Plant-based beverages need to offer more than a “milk alternative” to get ahead, newcomer Oatly says

By Elizabeth Crawford

- Last updated on GMT

Plant-based beverages need to offer more than an alternative to milk

Related tags Milk

To make it in the crowded plant-based beverage category, new products need to be more than just a passable alternative to dairy – they also need to be nutritious, delicious and environmentally sustainable, according to an established category player overseas that is just entering the US market. 

“The evolution and expansion of the plant-based dairy market over the last several years has been incredible with amazing growth rates, and if you look at the market today there is a mix of dominant big CPG food companies playing in that space and also some smaller startup brands,”​ Mike Messersmith, the general manager of Swedish based plant-based food and beverage company Oatly, told FoodNavigator-USA.

At the same time that this evolution is “incredibly exciting,”​ it also is raising the competitive bar and consumer expectations, he said.

He explained, “As the category has grown, you are seeing consumers pursue better options. They are looking for what is next [and asking] is there something that has a better taste or consistency? Something with a better nutritional profile or ingredient deck that is free of thickeners and gums and artificial sweeteners and preservatives? And they are asking questions about sustainability and where the products come from, because typically for these consumers who are pursuing a more plant-based diet the environmental factor is really important for them, too.”

These shifts in the competitive environment are what inspired Oatly to begin rolling out its oat-based dairy alternative beverage to the US, Messersmith said, adding that Oatly meets all of these new consumer demands.

“Oatly is a plant-based food and beverage brand that originated in Sweden founded over 25 years ago with the specific intention of creating this product that has a balanced nutrition for human beings while also preserving natural resource. Both the environmental sustainable message as well as the product nutrition and deliciousness have been core to the brand philosophy and values from the very beginning,”​ he explained, adding that this combination is rare.

“You would think that nutrition and sustainability would go hand in hand, but sometimes you get really great nutrition but it can come at a cost of the environment, and sometimes you have things that can be really incredibly sustainable, but they are not able to deliver the nutritional benefits,”​ he said.

Oatly can do both because it is oat-based and the company has “perfected the science and technology of working with oats to take a kernel of oat and turn it into a really great liquid that offers a balance of protein, carbs and fiber without having to add any of the other ingredients”​ that other brands use to round-out the mouth feel, Messersmith said.

He added that the nutritional profile of Oatly oat-based “milk”​ is better than many competitors made from other base ingredients because the company’s “technology is able to preserve the soluble fibers and beta glucan in the oats, which are really great for heart health and cholesterol levels. And, fibers in general are something most consumers don’t get in a nut milk.”

A more sustainable option

Oats also have some competitors beat on the sustainability front, Messersmith said.

He explained “oats are an incredibly sustainable crop,”​ that often is used in rotation with other crops to contribute to greater biodiversity and combating monoculture, are very hardy and can withstand cold weather climates and are require low water, land and pesticide usage in comparison to other source ingredients.

For example, the company notes, oats need 85-90% less water to produce oats than peel almonds. Compared to cow’s milk production, it also uses 79% less land, needs 85-90% less active substances in pesticides, uses 60% less energy and produces 69% less greenhouse gas emissions.

Messersmith added that the sustainability piece of the plant-based beverage movement has really tipped in 2017, which he describes as a “kind of cultural moment in time where the idea of trust and transparency around sustainability and environmental impact really matter to consumers.”

He added: “Consumers are looking for brands and companies that place those values first and that can be a part of bigger solutions to problems that are facing our country and our world, and Oatly has been a company that, from its core, leads with those values and nutrition and sustainability.”

The future is chilled

Among the products that Oatly is introducing to the US market is year are three chilled SKUs in the half gallon format, including a low-fat, original which is akin to 2% milk fat, and a chocolate option – all fo which “will be really exciting,”​ Messesrsmith said.

He explained that the company is going into the chilled section because this is where 85-90% of the growth in plant-based beverages is originating. These products will launch at Expo East in September and should be on shelves in October and November, he said. 

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