As an alternative to dairy produce, soy milk has emerged as one of the market's most dynamic sectors in recent years. In retail volume terms, growth of 12% in 2003 is expected to top even that of probiotic yoghurt and fermented dairy drinks, reports Euromonitor International.

Soy milk has benefited from its position as a healthy alternative to standard cow's milk, with fewer calories. In addition to its high protein, calcium and essential vitamin content, manufacturers have increasingly stressed soy's disease prevention benefits.

It is credited with providing the requisite calcium to prevent osteoporosis in older women, and maintaining a woman's hormonal balance during and after menopause (through soy isoflavones). Soy milk also appeals to lactose-intolerant consumers and has benefited of late from wider mainstream retail distribution in non-Asia-Pacific markets.

Consequently it has emerged more quickly than the many dairy alternatives it competes against. In retail volume terms, 12% growth in 2003 will be higher than probiotic yoghurt and fermented dairy drinks, both of which have seen considerable product development and marketing support over the last few years.

Asia-Pacific dwarfs other regions; North America emerging
Accounting for over three-quarters of global volume sales in 2003, the Asia-Pacific region is a traditional consumer of soy milk with a massive consumer base. However, in terms of value, Asia's share of world sales shrinks to just over 51%, reflecting the low price per unit of soy milk in the region relative to more developed markets of North America and Western Europe.

Aside from Asia-Pacific, North America was the only region with a double-digit share of global sales in 2003. In addition to growing awareness of soy-based products, manufacturer activity has been crucial in the development of the market. The unfamiliar taste has traditionally been the key factor inhibiting the expansion of soy milk to consumers beyond those with specific food allergies or lactose-intolerance. The key to changing this negative consumer perception has been to make soy milk look more like standard cow's milk by selling it, refrigerated, in a gable-top cartons.

This approach, spearheaded by Silk, the leading soy milk brand in the US, allowed for a stronger parallel to be drawn between the alternative products and created an aura of freshness that would not otherwise have been present. Other manufacturers, including the Hain Celestial Group, have since followed Silk's lead.

Further propelling Silk to the big league was its purchase by Dean Foods, the largest dairy company in the US. Dean Foods originally assumed a small interest in White Wave, the producer of Silk, in August 1999. Dean Foods' share in the soy producer gradually increased to 36% until it decided to buy the remaining 64% of the company in 2002. The well-established distribution network of Dean Foods has translated into obvious benefits for Silk. In 2002, its value share of soy milk in the US leapt to over 50%.

Threat to soy milk from GM food concerns
Though soy milk has yet to achieve significant household penetration in regions other than Asia-Pacific and North America, sales have shown rapid progress in Western Europe. Likewise the explosive growth predicted over the forecast period in Africa and the Middle East is not surprising given negligible current levels of consumption, and in volume terms the market will remain small.

In the long-term, however, lies a threat to continued expansion of the soy milk sector, namely rising consumer concerns over genetically-modified foods. Although soy milk positions itself as a health food, it will be increasingly difficult to ensure that soy products do not derive from genetically modified crops. There is a risk of a consumer backlash against soy products - already in September 2003, a furore arose in New Zealand over the inclusion of GM soy in infant soy milk formula.

One solution, as seen in the case of leading soy milk producer I-Mei Foods in Taiwan, is to strongly emphasise the use of non-genetically modified (NGM) soy beans to produce its milk. Similarly, White Wave/Dean Foods has also stated its commitment to the processing of non-genetically modified, organically cultivated soy beans.

The success with which manufacturers can reassure consumers of the provenance of a product which is so often positioned as healthy will be key to its continuing emergence into the global mainstream.

Related research from Euromonitor

The Market for Packaged Food in the United States

The World Market for Dairy Products