Supplies of oat milk, a coffee-shop favorite, are expanding after the popularity of the plant-based beverage last year left baristas struggling to meet demand.
Oatly Inc., based in Malmo, Sweden, is set to open a factory in Millville, New Jersey, in late March or early April to boost production by as much as 10 times. The closely held company had to turn down orders from some grocery stores and coffee shops amid limited supplies.
Other companies are jumping on the oat milk bandwagon amid signs that consumers are switching from almond milk in their coffee. California’s Califia Farms said last week that it will offer a line of oat milks with a version for coffee shops to be released in February and an unsweetened, at-home product in April. Quaker Oats, owned by PepsiCo, is starting to sell an oat beverage, and so is Danone’s Silk.
Oat production is sufficient to meet the beverage buzz, Mike Messersmith, general manager of Oatly’s U.S. operations in New York, said in a telephone interview. The company buys oats from Canada and the western U.S. and may purchase more from Midwestern farms in the future. Oats, a so-called cover crop, are grown in rotation with corn and soybeans and can help to prevent soil erosion and add nutrients.
“We’re not seeing pressure today because it’s an easy-to-grow agricultural commodity,” Messersmith said.
The factory expansion will make Oatly’s product more accessible for people looking to “buy a six-pack from Amazon,” Messersmith said.
--With assistance from Deena Shanker and Leslie Patton.
To contact the reporter on this story: Lydia Mulvany in Chicago at lmulvany2@bloomberg.net
To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Patrick McKiernan, Reg Gale
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