Oatly is no longer the star of the oat milk scene. Planet Oat, a lower-priced alternative, now accounts for 37% of the US oat milk market, while Oatly accounts for 22%, according to data from IRI, a Chicago-based market research firm.
When Sweden-based Oatly first launched in the US in 2016, the company largely had the market to itself. But its rapid growth and limited supply have attracted rivals. Now a handful of oat milk brands, including Planet Oat, Califia Farms and Mooala, are available on grocery store shelves.
Losing market share may be bad for Oatly, but competition is good for consumers. Oat milk has become more affordable: The average price of a half-gallon carton of oat milk has dropped from $5.68 in 2017 to $4.44 now. The price of a half-gallon carton of Oatly is $5, while for Planet Oat it is $4.34 and for Chobani it is $4.44, according to IRI. Meanwhile, the price of a half gallon of cow’s milk is $2.20 and that of almond milk is $2.96.
Keeping up with the demand for oat milk
Oatly has struggled to keep up with rising demand, as the Wall Street Journal reported this week. In November, company executives told investors they were having trouble ramping up production at Oatly’s second US factory in Utah. Oatly has relied heavily on contract manufacturers, but new players have created more competition for those services. From 2016 to 2021, global sales of milk alternatives grew 23%, from $14.4 billion to $17.7 billion, according to data from Euromonitor, a London-based market research firm.
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When Toni Petersson became CEO of Oatly in 2012, she led a packaging and advertising redesign that focused on quirky slogans like “No milk. I am not. No badness” to stand out from the dairy industry. In 2016, Oatly came to the US by partnering with hip, independent coffee shops like La Colombe and Intelligentsia, and quickly became the milk of the moment. Oatly now sells oatmeal-based ice cream, yogurt and whipped cream substitutes, and its products are available in 20 countries.
More oat milk, less emissions?
The proliferation of oat milk brands may also be good for the environment. Compared to dairy products or almond milk, oat milk uses much less water. A 2018 analysis of a variety of milks, published in the journal Science, found that oat milk produces fewer emissions than most alternatives.
However, exaggerating these claims has been controversial. Last July, Spruce Point Capital, an activist short seller, published a report claiming that Oatly had misled investors about its sustainability practices. He alleged that Oatly had curated the data for a June 2021 investor presentation, omitting how Oatly’s water consumption is worse than cow’s milk, and the company’s production process produces “dangerous volumes of wastewater.” . Oatly said the claims in the report were false, and the Science analysis not only found that oat milk used less water than cow’s milk, it also used less water than rice or almond milk.