ADM makes branding plans for soy

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Hardly known as a nimble consumer products powerhouse, commodities titan Archer Daniels Midland Co. is making a foray into the modern world of brand marketing with a push to promote a food ingredient aimed at the health-conscious set.

The food-processing giant, the world's dominant processor of commodities such as soybeans and corn, is readying a campaign to cash in on the recent government-endorsed health claim that soy proteins help reduce the risk of heart disease.

It's forming alliances with foodmakers to mark products containing its NutriSoy soy protein with a logo -- not unlike the familiar NutraSweet swirl once commonly found on soda cans.

Archer Daniels Midland also is preparing to test some of its own consumer products next year. The plans include advertising designed to educate consumers on the benefits of soy proteins.

`THEY'RE NOT COMMODITIES'

"What ADM is trying to do is focus on all of the non-commodity applications that can be derived from a simple corn kernel or soybean," said Jeffrey Kanter, a food analyst with Prudential Securities. "They're not commodities. They could throw off very high margins and a very consistent earnings stream."

The NutriSoy label will cover three categories: soy protein isolates, soy protein concentrates and textured vegetable proteins, which could be used in products ranging from beverages to ready-to-eat cereals and baked goods.

Analysts predict they could help ADM boost sales of "nutraceutical" products, which include vitamins and supplements.

In October, the U.S. Food & Drug Administration ruled that foodmakers can emphasize the potential health benefits of soy protein in advertising and product packaging. At least 6.25 grams per serving is needed to support the claim, the FDA said.

A LA NUTRISWEET, OLEAN

Though ingredient branding has been done before -- Monsanto Co.'s NutraSweet and Procter & Gamble Co.'s Olean top the list -- the idea is revolutionary for an old-line company whose products have been virtually unknown to consumers.

"It's kind of like `Intel Inside,' " said Del Cahill, director of North American sales for ADM's protein specialties unit, referring to the aggressive brand campaign that's helped Intel Corp. make its computer chips -- not exactly a consumer-friendly commodity -- familiar even to Luddites.

ADM will roll out the first of the branded NutriSoy food products next year as part of a test by its Gooch Food unit, which will test noodles made with soy protein isolates in Denver and Chicago.

"I know that [the NutriSoy logo] is going to be prominent on the label," said Gooch President Tim Malm, noting that packaging has not yet been developed.

If sales are strong, ADM may work with major U.S. pasta makers to develop similar products.

Indeed, wider alliances with foodmakers are pending, Mr. Cahill said. He wouldn't identify them but analysts said Kellogg Co., which is developing a soy-protein cereal and recently agreed to buy health foodmaker Worthington Foods, is a likely partner.

"They're working with all the major package-food companies," Prudential's Mr. Kanter said. "Kellogg just spent a lot of money to get into [soy] burgers; this seems like it could be a natural extension."

Another alliance could come with Du Pont Co., which has developed its own branded soy protein product under the SuproSoy name.

ADM and Du Pont have a history of working together to co-market specialty grains, such as soybeans that tolerate certain herbicides, noted securities analyst Cathryn Streeter of BioScience Securities.

DU PONT AT FOREFRONT

Du Pont has been at the forefront of ingredient branding; its Teflon coating was one of the first such success stories.

He declined to comment on a potential alliance.

What will determine ADM's success, industry experts said, is the extent to which it can win over mainstream consumers who may associate soy protein with alternative foods, such as tofu and soy milk -- products that aren't at the top of most Americans' shopping lists.

And the link between soy and healthy hearts hasn't been made clear yet to most consumers, observers added.

"These are nutrients that don't connect readily with heart disease and with reduction in cholesterol," said Steven Ink, director of nutrition for Quaker Oats Co.

MORE COMPLICATED

Mr. Ink, who worked on Quaker's 1997 efforts to promote oatmeal after the FDA touted the health benefits of oats, contended that though there are parallels to the recent health claims for soy, consumers already thought of oatmeal as a healthy food.

Soy protein, he said, is "a bit more complicated a story to tell."

Another challenge facing ADM: Soy protein-enriched foods are likely to be more expensive than their non-soy counterparts. A pound of soy-enhanced Gooch pasta, for example, will cost as much as $1.89, compared with as little as 99› for the conventional variety, Mr. Malm said.

"The problem with so much food is it gets banged on price," said Jack Trout of consultancy Trout & Partners. "They better have a hell of a story."

Ms. Cohen is an associate editor at Crain's Chicago Business.

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