US dairy giant Dean Foods beat Nestle and Unilever to buy Alpro. But could soya milk ever become mainstream in the UK, asks Michael Barker
These days, it's almost a badge of honour to suffer from an allergy and those who haven't got one certainly don't let that stop them buying free-from food and drink.
The UK's £100m dairy-free category has enjoyed a decade of strong growth as the ranks of the genuinely dairy-intolerant have been swelled by nervous and health-conscious shoppers who simply think they are.
But with UK soya sales still lagging behind those of Belgium, Australia and Canada, there is still plenty of opportunity to tap, say manufacturers. And that is exactly what US dairy giant Dean Foods is expected to do following its acquisition in July of European market leader Alpro for £275m.
So what plans does the sixth-largest dairy company in the world have for the UK and European soya market and do its aspirations extend beyond soya?
With 26,000 staff and a £10.3bn turnover that dwarfs the largest British-owned dairy business, Dairy Crest, Dean Foods is the biggest dairy producer in the US, ahead of the likes of Kraft Foods and Dairy Farmers of America.
The company, which produces the market-leading US soya brand, Silk, already had a presence in the UK market before it swooped for Alpro, having acquired organic brand Rachel's Dairy in 2003.
It maintained a fairly low profile until the Alpro deal but could barely disguise its delight with its new purchase having fought off more than 30 bidders, including Unilever and Nestlé, to secure it. Describing it as a "once-in-a-business-lifetime opportunity", Dean Foods is now making plans for growth of the Alpro brand across Europe.
"There is a definite opportunity to increase consumption across core European markets," says vice president of corporate communications Marguerite Copel.
Alpro has five manufacturing plants in the UK, Belgium, France and the Netherlands and last year posted net sales of around £220m. While it sells well in its home market of Belgium, consumption per capita across Western Europe as a whole is still low. In the UK, its 2008 soya milk sales were £39.7m and although this made it the second bestselling milk brand, it was way behind Cravendale, which recorded sales of £124m.
Alpro commercial director John Allaway is confident that the enhanced financial firepower Dean Foods brings will lead to better consumer education, marketing and NPD and help the soya sector realise its ambition of accounting for 5% of the UK dairy market.
As well as developing its existing markets, Copel hints further growth could also come through expanding into new European countries.
While the move has clear benefits for Alpro, Dean's motivation is more about cementing the US giant's place as the leading producer in the global soya market, says Cyrille Filott, director of beverages and dairy at Rabobank.
It has developed successful marketing techniques with the Silk brand, and could apply these to Alpro, he says.
"Silk has a wider product range too, which could mean we see an expanded Alpro range."
It has also been suggested the acquisition gives Dean the foothold it needs to launch into the mainstream European dairy market, but this would probably be restricted to the fragmented foodservice market, Filott says.
Dean would struggle to supply fresh milk to European retailers, who use dedicated farmer supply pools, but it does have the expertise to sell cheese, he adds.
For now, though, Dean's focus is on soya. According to Allaway, "soya is joining the mainstream". That might be a little premature, but with one of the world's largest dairy firms investing in the European market, few would dispute that the category has potential for significant growth.