A Soy-Based Tale of Missed Opportunity

Unilever's AdeS, a combination of soymilk and fruit juice, has become a big success in Latin America. In Brazil it's now so popular that it now has about ten direct competitors, among them a product made by Nestlé. All of which raises a question: Why did it take so long?

AdeS was developed not by Unilever but by an Argentinean lawyer. And while he enlisted Unilever and other multinationals to distribute the product from its beginnings in the 1980s, it took them decades to appreciate its potential.

In the 1970s, Brazilian housewives had begun tinkering with ways to extract milk from soybeans (abundant in Brazil) to supplement the nutritionally poor diets of schoolchildren. That led to the invention at a Brazilian university of a soymilk machine called the Mechanical Cow, which won a science prize. The milk it produced tasted foul and smelled even worse. Nobody would pay for it, but that had not been the intention. Much like medicine that is deemed good if it tastes bad, the resulting soymilk was purchased by the government and force-fed on schoolchildren under the attentive supervision of teachers.

About a decade later, a prominent Argentine lawyer planted soybeans in the rural northern province of Tucumán as part of his retirement plan. Concerned by the lack of employment opportunities around his farm, the lawyer looked for ways of adding value to his soy locally. He came back from Belgium with a package of soymilk, and hired a food engineer to see if he could produce something similar in Argentina. As the R&D efforts expanded, they became too costly for the lawyer, so he teamed up with a Spanish client active in civil engineering. Neither had experience in the beverage or food industry. After six months of tests in a Singaporean plant, the technical team came back with a product that smelled and tasted the least of soy as possible, but retained soy's nutritional advantages. However, it still didn't taste good, so they tried mixing it with fruit juice. That was the Eureka moment!

Despite lack of reliable energy and trained manpower, the lawyer set up a plant in Tucumán to make and package the beverage. His aim was to produce something that, by making a handsome profit, would offer sustainable employment — unlike the Brazilian soymilk program, which survives to this day on official subsidies.

AdeS was an immediate success. Its makers contracted with Pepsico to distribute it in Northern Argentina, and Unilever in neighboring Paraguay. It spread like wildfire among Paraguayans, who even today are the biggest per-capita consumers of the product. But neither Unilever nor Pepsi seems to have offered to buy into AdeS, or to distribute it more widely.

Finally, in 1992, New Jersey-based Bestfoods bought AdeS from its founders, who were crippled by the adoption of an unfavorable exchange rate by Argentina's goverment. Bestfoods then moved the manufacturing plant to Buenos Aires, doing away with the local jobs in Tucuman that had been the reason for starting the company in the first place. Bestfoods introduced the drink in Brazil. Then Bestfoods was acquired by Unilever, which finally saw the potential in AdeS and brought the product to Colombia, Central America, and Mexico.

Early weak signals of user-led innovation a la MIT's Eric von Hippel, like wives tinkering with kitchen mixers to produce soymilk, might be too faint for multinationals to pick up on. But they also failed to notice a prominently advertised science award to the inventor of the Mechanical Cow, and subsequent government subsidies for the product. Strong sales in Argentina and Paraguay also failed to catch the attention of Pepsico or Unilever, even though they were distributing the drink!

By now AdeS' potential is obvious. Why was it not appreciated decades earlier? One possibility: Multinationals have long managed their subsidiaries to sell, not to buy — especially not ideas. Also, as I have argued before, trainees at emerging-market subsidiaries of multinationals, who eventually become the leaders of those subsidiaries, are recruited among students near the top of the economic pyramid, who may miss signals coming from lower down.

This is still going on. Last year Vinita Bali was distinguished with India's Golden Peacock Award for Women Business Leadership, partly because of her penchant for doing well by doing good. Vinita Bali leads Britannia, the largest Indian biscuit manufacturer, which developed and distributes a biscuit that delivers micronutrients and thus supplements nutritional programs; like the Mechanical Cow did in Brazil. How much longer will it take until a multinational carries Britannia's idea to Africa, or Brazil?