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Soy Propels Growth in Asia
BY NUPUR SHARMA SENIOR FMCG RESEARCH ANALYST EUROMONITOR INTERNATIONAL
The region is seeing more soy-based product innovations due to growing consumer demand and approval from regulatory bodies.
1 November 2008
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Consumers’ desire to lead a healthier lifestyle and an increasing array of palatable soy food and beverage products has fueled the growth for soy-based products in Asia. Euromonitor International’s latest research shows that the value sales of soy-based products in Asia have grown by over 32% in 2004-08, registering sales of close to $12 billion in 2008.
Soy: Popular staple food and drink
Packed with protein and essential amino acids that are the building blocks of human muscles, soy is found in a myriad of food and drink products in Asia. Soy-based products discussed in this article comprise sauces, soybean oil, soy milk, soy drinks, yogurt, special baby milk formula and desserts. Chart 1 shows the breakdown of retail value sales of soy-based products in 2008.
In 2003, Japan's Ministry of Health, Labor and Welfare issued a report that recommended a daily consumption of 100g of soybeans would be beneficial to health. The ministry has also approved health claims suggesting that soy protein and isoflavones could lower cholesterol levels and are beneficial to bone health.
• Sauces
Soy-based sauces account for nearly 53% of the value sales of soybased products in Asia this year. The Chinese typically use soy as a flavoring in food and in douchi, which is made of fermented soybeans. Similarly, the Japanese frequently consume soy-based miso, natto and edamame. Both China and Japan account for over 88.5% of the value sales of soy-based sauces in Asia this year.
• Dairy Alternative
Soy-based products are also commonly consumed in Asia as an alternative to dairy products, catering to the lactose-intolerant population and to those who are aware of the nutritional benefi ts of soy.
Latest research shows Asia as the largest market for soy-based dairy alternative products, accounting for 33% of the global market in retail value terms in 2008. Of the soy-based dairy alternatives available in Asia, soy beverages are the single largest category that has achieved retail value sales of $2.2 billion in 2008, a growth of 9% over 2007. Meanwhile, soy-based yogurts, special baby milk formula and desserts account for the balance of soy-based products with value sales of $24 million, $20 million and $16 million respectively this year. These categories are considered niche in Asia mainly due to the lack of brands in the retail sector and competition from other dairy alternatives that are readily available in the market.
Soy-based sauces account for nearly 53% of the value sales of soy-based products in Asia this year. Both China and Japan account for over 88.5% of the value sales of soy-based sauces in Asia this year.
Positioning soy as a healthful ingredient
The global success of soy-based dairy alternatives is mainly due to several health and wellness factors. Marketing the health benefits of soy has positively influenced consumer awareness, which is backed by favorable perception of soy by regulatory bodies. In 1999, the US Food, Drug and Administration (FDA) approved a health claim that consuming soy could lower cholesterol levels, consequently officially endorsing soy's heart health benefits.
In 2003, Japan's Ministry of Health, Labor and Welfare issued a report that recommended a daily consumption of 100g of soybeans would be beneficial to health. The ministry has also approved health claims suggesting that soy protein and isofl avones could lower cholesterol levels and are beneficial to bone health.
Studies and research reports conducted by various organizations have also suggested that a high intake of soy might decrease the incidence of hormonally linked breast and prostate cancers. In addition, soy isoflavones are touted as having the properties to alleviate menopausal symptoms such as hot flashes and prevent osteoporosis.
These developments have encouraged consumers to view soy as a health food, and have given particular appeal to health-conscious, mature women. Even though there have been reports in the US that argue upon the harmful effects of soy such as linking its consumption to lower fertility, Asian consumers continue to enjoy products from their favorite bean.
Flavor innovations in soy-based dairy alternatives
Flavor innovations, especially those that provide functional benefi ts, have enabled soy beverages to retain loyal consumers as well as attract new ones.
In Singapore, F&N Foods launched Nutrisoy Omega range of soy milk in 2006 and Nutrisoy Hi Calcium Red Bean soy milk in early 2007. While the omega range was introduced as fortifi ed soy milk, the red bean beverage features benefi ts of soy and red beans, ingredients which are commonly used in traditional Chinese medicine (TCM).
TCM practitioners consider red beans as having the properties to reduce water retention due to its high fiber content. Meanwhile, Marigold has introduced the pomegranate-flavored soy milk in the country, marketing the health benefi ts of soy milk and the antioxidantrich pomegranate fruit.
In Thailand, soy milk manufacturers have launched soy beverages that contain corn and black sesame, the latter being considered by the locals as an ingredient that aids beauty. In South Korea, Hanmi Whole Soymilk launched a soy drink with red ginseng in 2007 with the latter ingredient considered by locals as having anti-stress properties. In Hong Kong, manufacturers are promoting organic versions of soy with products such as Soy Dream and Green dot dot instant soy milk powder that is made from 100% organic soybeans. Both products are sugar-free, thereby meeting the demands of health-conscious consumers. In non-traditional soy beverage markets such as India, manufacturers such as Staeta and Godrej have launched beverages with exotic flavors such as saffron, cardamom and a dried fruit called pista.
Foodservice boosts soy sales
Much of the product innovations in soy stem from the dynamic foodservice channel. Euromonitor International’s industry sources estimate that the sales of unpackaged fresh soy milk in China are 15 times higher than that of packaged soy milk. In the Philippines, taho (a form of soy dessert) is commonly sold by street side vendors and foodservice outlets such as Uncle Finn’s Soya also offer the dessert with flavors such as chocolate, strawberry and pandan.
In Singapore, foodservice outlets that specialize in soy, such as Mr Bean, offer various flavors of soy milk ranging from almond to celery, and other soy products such as bean curd, nuts and ice cream. Foodservice chain Gogo Beanz also offers other flavors such as Oreo cookies and aloe vera in their soy milk range.
Meanwhile, soy-based ice cream is popular in foodservice outlets in Asia, with Malaysia-based Gelatomio offering a range of sugar-free soy-based ice cream products. Soy milk is also commonly offered as an alternative to milk in international cafés like Starbucks and in their coffee beverages such as soy latte. Heinz is also providing soy-based sauces created by chefs for the growing demand.
Soy: Beyond conventional food and drinks
Owing to its popularity as a condiment in Asian cuisine, soy has emerged as a popular fl avoring ingredient in sweet and savory snacks. Soy-based snack brands such as Soyjoy in Japan and Taiwan are popular among white-collar workers who often have irregular working hours and desire healthy snacks to boost their energy levels. There are also new gourmet product launches in the sweet and savory snack segments that use extruded soy for a healthier product image.
The application of soy has expanded to the creation of nutraceutical drinks such as Lactasoy Light plus Collagen in Thailand, where it is marketed as being able to offer consumers glowing, youthful skin. Soy is also used to replace petroleum in cosmetic products due to its environmentally friendly texture.
Researchers have found the high content of phytoestrogens in soy to possess anti-ageing benefi ts and the bean is therefore used as an ingredient in cleansers, soaps and hair care products. Japanese cosmetics manufacturer Hiina, for example, has introduced a facemask made from 100% soy milk after studies showed that hands of tofu packers in the country have smooth and soft hands due to their constant contact with soy. The facemask needs to be stored in a freezer as is made from a food ingredient that does not contain additives.
Besides the face masks, the sales of soy-based Nameraka Honpo skincare line by Japanese cosmetics firm Tokiwa Pharmaceuticals are also seeing growth. In the US, hot soy manicure treatments in spas are gaining popularity and this trend is expected to show the same results in Asia in the short term.
Asia to propel soy growth
Asia is beckoning more manufacturers to expand their product offerings in the region. In China, per capita consumption (retail volume) of soy beverages is 0.6 liters in 2008, compared to Hong Kong's 13.3 liters and Thailand's 3.6 liters.
While Japan is the world's single biggest market for soy-based dairy alternatives with 2008 value sales of $679 million, the country’s per capita retail volume of soy beverages reached 1.4 liters in 2008, demonstrating that this highly mature market may still offer plenty of growth opportunities.
India has traditionally favored dairy over soy. There is a growing niche consumer base in the country for soy-based dairy alternatives with a 16% retail value growth in the soy category this year. Soy-based sauces and soybean oil are also expected to remain the bulk revenue churners for soy manufacturers. These sauces are expected to register attractive value growths in developing countries such as Thailand and Philippines at 61% and 48% respectively over 2008-13. Growth is expected to be driven by increasing fortifications of soy-based sauces with minerals and soybean oil blends.
www.euromonitor.com
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Global Soybean Trade Grows
The recent bearish momentum in the soy complex markets is expected to continue in the coming months.
LUKE CHANDLER SENIOR COMMODITIES ANALYST, RABOBANK FOOD & AGRIBUSINESS RESEARCH AND ADVISORY
Soybean prices fell sharply in early August, with the Chicago Mercantile Exchange (CME) November 2008 soybean futures price falling by 16% in a little over a week. Prices reached a monthly low of $11.80 per bushel on August 8, the lowest level since March.
In the second half of August, prices posted a partial recovery. However these gains did not last long as prices fell through the $12.00 per bushel level in early September. Price volatility remained extreme through August and early September due to factors such as a stronger US dollar, weakening crude oil prices and liquidation of investor long positions (see Table 1).
While stock levels entering the 2008/09 season are expected to be historically tight, with end stocks to use ratio of just over 4% in 2007/08, price peaks in recent months appeared to have resulted in some demand rationing in the US and elsewhere. Meanwhile, Chinese imports have slowed with higher prices due to the Olympics and a larger-than-expected domestic soybean crop.
Soybean prices have also eased due to more favorable growing conditions in the US in recent months. Yield forecasts for the 2008/09 season were at 40.5 bushels per acre, according to the United States Department of Agriculture (USDA) in August.
Rabobank expects the recent bearish momentum in the soy complex markets to continue in coming months, provided there is no crop scare in the US or South America. The direction of the US dollar and world energy markets could also play significant roles in soy-complex price movements.
Based on the current forecasts of larger-than-expected production in the US and China and a weaker demand allowing stocks to re-build in 2008/09, prices are likely to be bound between $11.50 and $12.50 per bushel till the end of 2008.
Prices are likely to strengthen toward the close of 2008 and in early 2009 as the battle for acres with corn intensifies. However, a return to 2008 price highs is not expected, not without significant production issues or a significant fall in the US dollar.
With the pressure on production costs, soybeans appear to offer farmers in Argentina an acceptable alternative crop.
Soybean price quarterly forecasts.
Soybean Fundamentals
The fundamental outlook for the US and world soybeans markets shifted significantly between June and September. Production expectations have lifted in the US and elsewhere and demand projections have eased, providing some comfort based on an extremely tight carry-in stocks situation. Some easing in the US stocks-to-use ratio is now expected throughout the 2008/09 season provided current yield expectations of above 41 bushels per acre prove to be accurate. However, the world scenario is not without risks. South American producers are currently making planting decisions that will impact a number of markets. A major planting decision to be made is on whether to plant corn or soybeans and if farmers would plant additional acres this season.
The likelihood of increased acreage in 2008/09 diminished in recent months due to less attractive margins as a result of declining commodity prices and high input costs.
Brazil
In September, growers started to plant the summer crop in Brazil and decided on how many acres would be planted with soybean and corn. A comparative analysis indicates that soybean has an advantage. Current domestic corn prices are similar to prices in 2007, while soybean is 30% higher over the same period. However, higher production costs, mainly due to high fertilizer prices, are likely to limit expansion in soybean planted area.
Concerns about production costs should also diminish the input level used in the soybean crop. Growers tend to use early soybean varieties that require less fertilizer and are less susceptible to diseases, which could, in turn, generate lower soybean yields for the coming crop.
Argentina
Looking at the 2008/09 soybean crop, there is some suggestion that crop areas not planted with corn and wheat could be planted with soybean due to a relatively favorable price outlook. Through mid- August, soybean prices on the local market have shown the largest year-on-year growth. While the outlook for soybean prices at the terminal has weakened in relative terms, they have more than held their own against corn prices. With the pressure on production costs, soybeans appear to offer farmers an acceptable alternative crop.
It is likely that the area planted with soybeans will surpass the record 40.77 million acres to over 42.00 million acres during the 2007/08 season. However, poor growing conditions this season may have an adverse impact on yields. While soybean production will grow, Rabobank does not expect 2008/09 to be a bin buster in Argentina.
China
According to the projection report published by the National Grain and Oils Information Centre in August this year, Chinese soybean production in 2008 is forecast to reach 17.5 million tons, 4.7 million higher or up 36.72% on 2007 levels.
In 2008, the planting area of soybean was 23.85 million acres, an increase of 10.92%, as farmers believed planting soybean could bring higher returns over other competing crops based on its high price last year. Besides the acreage augment, soybean yield production in northeast China, which is the main production region, showed a clear rebound. This is especially so after the low yield caused by serious drought in the previous year. The soybean yield in 2008 was 1.81 metric tons (mt) per hectare, 23.26% higher year-on-year.
Due to projected bumper harvest of soybean in 2008, domestic prices have fallen since the middle of July. The price in the production region in August was 4,280 RMB ($625.9) per mt, down 20.15% from July. Unlike the self-sufficiency policy of China in wheat and corn, the Chinese soybean industry is heavily reliant on imports. In 2007, China imported 30.82 million tons of soybeans. Major exporters to China included the US with 11.57 mt, followed by Brazil with 10.58 million tons and Argentina with 8.28 mt. These three main exporters accounted for 98.7% of China’s total soybean imports. Thus, the foreign dependency rate of Chinese soybean industry reached 62.8% in 2007.
Since October 2007, the Chinese government has reduced the provisional import tariff on soybean from 3% to 1%, which was reviewed in September 2008.
Outlook
Soy-complex prices have been adversely affected by a strengthening US dollar, weaker world energy prices, liquidation in the futures markets and improved growing conditions in the US and China. There is also some evidence of demand rationing due to record price levels in 2008.
Rabobank expects soy-complex prices to continue to stabilize around current levels, with some upside likely in the fourth quarter of 2008 and early 2009 as the battle for acres with corn recommences, pushing respective prices higher to encourage plantings in 2009.
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Advanced Soybean Traits
Research is underway in the US to produce profitable soybeans for industrial use.
KEITH WARDEN UNITED SOYBEAN BOARD
Checkoff-funded soybean research would enable these scenarios: changing the characteristics of the soybeans to obtain higher yields, healthier oils and more protein for animal feed; and providing food manufacturers with certain traits in soy that could boost profi tability. Laboratories in the US are now seeking new ways to keep local soybean farmers competitive and such research could impact the bottom line.
One of the biggest research efforts is to map the genes of the soybean to understand the effect of each gene on the plant – good or bad. This research provides seed breeders with tools they can use to develop resistance to pests, diseases and droughts, as well as a tolerance to herbicides.
“We’ve taken basic checkoff research and have used it to expand our knowledge of germplasm for developing improved varieties,” says Jeff Thompson, a researcher with Pioneer Hi-Bred. “We use traditional breeding techniques enhanced by genetic research and marker-assisted gene selection.”
Developments such as genome mapping and additional genetic research will pave the way for new advancements such as proteomics.
Research is underway to provide seed breeders with tools they can use to develop resistance to pests, diseases and droughts, as well as a tolerance to herbicides.
From genes to proteins
Simply put, proteomics is the study of proteins and how proteins could work together to achieve certain functions in an organism. While there may be tens of thousands of genes in a single organism, there can be hundreds of thousands of proteins.
“Proteomics is important – certain proteins are turned off, and others are turned on during plant development,” says Jason Bean, a soybean farmer from Holcomb, Missouri. By learning how proteins interact with each other, scientists hope to develop more enhanced-quality traits. So how are proteins connected to genes?
Proteins are made of amino acids and the sequence of amino acids is defined by genes. Understanding both will help lead to enhancedquality traits in soybeans in the US that can meet customer demands. Research has already met some specific demands for both the food and feed industries, but more are on the way.
From genes to proteins
Simply put, proteomics is the study of proteins and how proteins could work together to achieve certain functions in an organism. While there may be tens of thousands of genes in a single organism, there can be hundreds of thousands of proteins.
“Proteomics is important – certain proteins are turned off, and others are turned on during plant development,” says Jason Bean, a soybean farmer from Holcomb, Missouri. By learning how proteins interact with each other, scientists hope to develop more enhanced-quality traits. So how are proteins connected to genes?
Proteins are made of amino acids and the sequence of amino acids is defined by genes. Understanding both will help lead to enhancedquality traits in soybeans in the US that can meet customer demands. Research has already met some specific demands for both the food and feed industries, but more are on the way.
Winning the battle of edible oils
Low-linolenic soybeans produce soybean oil that reduces or eliminates trans fats in some food applications. They represent one of the most recent successes in addressing consumers’ healthconscious demands while boosting farmers’ profi tability.
“Low-linolenic soybeans give farmers ample opportunity to increase profits,” says Alan Moore, a soybean farmer from Bannister, Michigan. “Increased premiums are a direct result of increased demand for lowlinolenic soybean oil.”
Additional varieties with added or tweaked traits could also result in even healthier soybean oil. Continued research will provide midoleic soybeans that do not require hydrogenation (that results in trans fats).
These varieties also meet food manufacturers’ demands for oils better suited for heavy-duty frying with longer shelf life. These mid-oleic oils will help to maintain the soybean oil market share for farmers in the US. The high-oleic varieties should be available around 2010-11 to provide high levels of oil stability for cooking.
www.unitedsoybean.org
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