s been Boca’s main tactic, with 5,000 sampling days in ’99 alone (20 percent in natural foods stores, 80 percent in mainstream groceries) and sampling at 30 sports and social events. Kraft likely will continue that strategy as it targets meat-lovers, a far broader audience than vegetarians.
SMART STARTS
Kraft expected to close the Boca Burger deal in February, and eventually will move the company from Chicago to the Madison, WI, home of its Oscar Mayer division. Kraft named the general manager of its pizza division, Kevin Scott, to head Boca Foods, reporting to Oscar Mayer president Rick Searer.
Boca’s supermarket sales jumped 86 percent to $22 million for the 52 weeks ended Dec. 5, per Information Resources Inc., Chicago (see chart). Boca spokesperson Katie Torres attributes that to heavy promotion and advertising, expanded distribution (to 60 percent ACV), and new products.
Kraft plans to “strengthen Boca’s marketing,” says Kraft spokesperson Kathy Knuth, who wouldn’t elaborate. Ad spending in ’99 hit $2.4 million through September, per CMR. Oscar Mayer ad spending, by comparison, was $31 million.
Kraft could use Boca’s soy technology to develop cereals for its Post division, especially now that Kellogg is launching its first soy cereal.
Glenview, IL-based Kraft announced plans to buy Balance Bar Co. the same week it revealed the Boca deal. Kraft pays $268 million for the Carpinteria, CA-based maker of nutrition/energy bars, which claims ’99 revenue of $101 million, up from $1.3 million in ’95. Kraft likely will boost promotion spending and mainstream distribution.
On the West Coast last month, Kellogg began a regional rollout of Smart Start Soy Protein cereal – rice and wheat flakes with “crunchy soy granola clusters” that have 6.25 grams of soy per serving. Ads are set to break in April via J. Walter Thompson, New York City, along with heavy sampling and p.r. support. It’s the first line extension for Smart Start, whose sales rose 23 percent to $54 million for the 52 weeks ended Dec. 5, per IRI.
Kellogg is counting this year on cereal and snack-food intros – along with a heavy dose of consumer promotions (January promo) – to turn around recent lackluster sales performance. Those efforts, coupled with aggressive marketing and new products under Worthington’s flagship brand, Morningstar Farms, could put Kellogg in the lead with soy foods for breakfast, lunch, and dinner.
Morningstar Farms marketing isn’t set, but Kellogg will focus on burgers and may cross-coupon with Kellogg’s core brands. “We’re planning major consumer promotions and public relations programs with particular emphasis on the burger segment, including cross-couponing with a variety of Kellogg brands and prominent in-store merchandising programs and materials,” says Robert Hall, vp-marketing for Kellogg’s natural and functional foods division. Black Pencil, a division of Chicago-based Leo Burnett USA, handles. Morningstar Farms leads the vegetarian meals segment with a 50-percent share, and sales are expected to jump 20 percent in 2000.
FAT BUSTERS
Kellogg took some lumps in healthful foods when it pulled its Ensemble cholesterol-reducing line from test in late ’99. The company launched the line last March with designs to go national (July promo). Part of the $50 million to $75 million in planned support was Ensemble Services, a program in which consumers paid $150 for six coaching sessions on diet and exercise. Kellogg pulled Ensemble from its southwest Michigan test, saying it got “some positive consumer response,” but not enough sales to justify its expense, according to a spokesperson.
Battle Creek, MI-based Kellogg also is disappointed with consumer response to its K-Sentials campaign for fortified kids’ cereals, which pegs the brand “for growth” or “for energy.” Ads broke in ’98 with an umbrella brand that still appears on boxes, but didn’t wow moms the way Kellogg had hoped.
In December, Johnson & Johnson pulled ads for Benecol cholesterol-lowering margarine, salad dressing, and snack bars, opting instead to pitch the brand to doctors – whose endorsement may hold more sway with consumers. J&J launched the brand last May by giving away 200,000 bagels with a Benecol margarine schmeer.
Unilever’s Take Control cholesterol-reducing spread launched last May with a push directed at docs, but it too has fared poorly. “They were positioned almost like medication, with something added to the food,” says analyst Huskins. “Soy will do better because it’s an organic ingredient.”
That may not mean beans to consumers.
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