Milk didn’t always feel so ambiguous. It was a dairy product. It came from cows. It “built strong bones.” That’s all I knew growing up. I even had the iconic “Got Milk?” posters I ripped out of Sports Illustrated taped to my wall.
The non-dairy alternative industry is booming as we enter the post milk generation. Soy made the first charge and almond quickly followed taking the market by storm. However, once it became public knowledge that one almond requires about a gallon of water to grow, almond milk took a slight tumble. Now oat milk is seizing the opportunity, driving an irreversible wedge between younger consumers and dairy for good.
Who could have predicted in a global pandemic, oat milk shortages would be a real topic of conversation? Nielsen data tracking 52 weeks until March 7th, showed that retail sales of oat milk were five to six times higher than those of dried beans, rice, and household items like rubbing alcohol, bath, and shower wipes. Only hand sanitizer and aerosol disinfectants saw bigger increases during the period.
So, how did we get here?
Let’s Start From the Beginning
“It’s like milk, but made for humans.”
Unsurprisingly, Oatly’s foundation began with a belief in oats as a nutritional alternative to dairy. Rickard Oste, a food-science professor, figured out a way to liquefy oats into milk while still retaining their fiber. Thus, Oatly was born. Oatly’s team saw the potential in their product to target people with a dairy sensitivity, vegans, or anyone who simply didn’t care for cow's milk.
Despite a small and loyal following in Sweden, Oatly didn’t grab people’s attention in a dairy-obsessed country. As John Schoolcraft, Creative Director of Oatly said.
“It looked like a Dutch multinational, just indistinguishable from anything else on the shelves.”
Then in 2012, Oatly hired a new CEO, Tony Peterson, who took the company in a completely new direction. Alongside John Schoolcraft, he shaped Oatly into a challenger brand, sparking a revolution of companies dedicated to humanizing their organization.
The new packaging mixed perfectly with an environmentally conscious, often humorous rebrand. And Oatly seamlessly integrated into a generation of savvy consumers ready for brands to do more than sell products and pay for advertising.
As a result, the product gained popularity in Europe and was a coffee house staple after entering the U.S. in early 2017. Its singular focus on one plant-based ingredient helped the company liftoff in the non-dairy alternative market, nearly tripling its sales from $68 million in 2017 to $200 million last year, per the company.
Why Oatly’s Rebrand Worked So Well
There are three keys to this tiny upstarts marketing strategy that positioned it to be the oat milk brand to beat.
1. Niche targeting
Oatly’s singular focus on baristas was a stroke of genius. To bring the product to market in the U.S., Oatly sent coffee shops its barista edition as a sample.
Caroline Bell, co-owner of Café Grumpy in New York City, told Time Magazine:
“We had tried soy, almond, hemp, coconut, and nothing worked with coffee. With some varieties, you couldn’t taste the coffee; with others, the milk would curdle. The oat fibers plus the added oil in the barista edition of Oatly give the milk a thicker consistency, which produces a stable, undulating foam that will hold for a long time.”
Clearly, she wasn’t alone. Soon coffee shops across the United States were rushing to stock their shelves with Oatly. This built exclusivity for consumers who wanted to use what the baristas had — it also got coffee community leaders to back the product.
2. Authentic messaging
The phrase “Be human and not a logo” is featured in Oatly’s lookbook. It’s simple, alluring, and transparent. Whether you’re a fan of the self-deprecating humor often displayed on Oatly’s products or really believe in their commitment to bettering the environment, it’s hard to argue that Oatly doesn’t know who its brand is.
In Germany, the brand even petitioned that all food in retail should have to be labeled with greenhouse gas emissions during production.
Oatly invokes feelings of sustainability and collaboration, while traditional dairy products often come across as outdated. Plus, Oatly only does one thing: oats. Other companies have dipped their toes into the oat milk market with competing products, but Oatly’s commitment to oats has put them a length ahead of everyone else.
3. Health anxiety
Oatly has mastered the art of telling you what its products don’t have. By using statements on the packaging like “non-dairy”, “gluten-free”, and “soy-free,” consumers are less inclined to actually read the ingredients. They trust the product is good for them because it doesn’t include trigger ingredients we perceive to be bad.
Ultimately, Oatly’s transformation from a bland oat milk company full of researchers into an entertaining content powerhouse has created an enviable trend rocking the food and beverage industry. They still value the science that makes a great product, but they have also created an extensive brand strategy that’s unapologetically fun for an audience tired of sales pitches.
What Does This Mean for Dairy?
We are currently in the midst of an alternative-milk revolution.
Environmental concerns have shed a negative light on dairy products, and younger consumers are wary of brands that don’t connect with them on a personal level. It’s not always about nutritional value. Its true oat milk is a good source of dietary fiber. But it’s also lower in protein and higher in carbs than dairy milk and other non-dairy alternatives. Some non-dairy kinds of milk pump their products with additives, despite making it appear they are healthier alternatives.
Still, consumers have been thinking twice before drinking dairy milk for years, with growing health concerns. Add the environmental impact of dairy products on a consumer-base increasingly dedicated to sustainability, and it seems dairy milk will only continue its downward spiral.
This is only the beginning. As Julian Mellentin, director of New Nutrition Business said in a 2019 interview:
“Peak plant milk is about three to five years away, at most.”