Increased consumer interest in health and in the impact of their consumption on the environment is driving demand for soy ingredients supplier Solae, according to CEO Torkel Rhenman. He spoke to Dean Best at the Food Ingredients Europe exhibition about the outlook for Solae, which has hit the corporate headlines in recent months due to speculation over its future ownership.
“We’ve never seen it as good as it is right now.”
On a busy stand at a bustling Food Ingredients Europe trade show in Paris, Torkel Rhenman, CEO of soy ingredients supplier Solae, is upbeat about the outlook for the demand for his company’s products.
Increasing consumer awareness about health, he says, means they are demanding more products containing plant proteins. Consumers, perhaps, want to eat soy-based products to help keep their heart healthy or to help them monitor their weight.
“Consumer awareness around health has really raised prices. You have a lot of demand driven that way,” Rhenman tells just-food. “Health and wellness is growing at 2x GDP. It’s the fastest-growing segment for many of our customers. That’s where they’re putting their investments, that’s where our customers should see the highest margins. That’s why we are often involved in those kind of developments because we’ve got the ingredients to help them.”
Rhenman also points to the growing responsibility some consumers feel for the impact their consumption has on the planet.
“People are also wanting to make a statement about doing something for the environment. There’s a word in the US, I’m not sure if it’s in the UK – flexitarian – they are not 100% vegetarian. They are looking at the choices they can make that have a greater social responsibility and them choosing to eat more vegetables and plant-based ingredients helps our growth.”
And ‘green’ concerns are not just the preserve of consumers, Rhenman argues, citing another factor driving his business and the wider soy ingredients sector. “It’s also from the corporate stewardship perspective of sustainability. It’s becoming more and more important especially for big companies to look at what they are doing for the planet.”
It’s an upbeat message from Rhenman, who became Solae chief executive in 2008. He joined Solae from US chemicals giant DuPont, where he had worked for 22 years across a number of markets. DuPont owns Solae in a joint venture with US agribusiness group Bunge; the two firms formed the business in 2003 by bringing together two legacy companies – Protein Technlogies International and Central Soya.
There is, however, uncertainty around Solae’s future ownership. Bloomberg reported in July that Solae’s management had met potential buyers. DuPont, which has a 73% stake in the venture, refused to comment when then contacted by just-food.
Two months later, Bloomberg quoted a DuPont executive vice president as saying the venture partners were considering their options for Solae. Mark Vergnano said the process was “in flight” and “could end up in a sale of the unit”.
Rhenman says the DuPont executive “may have been misquoted” and describes the reports as “a lot of rumours in the newspapers”.
“Our policy is not to comment on what’s being speculated by the media. As soon as we would have any news, we’d be happy to share that but there’s nothing,” Rhenman says.
But, with consumer and industry trends favouring Solae, why would DuPont and Bunge be weighing up their options?
“Our shareholders have been extremely happy about how we have performed as a business and have been very pleased with what they see as our future plans. You’d really have to ask them if they see any changes going forward,” Rhenman says, who despite his time at DuPont, refuses, politely, to comment further.
Solae’s future plans include expanding its business further in Asia, where despite the consumption of soy being relatively high, Rhenman sees a lot of potential, particularly, he argues because of the way soy can be used in convenience foods bought by the increasing number of middle-class consumers.
“Now, about half of the middle class resides in western Europe and US together. When we get to 2030, two-thirds of the middle class will be located in Asia,” Rhenman says. “There’s a huge demand and opportunity for growing that convenience segment in emerging markets.”
Rhenman says the desire of multinational companies to diversify their operations away from the more mature markets of the West and into faster-growing emerging economies is fuelling demand for ingredients companies like Solae to build their own presence in those countries. “Most of this technology is still moving from the West to those markets as the first imprint of convenience food before you have local champions,” he explains.
Solae opened a centre that looks at how to use its ingredients in food products in China last year and the company is lining up similar facilities across Asia. “We’re probably going to have multiple application labs in Asia Pacific. We’re actually looking at India in the next year or so.”
Of course, if these consumer trends and customer demands are benefiting Solae, they are also benefiting the company’s competition. Rhenman insists, however, that his company has the edge over its rivals. He points to two products being launched in Europe at Food Ingredients Europe: a soya protein nugget, providing protein and both soluble and insoluble fibre in a textured form, which could be used in bars, snacks and bakery products; and a soya protein isolate developed to replace dairy proteins in bars.
“The difference is having a bar line to make these kind of bars – our competitors don’t have that,” Rhenman says. “We’ve led this industry for the 50 years it’s been around. We’ve always been the leader in introducing new products. If you go and look at our competitors, you see more me-too copies.”
He adds: “If you look at our organisation, we have about 400 scientists around the world that is developing new ingredients and helping our customers. That’s a large investment. You have to be big in the industry to afford that. That’s where the dilemma with smaller companies. It’s hard for them to have that kind of scale of investment to come with those technologies.”
The present looks good for Solae and Rhenman insists the future is, too. However, with the speculation over the plans of Solae’s owners, there could be some challenges ahead.