Quaker bets oat milk is more than just a passing fad
These days, a trip to the grocery store to pick up milk can be a daunting task. Not only are there new spins on traditional cow’s milk — ultra-filtered? grass-fed? — but there’s also a dizzying array of alternatives made from soy, rice, coconuts, almonds, cashews, hemp and even peas.
Now, Quaker Oats is muscling its way into the aisle with a version based on the grain that made it famous.
In January, the company plans to bring Quaker Oat Beverage — not “milk,” perhaps because of the debate over whether the word is appropriate for non-dairy drinks — to the mass market. It will use the distribution might of its parent company, PepsiCo, in hopes of claiming a big piece of a fast-growing sector.
The beverage is part of PepsiCo’s push to expand its portfolio beyond sugary sodas and salty snacks to healthier options.
Milk alternatives were originally geared toward people unable to stomach cow’s milk because they were lactose intolerant. But as vegans and other buyers embraced the plant-based choices, sales in the United States rose to more than $2 billion last year, up 61 percent from five years earlier, according to the research firm Mintel.
Oat milk, while gaining popularity in parts of Europe, has been mostly a trendy, fringe product in the United States. Quaker is betting it can be more than that.
The company’s main competitor in the category is Oatly, a 25-year-old company based in Sweden, and its namesake drink. Oatly tiptoed into the U.S. market about two years ago, and into Toronto last month, persuading small coffee chains like Intelligentsia and some stand-alone shops to use its dairy milk alternative.
Oatly has quickly developed a cultlike following among the coffee elite as baristas took advantage of its consistency — thicker than other plant-based options — to whip up lattes and other foamy drinks. (How does it taste? Well, like Quaker’s version, a little like oats.)
After spreading from a small number of coffee shops in New York to more than 2,000 nationwide in a little over a year, Oatly began to sell its milk at Wegman’s, Whole Foods, ShopRite and other grocery stores this year. In Toronto, Pilot coffee locations began serving Oatly in September.
The brisk growth of milk alternatives is bad news for the dairy industry, which has experienced a decades-long decline in milk consumption. And as more plant-based beverages come to market, grocers have increased the fees they charge dairy milk brands to maintain their spots in the refrigerated aisles. That has cut into what were already slim profit margins for dairy milk producers, who have been loath to raise prices for fear of accelerating the decline in demand, according to analysts at the research firm CoBank Knowledge Exchange.
Some milk producers have responded by jumping onto the plant-based bandwagon. Dean Foods, a leading supplier of dairy milk, is a majority investor in Good Karma Foods, which makes flax milk. And after Elmhurst Dairy, the last remaining milk company in New York City, stopped producing milk in 2016, it turned to making Elmhurst Milked, a line of drinks made from hazelnuts, almonds and oats.
Quaker hopes to distinguish its offering by promoting what it says are its health benefits, primarily that it contains beta-glucan, a soluble fiber from oat bran, that can reduce the risk of heart disease.
“Oats are good for you,” Robbert Rietbroek, Quaker Foods North America’s general manager, said. “They’re good for your heart. They reduce cholesterol. They’re good for your gut, and they give you long-lasting energy.”
Health professionals are more reserved about such claims.
“How much do you have to drink to get the recommended daily amount of soluble fibre?” asked Marion Nestle, a retired professor who specialized in nutrition, food studies and public health at New York University. The answer: four eight-ounce glasses. “Or you could just eat a bowl of oatmeal,” Nestle said, laughing.
“For the population of people who are buying these products, the health benefits from this incremental change are going to be small,” she added. “These people are already eating healthily.”