DuPont-Bunge venture sold on soy protein.When Bunge Ltd. and DuPont announced the completion of their joint venture Solae in early April, the news caused barely a ripple, even in much of the agricultural press. Which is surprising considering the $800-million (revenues) deal linked one of the world's largest chemical companies with the largest soybean soybean, soya bean, or soy pea, leguminous plant (Glycine max, G. soja, or Soja max) of the family Leguminosae (pulse family), native to tropical and warm temperate regions of Asia, where it has been processor in this hemisphere.
Indeed, a look past the headlines shows that The Solae Company will easily dominate one of the fastest-growing niches in the agriculture industry.
Under the deal, first announced in early 2003, DuPont will contribute its expertise in biotech development with Bunge's market ties up and down the agricultural market food chain, especially in the area of soybean food additives food additives, substances added to foods by manufacturers to prevent spoilage or to enhance appearance, taste, texture, or nutritive value. By quantity, the most common food additives are flavorings, which include spices, vinegar, synthetic flavors, and, in the and ingredients. Much of the new company's revenues will come from an existing DuPont product--the popular soy additive Solae, from whence the venture's name comes.
According to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. the official announcement, the agreement involves two steps. Under step one, DuPont will contribute its Protein Technologies business. In exchange, White Plains, N.Y.-based Bunge will throw in its North American North American
named after North America.
North American blastomycosis
see North American blastomycosis.
North American cattle tick
see boophilusannulatus. and European ingredients operations. Bunge will also contribute its Brazilian ingredients operations. The South American operations 'South American' operation Surgical oncology A radical operation for 'frozen' pelvis, which consists of en bloc resection of the uterus and rectum. See Frozen pelvis. Cf 'All-American' and 'North American' operations. will bring diversification to soy supply and production, which is otherwise concentrated in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Europe, explains Hunter Smith Hunter Dwight Smith (born August 9, 1977 in Sherman, Texas) is an American football player who is currently the punter and emergency quarterback for the Indianapolis Colts. He attended the University of Notre Dame. , Bunge's director of global communications.
The Quest for Verb 1. quest for - go in search of or hunt for; "pursue a hobby"
quest after, go after, pursue
look for, search, seek - try to locate or discover, or try to establish the existence of; "The police are searching for clues"; "They are searching for the Healthy Foods
But, as with any corporate matchup of this scale, there's likely a good deal more to the story than what the headlines tell. For starters, some see the linkup link·up
1. The act of linking or connecting: a linkup of two orbiting spacecraft.
2. Something that serves to link or join; a connection.
3. as further evidence that soy additives have come of age. New Farm magazine, for example, recently noted that soy was destined des·tine
tr.v. des·tined, des·tin·ing, des·tines
1. To determine beforehand; preordain: a foolish scheme destined to fail; a film destined to become a classic.
2. to play a major role in the increasingly important market for nutraceuticals, that is, foods that provide health benefits in addition to sustenance. A visit to just about any supermarket will reveal soy proteins in nearly every aisle--from substitute meats to health and diet drinks and energy snacks.
Strong demand for these products comes from, among others, vegetarians who want more and tastier food choices. Plus, there are those who simply want a healthier, less meaty diet. Demographically, those groups tend to break down into two categories, according to the St. Louis Post-Dispatch The St. Louis Post-Dispatch is the only major city-wide newspaper in St. Louis, Missouri. Although written to serve Greater St. Louis, the Post-Dispatch is one of the largest newspapers in the region, and is available and read as far west as Springfield, Missouri. : aging baby boomers See generation X. who want foods to help them live longer, healthier lives and an emerging crowd of 20-year-old "fitness junkies" who make these foods part of an active health-conscious lifestyle.
Sales of these so-called functional foods already top $18 billion per year and, by some estimates, could reach $33 billion annually by 2005, the Nutrition Business Journal notes.
Those numbers haven't been lost on Solae's competitors. In International Food Ingredients magazine, Michelle Jones, technical manager for Europe for ADM See add/drop multiplexer.
(language) ADM - A picture query language, extension of Sequel2.
["An Image-Oriented Database System", Y. Takao et al, in Database Techniques for Pictorial Applications, A. Blaser ed, pp. 527-538]. Natural Health and Nutrition, spoke of a growing awareness about the benefits of eating healthy.
Moreover, the market right now is still in its nascent stages. Announcing the deal, Bunge chief financial officer Bill Wells told analysts at a recent Goldman Sachs agricultural forum in New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of that the soy ingredient market is still relatively small, about $1.3 billion a year, according to Reuters. But, Wells said growth approaches "about 10 percent per annum Per annum
In fact, it may be far higher than that. Chris Magnuson, domestic marketing manager for the United Soybean Board, says one study shows an estimated 20 percent annual growth for soyfoods.
Some predict the real catalyst for growth will come once bioengineered soy additives hit the market. "The Solae deal could speed development of other soyfoods that can fight cancer and strengthen bones," John Becherer, chief executive of the United Soybean Board, told the Post-Dispatch.
Chemical and Engineering News noted that the Solae joint venture would likely draw on DuPont's extensive research into the soy genome. The goal, according to the article, is for the new company to create improved conventional bean varieties and genetically modified beans.
No coincidence, using biotechnology to engineer "soybeans with improved quality traits" was one of three benefits of the Solae joint venture highlighted at an annual agricultural forum held by Goldman Sachs earlier this year.
What's in a Name
Smith at Bunge claims that Solae sees bioengineered soy additives entering the product mix in perhaps five to 10 years. But in the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified"
meantime, meanwhile , Solae already enjoys a formidable market advantage. Specifically, the Solae name itself represents the industry's most ambitious attempt so far to create a consumer brand around a protein additive, in the same way artificial sweetener producers have used Equal and Nutrasweet.
The Solae logo appears prominently on product labels that contain the additive, and brand managers have worked hard to build awareness among influential consumers, among them, fitness buffs. In a case study on its Web sites, David Eng Communications describes efforts to market the brand with milk and soy-based cookies at runners events in New York and elsewhere, with the idea that these buzz generators would viral-market the brand to others.
Also, before the merger even took place, DuPont Protein Technologies reached out to mainstream consumers, positioning Solae as a "good tasting" as well as nutritious additive. To reinforce that message, the Solae Web site (www.solae.com) features recipes, homey columns and guest appearances by notable chefs. The goal is to overcome soy stereotypes by impressing on consumers that protein additives, in addition to being healthy, can be tasty and possess a pleasant consistency and mouth feel.
The efforts have evidently paid off. As far back as 2001, DuPont conducted independent research, which found that, "Given the choice between similar products (with and with out the Solae 'good health seal'), 90 percent would rather buy the Solae-branded product."
To build on these consumer efforts, Solae officials continue to work with the food producers who add Solae to their products, devising co-branding strategies, while helping nutritionists maximize the additive's taste and health benefits. With these efforts comes the result that the brand appears in a growing list of foods including V8 Splash Smoothies and Snapple-A-Day brand products.
Branding Protein Like a Microprocessor
The DuPont-Bunge joint venture likely will bring a new stable of products to the Solae banner. To speed consumer acceptance, Smith says the marketing approach using the Solae logo is similar to the way Intel builds awareness for its microchips. A computer manufacturer, for example, might display the "Intel Inside" logo. And consumers get the message that any number of different-generation Intel processors might be affixed af·fix
tr.v. af·fixed, af·fix·ing, af·fix·es
1. To secure to something; attach: affix a label to a package.
2. to the PC's motherboard. By the same token, Solae will be an umbrella label that could include a variety of additives. Take Alphaprotein, for example, the liquid-soluble protein concentrate produced by a Bunge-affiliate company that is being targeted at sports drinks. And those drinks would display the Solae label. "Ultimately, Solae is not soy-specific," says Smith. "As other vegetable protein and food ingredients are developed that may not come from soy, Solae can be an umbrella for all of them."
It hasn't hurt Solae that the Food and Drug Administration now permits food makers to tout the heart-health benefits of soy additives on their labels. Ever since the FDA FDA
Food and Drug Administration
n.pr See Food and Drug Administration.
n.pr the abbreviation for the Food and Drug Administration. ruling, a number of companies have reportedly rushed to introduce soy additives--for the simple reason that additives placed invisibly within fruit drinks or snack bars and other foods allow consumers to get the soy content to improve their health, without resorting to fringe foods.
But Solae easily reigns over its competitors. Archer Daniels Midland The Archer Daniels Midland Company (NYSE: ADM), is a conglomeration based in Decatur, Illinois. ADMoperates more than 270 plants worldwide, where cereal grains and oilseeds are processed into numerous products used in food, beverage, nutraceutical, industrial and animal feed Co. has pursued a similar strategy with its own $150-million-per-year brand Nutrisoy additive, putting it in a distant second place.
Smith says ADM and Cargill's protein additives will remain Solae's leading competitors in the foreseeable future. For one thing, it takes money and the ability to invest it sans return for long periods in order to develop additives with viable consumer appeal, he says. For that reason, too, merging an R&D giant like DuPont with an agrimarketing firm makes perfect sense, he says. "We bring the chain, they bring the science," he says.
Mark Ingebretsen writes on technology, business and finance from his home in Iowa. His most recent book on the history of the Nasdaq stock market Nasdaq stock market
The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. was published in March 2002. He also writes "The Daily Scan" for the Wall Street Journal online.