Scotland is preparing to expand production of oat milk but Oatly won’t be quaking in its boots just yet. David Burrows reports.
Sunday marked World Plant Milk Day. Some might say this is a category that needs little additional exposure, with oat milk leading the charge. Sales are “on fire”, according to a recent report, while Oatly this year announced plans for a new site in Peterborough that will initially produce 300m litres of oat milk annually (with scope to increase production to 450m litres).
“The UK is a really important driver of the global plant-based movement, with growing demand for Oatly across the country,” the company said in a statement.
But why is it being left to a Swedish company to lead when Scotland produces some of the best oats in the world? Could provenance become an important factor in plant-based purchasing habits?
“It’s ridiculous the amount of oat milk that people drink [so] why aren’t we making it [in Scotland]?” said Josh Barton from Brose Oat Drinks in an interview with Wicked Leeks this month. “Oatly’s a great product but I think we’ll catch up.”
The market currently is dominated by Oatly and Alpro – the former having just floated on the US stock market and the latter being owned by dairy giant Danone (and is also boosting production facilities in the UK). Taking those two on is a daunting task. Most Scottish producers, like Brose, currently supply only their local markets. Few have thought about PR.
But work is underway to establish an Association of Independent Oat Milk Producers in Scotland. “By collaborating, the individual niche manufacturers will be able to share resources and help the fledging industry compete against the large multinational competitors,” says Alistair Trail from SAC Consulting, which recently facilitated a Rural Innovation Support Service (RISS) group to discuss the new association.
“There are many opportunities for this group to grow in the future, without detracting from our individual operations or losing IP,” adds Alex Baldwin from Untitled Oats, based in Edinburgh. “This could include legal expertise, joint research and marketing, or joint use of a UHT facility.”
The fact these local products comes fresh and need to be chilled reduces their appeal to small cafés with limited fridge space. Larger foodservice customers would struggle to achieve the supply they need. Currently, there are only four or five plants in the UK that can process oat milk products, according to Baldwin, and all of them have minimum order runs of about 10,000 litres. “The micro producers in Scotland aren't able to do that at the moment,” he explains. “It’s an enormous hurdle.”
Baldwin has recently taken the lead on establishing the new organisation; this despite the fact that Untitled Oats recently stopped trading. A blog entry on its website explained: “We couldn’t see a way forward to continue distributing perishable oat milk across the Central Belt [of Scotland] with a bottle return scheme, whilst remaining price competitive with billion-pound companies and maintaining our founding ethos – environmental sustainability and supporting local agriculture.”
So, can others succeed where Untitled came up short? Brose is targeting production of 1,000 litres a day and other brands are popping up all over the place as they look to tap into a thirst for both dairy alternatives and local products. Speak to producers and many will say the first reaction they have from customers is that, finally, Scotland is making oat milk rather than importing it from Sweden.
And what of Oatly? Should it be worried by these start-ups that boast of their provenance and purpose? With a reported £1bn set aside to expand production capacity globally, probably not. But it will have to get used to the scrutiny that comes with being a publicly-listed company.
Recently it was the subject of a detailed and damning report by Spruce Point, a short-selling hedge fund. Oatly was accused of “cherry-picking” environmental statistics and locating production facilities “thousands of miles” from its oat sources. Its choice of ingredient suppliers was also questioned given that some had been accused of deforestation. Oatly rejected the claims.
This month Oatly also failed in its bid to sue oat drinks brand Glebe Farms, the only large-scale manufacturer of oat milk in the UK. Glebe’s PureOaty brand infringed the Oatly and Oat-ly trademarks and was claimed to be too similar. The case was dismissed. “You only need to look at the two products and packaging side by side to appreciate how different these brands are, and how unnecessary this legal action was,” explains Phillip Rayner, owner and managing director of Glebe Farm.
Clearly there are tensions emerging in this competitive market. Glebe recently published research showing that just 0.29kg of CO2e is emitted on average per litre of PureOaty oat drink produced – which is “lower than any other oat drink currently reporting comparable figures in the UK”. Oatly’s is 0.31kgCO2e per kilo of product, so about 0.01kgCO2e more than PureOaty (assuming the life cycle assessments are similar in scope).
Oatly played down the significance of the court case and its depiction as corporate bully. “[The] truth is, we love all oat drink companies and never brought this case to damage Glebe Farm,” the company’s PR manager for the EMEA region Erica Wigge told The Grocer. “In fact, we want them to thrive and help bring products into the world that are good for the planet.”
More of these could soon come from Scotland. “Scottish oats have a great history, reputation and heritage,” says NFU Scotland combinable crops committee chair, Willie Thomson, so the new association “creates the exciting potential to market our high quality product to a growing customer base”.
Collaboration will be key if they hope to threaten Oatly’s dominance.