By Brian R. Hook
The escalating cost of commodities is seeding growth
at St. Louis-based Solae, a developer of soy protein used in thousands of food, meat, and nutritional products.
The price of soybeans, which has nearly doubled in the last year, hurts Solae in the short term, says Torkel Rhenman, Solae CEO. But in the long term, he says, higher prices will help promote soybeans as an alternative source of protein.
"The relevance of soy protein versus other proteins increases exponentially" as prices rise, says Rhenman, who started as CEO at Solae in March, a month before Solae announced it was raising some of its own prices by up to 30 percent.
Alternative Protein
Rhenman compares the increasing prices to the rising price of fuel. "When gasoline prices go up, the first thing impacted is your pocketbook," he says. "When it goes up significantly, you start changing your habits." Consumers will drive less, use alternative forms of transportation, or purchase a new car with better gas mileage.
It is the same principal behind the growth of Solae's soy protein. While the soy protein from Solae already accounts for approximately 50 percent of the $2 billion market for soy protein, Rhenman says, Solae's main competitor is animal protein.
It now costs more to feed cattle, for example, because of higher feed prices.
"You need to feed a cow five times the amount of protein versus what the cow actually produces," Rhenman says. "When you look at sustainability, eating vegetable protein is by far a better alternative, as well as when you look at the cost benefits."
Global Growth
Solae has more than 3,500 customers worldwide that use soy protein products as an alternative to traditional protein in food bars, beverages, baked goods and cereals.
To serve its growing list of customers, Solae employs more than 3,000 people located at manufacturing facilities around the world. The soy protein developer also has regional offices in Geneva, Switzerland, Hong Kong, China, and Sao Paulo, Brazil.
Rhenman's career in agribusiness has spanned the globe. He landed his first job at DuPont, which owns 72 percent of Solae, in 1986. Bunge owns the other 28 percent.
Rhenman's career at DuPont—including positions in sales, marketing, manufacturing, and management—has included stops in Sweden, the United Kingdom, Switzerland, the Czech Republic, The Netherlands, Belgium, Japan and the United States.
With revenue exceeding $1 billion a year, North America remains Solae's single-largest source of revenue. But a majority of the company's sales comes from customers overseas. "We predict a lot of growth will come from outside the U.S.," Rhenman says, noting that consumers in China and India are demanding more protein in their diet.
Health Benefits
Soybeans are 30 percent carbohydrate, 18 percent oil, 14 percent moisture and 38 percent protein. Soy protein is cholesterol-free, low in saturated fat and lactose-free.
Researchers at more than 180 universities have used Solae's soy protein in nearly 400 research studies. Many of the results have been published in medical journals.
"Every year awareness increases about soy's health benefits," Rhenman says.
One of the next opportunities for Solae might be in the $60-billion breakfast-food market. A recent survey involving 1,000 consumers reveals that 79 percent of consumers are looking for food at breakfast that maintains energy levels throughout the morning.
Touting Taste
One of Solae's newest products is a soy protein that is more like fiber instead of powder. The soy protein is used for meat replacement products, like chicken nuggets.
"You get all of the advantages of protein, but you don't get all of the other byproducts that you tend to have with higher cholesterol or fats," Rhenman says.
Solae designs soy protein products to specifically meet customer's applications. Whether it is for ready-made drinks, yogurt or even ice cream, Solae formulates the soy protein so that it does not give off an adverse taste in the customer's finished product.
"Not everybody likes the taste of soy," Rhenman acknowledges, adding that each soybean contains thousands of different ingredients. He says determining which ingredient makes a product taste different is the big challenge for scientists.
Research & Development
More than half of the 400 employees at the company's new $40 million headquarters in St. Louis are scientists working on research and development.
Solae's labs used to be spread throughout the region. Rhenman says the 165,000-foot facility, opened in March, brings everyone into one centrally located place. It also allows Solae to bring in customers for taste testing, providing quicker feedback.
"They can tell us which of the products tastes the best," Rhenman says.
The new Solae corporate headquarters and R&D center are located in the Center of Research, Technology & Entrepreneurial Exchange (CORTEX) corridor immediately west of downtown St. Louis; a collaboration between Washington University in St. Louis, Saint Louis University, University of Missouri-St. Louis, Barnes-Jewish Hospital and the Missouri Botanical Garden to promote biotechnology.
CORTEX has helped the company establish a network of contacts with the region's universities and hospitals, Rhenman says. "We need to attract top caliber scientists to be successful and that all starts with having strong collaboration."
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