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(CNN Business) -
(CNN Business) -
It's been a great year for America's oat milk fans and the businesses that serve them.
In March, Starbucks launched the option and it sold out a month later.
Silk added oat milk to its non-dairy milk line in April.
Oatly had a spectacular initial public offering in May.
And a host of new ad campaigns, featuring upbeat music and cheeky banter, are competing for shoppers' attention.
That's because there is a lot of money at stake for brands that sell the increasingly popular dairy alternative.
Sales of this product were approximately $ 316.4 million at US retail in the year ended May 29, according to Nielsen.
That's still a small market compared to non-dairy milk alternatives overall at around $ 2.2 billion.
But oat milk has risen 1,200% in the last two years.
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That means there may well be an even bigger oat milk boom in North America.
And with Oatly, the Swedish company that helped popularize the product, still struggling to meet demand as it works to expand production capacity, it's the perfect time for competitors like Danone, Planet Oat maker HP Hood, and Chobani to take over. with part of the new category fragmented, where the race is still close enough that players have a chance to fight for the top spot.
"There will be a lot of competition on this front," said Maria Mascaraque, who oversees food and nutrition research at Euromonitor.
Oatly arrives on the scene
Oatly came to the United States in 2017.
Oatly first launched its oat milk in 1995. The company's flagship product didn't arrive in the United States until 2017, "aimed at the creators of coffee taste, professional baristas in independent coffee shops," according to the IPO's prospectus. the company.
At the end of last year, Oatly was available in more than 7,500 retail stores and about 10,000 coffee shops, Oatly said, including Starbucks locations.
Oatly captured the attention of American shoppers not only with its products, which include oat-based ice cream and oat milk, but also with its eye-catching advertising campaigns.
Some examples of Oatly ads: “Did you really read this?
and “We spent an enormous amount of money on this elegant poster.
I hope someone interested in the oatmeal drink will see it. "
The brand also caused a sensation with its Super Bowl commercial earlier this year.
Oatly posted an ad featuring CEO Toni Petersson playing a keyboard and singing a repeating song, with the lyrics “Wow!
No Cow ", in a field.
Oatly gave away T-shirts that said "I totally hated that Oatly ad" after people responded poorly to the ad.
This spring, the company debuted on the Nasdaq with a valuation of $ 10 billion.
With a starting price of $ 17 per share, the company's share price is now around $ 27.50.
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Analysts feel good about Oatly's possibilities.
"We see Oatly as a long-term growth story that is just beginning," Guggenheim analyst Laurent Grandet wrote in a note Monday.
At Jefferies, analysts wrote this week that Oatly "has a long track record of sustained high growth and margin expansion" compared to its peers in the consumer packaged goods space.
And while almond milk remains the leading plant-based milk category in the United States, sales of oat milk have surpassed those of almond and soy milks in the United Kingdom and Germany in recent years, Oatly noted. in its IPO prospectus, citing Nielsen and IRI data.
But Oatly's success has been a double-edged sword.
The company has not been able to meet the demand.
"Despite ongoing efforts to increase our production capacity, our current supply, processing and manufacturing capabilities are insufficient to meet our current business needs," Oatly wrote in the prospectus.
"The adoption, acceleration and enthusiasm [for Oatly] has exceeded our expectations," Mike Messersmith, Oatly president for North America, told CNN Business.
"It's always a constantly evolving challenge to be able to meet those needs."
To meet demand, Oatly has to expand its production capabilities, something it plans to do with the money raised from the IPO.
The company is in a "transition" period this year, Guggenheim's Grandet said.
Eventually, Oatly will bridge the gap and have enough product, he predicts.
But in the meantime, if grocery stores or coffee shops can't stock their shelves with Oatly's product, they might turn to a competitor.
"There is a risk that competitors will take your [space] on the shelves and create that connection with consumers," Grandet said.
The big dairy wants to enter
Planet Oat and Oat Yeah, which has been renamed Silk Oatmilk.
HP Hood, the company behind Planet Oat, and Danone, famous for its dairy, yogurt and plant-based milk brands, also take oat milk seriously.
And recently, they have competed for customer service with new marketing strategies and efforts.
For HP Hood, a legacy dairy brand, it has been especially important to switch to plant-based alternatives as cow's milk loses favor with customers.
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"The creation of Planet Oat was a way of giving [consumers] what they wanted," said Chris Ross, senior vice president of marketing and research and development, HP Hood LLC.
This year, HP Hood projects it will spend about $ 30 million promoting Planet Oat.
Next year he hopes to spend more.
"Every year [the oat milk market] becomes more and more competitive," Ross said.
Planet Oat recently launched a "#wesolvedmilk" campaign, which describes the product and shows how easily it can be swapped for cow's milk and other milks.
But he has some competition besides Oatly.
New packaging of Silk Oatmilk.
Danone initially started selling oat milk under the Oat Yeah brand in 2019, under the shadow of Silk.
But now it goes after Silk's customers more directly.
In April, he relaunched the product as Silk Oatmilk, with a new recipe.
The company has also started advertising Silk Oatmilk as part of its "Milk of the Land" campaign promoting its plant-based products.
The oat milk commercial, set to rapturous music in the background, shows people sipping oat milk directly, dipping a cookie into a glass, and sipping from a bowl of cereal.
Silk's portfolio already includes coconut, almond and soy.
By introducing Silk Oatmilk, Danone wants to convince customers who already choose Silk for soy or almond to opt for the oat milk brand.
"We see the opportunity and we intend to be more assertive in the space," Shane Grant, CEO of Danone North America, told CNN Business in an email.
Chobani also sells oat milk.
Chobani introduced a slew of oatmeal products in 2019. For Chobani lovers, that means more options from the brand, from oat milk to oat-based yogurt to coffee made with oat milk.
The company bets on those customers who want to try anything under the shadow of Chobani.
"We received the proof under the name Chobani," said Peter McGuinness, the company's president and chief operating officer.
It has also invested in the production of oat milk at its own facilities, McGuinness said.
"We basically built a factory within a factory," he told CNN Business earlier this year.
That approach can help you prevent shortages.
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As established companies fight for the sector, small upstarts will also have a chance to distinguish themselves.
Some examples: California has a protein oat milk that could help differentiate it in the eyes of customers specifically looking for a protein boost.
A company called Three Trees makes a mixture of oat milk and seeds.
Others are leaders with specific credentials: Minor Figures prioritizes oat milk for coffee, for example, and Happy Planet announces its environmental credentials.
Who knows what other oat milk options will hit your nearest grocery store.