USSEC led a soybean oil marketing mission from August 16-21 to Costa Rica and Mexico. The Americas region is U.S. soy oil’s largest exporting destination and these two countries are U.S. Soy’s biggest oil customers.
United Soybean Board (USB) directors Jim Domagalski of Michigan, Dallas Wright of Delaware, Jay Myers of North Dakota, and Belinda Burrier of Maryland, along with American Soybean Association (ASA) director Ron Moore of Illinois joined USSEC Marketing Director – Human Nutrition/Oil Marypat Corbett, Marketing Assistant – Human Nutrition/Oil Jelena Smojver, Regional Commercial, Technical & Marketing Director – MENA Mousa Wakileh, USSEC Regional Director – Americas Francisco de la Torre, USSEC Regional Marketing Director – Americas Nayeli Villanova, and USSEC consultants Pedro Gonzalez, and Mark Anderson on this trip.
The purpose of the mission was to examine future export opportunities and competitive global market factors impacting U.S. soybean oil that can help define and develop effective defensive/counter-offensive actions and market development activities to increase the value and volume of U.S. soy oil exports.
The trip included an orientation on the vegetable oil retail sector in both Costa Rica and in Mexico, which involved visits to several different types of grocery stores. The shops included all types from large warehouse-style stores to small, mom-and-pop corner stores known as “chicos.”
The grocery store visits provided the U.S. farmers with an opportunity to observe and investigate how oils are marketed and sold in this region. At each store, the grower leaders looked at the types of oil, the length of the vegetable oil aisle and the shape, size and labeling of the container.
The U.S. farmers marveled at the vastness of consumers’ oil choices. Mr. Domagalski said, “The aisles that contained soy oils and other frying oils were from one end to the other.”
Ms. Corbett explained, “The competition [between oils] is unbelievably huge in both countries. Some vegetable oil aisles were over 50 feet long and had shelves that were 6 feet high – full of vegetable oils. They contained soy and soy blends, solid palm oil and liquid blends, canola and blends, sunflower and blends, and olive oil. The containers ranged in size from 2 pints to 4 gallons.”
In the Americas region, the per capita purchase and consumption of vegetable oils is 4.5 gallons (17 liters) a year, because people often fry foods for all three daily meals.
Mr. Domagalski continued, “Here in the U.S., I took notice when I returned. The frying oils areas are much smaller. Even with the fact that here, there are also several oils to choose from, the volume didn’t compare to Costa Rica stores.”
Consumption of vegetable oil is even higher in the Middle East/North Africa (MENA) region – closer to 9 – 12 gallons per year. Oil is used for every meal and to preserve pickles, which are extremely popular and served at least twice per day. Mr. Wakileh pointed out that, many years ago, the crushing and refining industry throughout the MENA region established regulations that made it illegal to blend oils.
Labeling of soybean oil in the Americas region is very different from the United States with helpful health benefit label claims on the soy oil bottles such as “Omega 3 and 6” and “No Trans Fats.” Some products had healthy additives such as Docosahexaenoic acid (DHA) and flavors such as garlic. The companies capitalize on soy’s differences from the competing oils and use a “Soy is Healthy” platform. In addition, there are cardiac health and diabetes association labels endorsing the use of certain oils.
The next phase of the mission included interactions with the largest U.S. soy oil customers in the two countries. Both are crushing/refining companies and are interested in the promise of the U.S Soy Sustainability Assurance Protocol.
According to Mr. Moore, “These companies are some of U.S. soybean farmers’ best customers.”
With help from USSEC, both companies were responsible for introducing soybean oil into their markets over 10 years ago and making it the premium priced oil. Both have established their soy oil market and increased sales using a health platform, with one company relying upon Facebook as its most important form of communication. The other company has seen its marketing programs significantly increase its sales.
Both crusher/refiner companies gave several examples where they had recently been recently challenged to migrate away from soybean oil by very large customers. The solution for the refiner could be to add a small percentage of another oil to its current 100 percent soybean oil product to meet the demands of this large customer.
The two companies stressed how they value U.S. soybean growers and their long-term relationship with USSEC, mentioning specifically that no other commodity or company offers partnering knowledge of the market place like U.S. Soy growers. Both crusher/refiners mentioned that they see U.S. soybean farmers as a true industry partner. They said it would be extremely beneficial to them if the U.S. would start labeling the soybean oil sold in U.S. grocery stores as soybean oil and not vegetable oil.
These businesses import whole U.S. soybeans and are very much interested in soybeans that have a composition which would give them higher oil yields and make a soybean meal that is higher in protein – they want more than 37 percent protein. These companies are interested in high oleic soybean oil as they see it as a way to effectively compete against South American soybean oil, canola and sunflower high oleic oil.
Mr. Moore said, “They indicated that they preferred U.S. soybeans because of their higher quality. They also were excited about the new high oleic soybeans and wanted to purchase them as soon as they became available.”
The purpose of the roundtable meetings was for grower leaders to leave with an impression of what’s going on in the market and with a better understanding of what U.S. oil’s future so that USSEC can better strategize its projects in the coming years. Two important outcomes of the meeting were that USSEC confirmed and quantified competitors’ bench strength over the next one to three years and helped confirm regional priorities and prospective positioning focus for future U.S. soy oil program development.
Ms. Burrier said, “The roundtable discussions were very productive for all involved. The key piece I took away was the magnitude Facebook played in the popularity of soy oil and the promotion of soy oil as a heart healthy product with added Omega 3.”
USSEC’s next steps include working to get U.S. companies to relabel their vegetable oil as soybean oil; encouraging India to consume more palm oil, which threatens the consumption of U.S. soybean oil; concentrating on defending its U.S. export markets in the Americas and MENA; and expanding partnering efforts with customers because they positively impact exports of U.S. soybean oil.