The oat milk wars are just beginning

This is because there is a lot of money at stake for the brands selling the increasingly popular dairy alternative. Sales of the item were approximately $ 316.4 million at retail in the United States in the year ending May 29, according to Nielsen. It’s still a small market compared to non-dairy milk substitutes overall, around $ 2.2 billion. But oat milk has increased by around 1,200% over the past two years.

This means that in North America there may well be an even bigger oat milk boom. And with Oatly, the Swedish company that helped popularize the product, still struggling to keep up with demand as it strives to expand its production capacity, now is the perfect time for competitors like Danone, the makers of Planet Oat HP Hood and Chobani to take a part, fragmented category, where the race is still close enough that players have a chance to scramble for first place.

“There’s going to be a lot of competition on this front,” said Maria Mascaraque, who oversees food and nutrition research at Euromonitor.

Oatly arrives at the scene

Oatly first launched its oat milk in 1995. The company’s flagship only arrived in the United States in 2017, “targeting the makers of coffee flavor, professional baristas in independent cafes “, according to the company’s IPO prospectus. By the end of last year, Oatly was available in more than 7,500 outlets and around 10,000 cafes, Oatly said, including Starbucks locations.

Oatly has caught the attention of American buyers not only with its products, which include oat ice cream and oat milk, but also with its brassy advertising campaigns. Some examples of Oatly announcements: “Did you really read this? Total success! And “We spent an insane amount of money on this fancy billboard. I hope someone interested in oatmeal drink sees it.”

The brand also made waves with its Super Bowl advertising earlier this year. Oatly ran a spot featuring CEO Toni Petersson playing the keyboard and singing a repetitive song, with lyrics “Wow! No Cow”, in a field. Oatly gave away “I totally hated that Oatly ad” t-shirts after people responded poorly to the place.
This spring, the company debuted on the Nasdaq with a valuation of $ 10 billion. Originally valued at $ 17 a share, the company’s stock price has now reached around $ 27.50.

Analysts are happy with Oatly’s chances. “We see Oatly as a long-term growth story that is only just beginning,” Guggenheim analyst Laurent Grandet wrote in a note on Monday. At Jefferies, analysts this week wrote that Oatly “has a long track record for sustained, high growth and margin expansion” relative to its peers in the consumer packaged goods space.

And while almond milk is still the main category of plant-based milk in the United States, sales of oat milk have overtaken those of almond and soy milk in the United Kingdom and Germany in the in recent years, Oatly noted in its IPO prospectus, citing Nielsen and IRI data.

But Oatly’s success has been a double-edged sword. The company was unable to meet demand. “Despite continued efforts to increase our production capacity, our current sourcing, processing and manufacturing capabilities are insufficient to meet our current business needs,” Oatly wrote in the prospectus.

“Adoption, acceleration and enthusiasm [for Oatly] exceeded our expectations, ”Mike Messersmith, Oatly president for North America, told CNN Business. “It is always a constantly evolving challenge to be able to meet these needs. plans to do with the money raised from the IPO.

The company is in a period of “transition” this year, said Guggenheim’s Grandet. Eventually, Oatly will close the gap and have enough product, he predicts. But in the meantime, if grocers or coffee shops can’t stock their shelves with Oatly’s product, they could turn to a competitor.

“There is a risk that competitors take their shelf [space], and make that connection with consumers, ”said Grandet.

A large dairy wants to enter

Planet Oat and Oat Yeah, which has been renamed Silk Oatmilk.

HP Hood, the company behind Planet Oat, and Danone, famous for its dairy, yogurt and plant-based milk brands, also take oat milk seriously. And recently, they’ve been struggling to grab the attention of customers with new marketing strategies and efforts.

For HP Hood, a former dairy brand, it was especially important to turn to plant-based alternatives as cow’s milk fell out of favor with customers.

“Creating Planet Oat was a way of giving [consumers] what they wanted, ”said Chris Ross, senior vice president of marketing and research and development at HP Hood LLC. This year, HP Hood predicts it will spend around $ 30 million promoting Planet Oat. Next year he plans to spend more.

“Every year, [the oat milk market] is getting more and more competitive, ”said Ross. Recently, Planet Oat launched a “#wesolvedmilk” campaign, which describes the product and shows how easily it can be redeemed for cow’s milk or whatever.

But he has some competition besides Oatly.

The new packaging from Silk Oatmilk.

Danone started selling oat milk under the Oat Yeah brand in 2019, under the Silk umbrella. But now he’s suing Silk’s customers more directly. In April, he relaunched the product under the name Silk Oatmilk, with a new recipe.

The company has also started to advertise Silk Oatmilk as part of its “Milk of the Earth” campaign promoting its herbal products. The oat milk commercial, with upbeat music playing in the background, shows people drinking oat milk straight, dipping a cookie in a glass, and sipping a bowl of cereal.

Silk’s portfolio already includes coconut, almond and soy. By launching Silk Oatmilk, Danone wishes to convince customers who already choose Silk for soybeans or almonds to opt for the brand for oat milk.

“We see the opportunity and plan to be more assertive in the space,” Shane Grant, CEO of Danone North America, told CNN Business in an email.

Chobani branches out

Chobani sells oat milk under the Chobani brand.

Chobani introduced a plethora of oatmeal products in 2019. For Chobani enthusiasts, that means more brand options – from oat milk to oat-based yogurt to coffee-based oat milk oats.

The company is betting on customers who want to try everything under the umbrella of Chobani. “We get the lawsuit with the name Chobani,” said Peter McGuinness, president and chief operating officer of the company.

The company has also invested in making oat milk at its own facilities, McGuinness said. “We basically built a factory within a factory,” he told CNN Business earlier this year. This approach can help prevent shortages.

As established businesses scramble for space, newcomers will also have the opportunity to stand out.

A few examples: Califia offers a protein oat milk that might help distinguish it from customers who are specifically looking for a protein boost. A company called Three Trees makes a mixture of oat milk and seeds. Others lead with specific references: Minor Figures prioritizes oat milk for coffee, for example, and Happy Planet advertises its environmental credentials. Who knows what other oat milk options will be coming to your nearest grocery store next.

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