PepsiCo drops Quaker Oat Beverage less than a year after launch

By Elaine Watson contact

- Last updated on GMT

Quaker Oat Beverage  - debuting in January 2019 - contained more fiber, less sugar and fewer calories than rival brands, but did not meet expectations ( Picture: Elaine Watson)
Quaker Oat Beverage - debuting in January 2019 - contained more fiber, less sugar and fewer calories than rival brands, but did not meet expectations ( Picture: Elaine Watson)

Related tags: Pepsico, Quaker oats company, oatmilk

While oatmilk was an obvious category to enter for Quaker, a trusted brand synonymous with oats, Quaker Oat Beverage has been discontinued less than a year after launch. So what, if anything, does this tell us about what works and what doesn't in the burgeoning category?

In a statement sent to FoodNavigator-USA, brand owner PepsiCo said: “Quaker made the decision to discontinue the Oat Beverage product line. As the 142-year-old leader in oats, Quaker is always looking for new ways for people to experience their benefits, and they are committed to continuing to innovate within the foods and snacks categories across the full portfolio of brands​.”

While a flurry of brands piled into the oatmilk category early this year, Quaker was seeking to carve a distinct position in the segment​ with a product offering unique functional benefits.

Made with oat bran concentrate, which is high in ​the soluble fiber beta glucan, Quaker Oat Beverage  - debuting in January 2019 - contained more fiber, less sugar and fewer calories than rival brands, and in tune with a larger brand revamp at Quaker, homed in on the heart-healthy benefits of oats with a picture of a heart on the front of pack.

Unlike other brands in the segment, which either describe their products as oatmilk, or highlight brand names more prominently, Quaker opted for the prominent term ‘Oat Beverage.'

As for taste, Koen Burghouts, global VP, nutrition group, at PepsiCo, told us in March​ that, “We tested this product multiple times with consumers for taste and texture and they are very satisfied with the smoothness and overall texture in all usage occasions.”

Greg Steltenpohl: Oatmilk early adopters are not looking for heart healthy cues

So what – if anything – does the demise of Quaker Oat Beverage tell us about what works and what doesn’t in the emerging oatmilk category?

Greg Steltenpohl, founder and CEO of Califia Farms, which has launched oatmilk products in the retail and coffeehouse/cafe market,​ said he saw the Quaker product start disappearing from shelves "four or five months ago"​ suggesting that it had not delivered on initial expectations.

While some industry sources argue that Quaker's formulation wasn't quite ready for prime time, the product's lackluster performance may also have reflected a miscalculation on PepsiCo's part as to what early adopters of oatmilk are looking for, speculated Steltenpohl.

"These next gen consumers that are adopting oatmilk first are not looking for heart healthy cues. They are looking for flavor cues."

Success in mainstream channels won't come overnight for oatmilk

And while most observers agree that oatmilk could become a big category in plant-based milk, particularly in the foodservice channel, success in mainstream retail channels will not come overnight, he predicted.

"Quaker was this big legacy brand launching oatmilk at a time when it had not yet reached the middle of the country from a demographic standpoint, and these broad launches didn't get the velocity traction I think a lot of retailers were looking for.

Califia farms oatmilk
Greg Steltenpohl: "There's no question that the leading vanguard of third wave coffee houses has crossed over into oat as the preferred variety of barista formulations, and among the progressive coffee houses, that's even beyond dairy milk."

"The adoption and awareness of oatmilk has been driven by the coasts and in the natural food segment and has not yet crossed over into widespread adoption."

Oatmilk gaining traction in third wave coffee houses

He added: "Both Oatly and Califia are doing really well but we're still in fairly limited ACV. We're doing very well in our core coastal locations and natural food channels, and there's no question that third wave coffee house adoption does have an influence on retail home consumption.

"Mainline foodservice distributors are still very slow in adopting oatmilk, but we've found it more fruitful as a young brand to focus on what we call alternative distributors, and there's no question that the leading vanguard of third wave coffee houses has crossed over into oat as the preferred variety of barista formulations, and among the progressive coffee houses, that's even beyond dairy milk."

Fred Hart: Quaker's clinical-looking plastic bottle and geriatic cues didn't resonate with oatmilk early adopters

Fred Hart, creative director and partner at Boulder-based branding and packaging studio Interact, told FoodNavigator-USA that Quaker's approach to the oatmilk segment "lacked authenticity from the outset in a category chock-full of it."

He added: "Brands like Oatly, Planet Oat and even Silk have strong, contemporary purposes and rich histories of defying odds. So when Big Food throws one of it’s most heritage brands into the ring, it, unfortunately, does some very big food things - overt and obtuse health claims, legal language that serves themselves over the consumer ('oat beverage' rather than oatmilk, a potential move to avoid the angst of America's dairy lobbyists), and geriatric cues in the form of a clinical looking bottle that by the way, was plastic in a sea of paperboard cartons.

"Ultimately the brand launched a product only because they should’ve, not because they believed in it. Consumers are not interested in opportunistic land grabs, especially in such a woke category as alt-dairy."

oatmilk brands january 2019

OATMILK BY NUMBERS:​ According to SPINS​ data supplied to FoodNavigator-USA covering the 52 weeks to October 6, 2019 in natural, specialty gourmet, and conventional multi-outlet food retailers in the US, sales of refrigerated oatmilk grew by 2094% to $48.5m, while sales of shelf-stable oatmilk rose 91% to $10.9m. The data does not include retailers such as Whole Foods, Trader Joe's or ALDI. 

"While oat milks still make up just 2.7% of dollar volume in the refrigerated plant-based milk category, sales growth has been explosive with numerous strong contenders in the space,"​ said SPINS Senior Manager of Natural Insights and Innovation Research, Jessica Hochman. 

Oatly oatmilk

Oatly and some other oatmilk brands have confirmed that they will be changing the way they list sugars on their Nutrition Facts panels following conversations with the Food and Drug Administration (FDA).

Read more HERE.

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