Soyfoods 2004 & Beyond

Soyfoods 2004 & Beyond: Global & U.S. Perspectives

Soyfoods 2004 & Beyond Global & U.S. Perspectives

Peter Golbitz

6th International Soyfood Conference Pretoria, South Africa

The Focus Today: Soybeans as Food

 Soybeans as a base for a new food platform  Development and trends in the U.S. soyfoods market  Use of soybeans in food worldwide  What the future may hold

The Soybean

 Soybeans form the base of a new food platform for the 21st Century

 The soybean’s wide range of functional properties and high nutritive value makes it the perfect ingredient for a wide array of food and nutritional products  Soy-based foods can play an important role in reducing many chronic health problems such as heart disease, cancer, obesity, bone health and kidney diseases

Soybeans:

So versatile, they could be called the 21st Century Food Mimic

Percent Soybean Composition

 On a moisture-free basis, the soybean contains Carbohydrates approximately: Ash (fiber) 5%5% AshAsh – 40% Protein 5% – 22% Fat 8%8% FiberFiber – 25% Carbohydrates – 8% Dietary Fiber 40%40% ProteinProtein – 5% Ash (minerals) 40% Carbohydrates25% Carbs  And a virtual pharmacy 25% Carbs of powerful phytochemicals(sugars) including: 25% – Isoflavones – Sterols – Saponins – Protease inhibitors 22%22% FatFat – Anti-oxidants Fat – Tocopherols (Vitamin E) 22% – Lecithin

And there are plenty for everyone…

World production of soybeans has grown over 500% in 40 years

 The U.S. is currently the World Soybean Production, 1965 - 2004 largest producer with about Worldin Million Soybean Metric Production Tons 1965 - 2004 35% of world production

 Brazil and Argentina are 250 number 2 and 3 and

expanding rapidly 200

 The forecast for 2004/05 world production is nearly 150 225 million metric tons 100  Enough soybeans to give every man, woman and 50 child on the planet 30 kilos, or 66 gallons or 250 0 liters of soymilk per year 1965 1970 1975 1980 1985 1990 1995 1998 1999 2000 2001 2002 2003 2004

But most of the soybeans are fed to animals

Average annual use of soybeans globally

shows that: 1996-2001 Average World Soybean Disposition for  84.4% is crushed for 1996 - 2003 as Percent of Production meal and oil, with 95% of the meal fed Direct Food Use to animals Soybean Crush 8.6% 84.4%  8.6% is used for soyfoods such as Feed/Seed/Residual tofu, soymilk and 5.7% fermented products Change in Stocks 1.4%  5.7% is for on-farm feed, seed and residual

Soybeans consumed as food most heavily in Asia

Soybeans for Direct Food by Country, Top 25 By Annual Per Capita Consumption, 2001 Average per capita Grams Per Day (36% pro.) consumption of soybeans Rank Country kilo/yr soybean soy protein as food around the world: 1 Taiwan* 19.15 52.46 18.89 2 Korea (North) 10.67 29.24 10.53  2.4 kilos per year or 3 Korea (South) 8.79 24.07 8.67 4 Libya 8.68 23.78 8.56 – 6.5 grams/day 5 Japan 7.73 21.19 7.63 6 China 7.31 20.03 7.21 – 2.4 grams protein/day 7 Indonesia 7.16 19.61 7.06 8 Uganda 4.71 12.91 4.65  Heavy consuming 9 Nigeria 2.76 7.57 2.72 10 Thailand 2.34 6.40 2.30 Asian nations use from 11 Myanmar 1.91 5.22 1.88 12 Yemen 1.85 5.06 1.82 7 kilos per year to over 13 Costa Rica 1.40 3.84 1.38 14 Peru 1.40 3.83 1.38 19 kilos 15 Viet Nam 1.27 3.48 1.25 16 Canada 0.68 1.88 0.68 – Equivalent to 7 to 19 17 Zimbabwe 0.65 1.77 0.64 grams of soy protein 18 Philippines 0.51 1.39 0.50 per day 19 India 0.41 1.13 0.41 20 Ethiopia 0.38 1.04 0.38 21 U.S.A.* 0.33 0.89 0.32 22 Germany 0.24 0.66 0.24 23 Egypt 0.24 0.66 0.24 24 South Africa 0.23 0.64 0.23 25 Congo, Dem Rep 0.18 0.50 0.18 World Average 2.39 6.54 2.36

Processing Soyfoods

Processing soybeans into foods

 There are a number of means of classifying foods made from the soybean including the following: – Soy-based dairy alternatives (primarily water processed)  Modern and traditional » Includes soymilk, tofu and other – Soy protein-based foods (primarily from dry ingredients)  Modern and traditional » Includes meat alternatives, energy bars, snacks, cereals, baked goods and powders – Soybeans as beans (dried and fresh)  Modern and traditional » Includes products made from both dried beans and fresh green soybeans – Fermented and Other

Soy-based dairy alternatives (Aqueous Extraction/Wet Processing)

Process (water extraction or reconstituting ingredients)

Soy-base (soymilk)

Soy protein-based foods (Solvent or Mechanically Extracted or Ground Dry Ingredients as Food Products)

Process (Solvent or mechanical extraction, processing and/or texturizing)

Soy proteins

Soybeans as beans

Process Harvest (Dry or Green) & Clean — Blanch, Freeze, Can, Roast, Can, etc.

Soybeans as Food in The U.S.A.

First “modern” wave began in 1950s and 1960s

New technologies were developed that improved flavor and texture of soy proteins and soyfoods  Textured soy flour  Isolated soy proteins  Soy protein concentrates  Spun soy protein fibers for meat alternatives

Second wave forms during the 1970s and 1980s

 Right livelihood- entrepreneurs form hundreds of soyfood companies in late 1970s and early 1980s  Tofu and tempeh introduced to non- Asian consumers as a vegetarian meat alternative  Non-beany soymilk imported from Japan, Hong Kong and Europe enter U.S. market

Third wave began in 1990s

 Americanized products such as frozen entrees, veggie burgers, tofu hot dogs, and flavored and fortified soymilks increase consumer appeal  News on the health benefits of soy protein and soyfoods hit the mainstream press

Tidal wave in 2000 and beyond

 Rapidly growing market attracts the food industry’s major players  Supermarkets become a major outlet for soyfoods  Endorsement of health benefits supports further growth  Hundreds of new products enter marketplace

New wave of soy products fit our busy lifestyle

 Flavored products are not enough… must be prepared and ready to eat  Frozen entrees with soy, both with tofu and meat and poultry alternatives  Hand-held foods  Convenient drinks  Soy snacks

A rapidly growing market has attracted the food industry’s major players

Kellogg Co. acquires Worthington ConAgra purchases LightLife Foods, a Foods, the leading meat alternative leader in meat alternatives manufacturer Coca Cola purchases Odwalla, which Heinz Co. acquires 19% of Hain Foods, had purchased Fresh Samantha, both owners of Westbrae, the leading soymilk fresh juice and soymilk processors marketer Hain-Celestial purchases Yves Veggie Dean Foods, a leading U.S. dairy invests Cuisine, a leading fresh meat alternative in White Wave, a leading tofu and soymilk producer processor Tropicana (PepsiCo) announces joint Suiza Foods, the largest U.S. dairy, venture with Galaxy Foods to sell announces their entry into the soymilk fruit/soy smoothies category Heinz launches lines of frozen entrees Dean completes White Wave acquisition with soy under Ethnic Gourmet brand and then gets acquired by Suiza Burger King launches veggie burger DuPont, owners of Protein Technologies nationally (non-soy) International announce a JV with General McDonalds of Canada launches Yves Mills to produce soyfoods, releases soy-based veggie burger, now testing cereals and 8th Continent soymilk burger is So. Calif. Kraft Foods purchases Boca Burger, a Bunge buys Central Soya and forms leading soy-based meat alternative Solae LLC joint venture with PTI to sell producer and marketer broad range of specialty soy protein ingredients

And consumers seem to be getting the message

 U.S. FDA approved a heart health claim for foods containing more than 6.25 grams of soy protein in 1999

 Soyfood marketers are using the health claim to formulate and promote the benefits of soy protein in the human diet

 According to the latest consumer survey by the USB conducted in 2003, 74% of U.S. consumers consider soy products to be healthy

Hundreds of new products are entering the marketplace

 The number of new soy-based food products grew 3% overall in 2003 to reach nearly 5,000 products.  The number of products in supermarkets grew by 5.2% and 1.9% in natural product stores

4,846 Total Number 5,000 4,739 of Soy-based 4,500 Food Products 3,755 in the U.S. 4,000 3,708 3,386 3,227 Market in 2002 3,500 and 2003 3,000

2,500

2,000

1,500

1,000

500

- 2002 FDM 2002 NPS 2002 Actual 2003 FDM 2003 NPS 2003 Actual

U.S. soyfood sales increased 7.2% in 2003 to hit $3.9 billion at the retail level

$5,000 35.0%

$4,500 30.0%

$4,000

25.0% $3,500

$3,000 20.0%

$2,500

15.0% $2,000

$1,500 10.0%

$1,000

5.0% $500

$0 0.0% Proj Proj Proj Proj 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Soyfoods, Retail Sales $1,244 $1,484 $1,747 $2,288 $2,769 $3,234 $3,648 $3,912 $4,121 $4,327 $4,522 $4,703 Annual growth rate 11.5% 19.3% 17.8% 31.0% 21.0% 16.8% 12.8% 7.2% 5.3% 5.0% 4.5% 4.0%

Soymilk beverages

 Soymilk is one of the fastest growing categories in the history of the soyfoods industry  Plain and flavored products are available in both aseptic and refrigerated packages  Sales have grown from just $100 million in 1995 to nearly $652 million in 2003  Of the larger nondairy beverage category, soymilk had 89.7% of the sales in mainstream markets

Soy-based Meat alternatives

 A wide range of products are available such as burgers, hot dogs, poultry replacements and breakfast patties  Products are sold both refrigerated and frozen  Sales have grown from $114 million in 1992 to over $546 million in 2003  Many of the largest food companies are currently in this market through acquired brands

Soy-based Energy Bars

 A true testimony to convenience and functionality, sales of soy- based energy bars reached $964 million in 2003, up by nearly 10%  Some bars are positioned for health/wellness, while others are positioned for energy  Many are formulated for women’s health containing high levels of isoflavones  In 2004 we have seen a surge in low-carb positioned energy bars

Tofu

 The first major soyfood that introduced non- Asian consumers to a traditional soy protein- based food  During the late 1980s, tofu began to be “Americanized” into meat alternatives and ready-to-eat flavored or prepared products  Sales have grown from $108 million in 1992 to $264 million in 2003

Emerging Product Categories

Emerging & Evolving Product Categories

 Due to the soybean and soyfood products’ unique ability to take on the flavor and structure of novel or alternative foods, soyfood marketers have been able to continue to reshape and flavor products to meet the continually evolving needs of consumers and to meet emerging consumer trends

Emerging & Evolving Product Categories

 Frozen and ethnic entrees of ready-to-eat foods

 Meat alternatives as complete meals

 Tofu as a prepared ready- for-meal ingredient

Emerging & Evolving Product Categories

 Soymilk based yogurts

 Soymilk yogurt drinks and snack

 Nondiary frozen desserts

 Snacks made from soynuts, soy flour and textured soy bits

Soyfoods in other countries