Source: 36 krypton
In a more profound story, the oatmeal latte, a classic product in coffee stores today, comes from a "bet" of OATLY, the company behind it.
When it comes to oatmeal lattes, many people first think of Earth Day. This year, on the day of 520, which is full of love, the oatmeal latte circuit is also very popular.
All major coffee chain brands have launched new oatmeal lattes. A variety of innovative and high-quality oatmeal milk coffee drinks bring consumers a different coffee experience and more choices, and oatmeal lattes are in full bloom. At the beginning of April, Starbucks combined with Alice in Wonderland, combined OATLY oatmeal milk with the vibrant spring, launched a new flavor latte series, and created a "taste wonderland".
KFC officially launched a new sandalwood oatmeal latte on May 20.
On May 20, 9 products of Ruixing added the option of oatmeal milk, and consumers could choose to use OATLY oatmeal milk to replace the conventional base. As early as April 22, the new "Mancui Series" of Ruixing Coffee has been made with OATLY coffee master oatmeal milk.
On May 18, Kudi created the first fresh waxberry oatmeal milk shake. Mainly 0 lactose, plant based and lower calorie. Waxberry meets OATLY oatmeal milk, which is light and fresh.
Many people first realized oatmeal lattes through the relationship with the earth. In fact, in a more profound story, people do not know that this classic product, which is now ubiquitous in coffee stores, comes from a "bet" of OATLY, the company behind it. It is also because of this bold decision that the oatmeal latte has gone from strangeness to normality. From 2018 to 2023, the oatmeal milk sold by OATLY in the Chinese market can be made into about one billion cups of oatmeal latte, which makes the new plant based track truly enter China and become a 10 billion track. OATLY, the company, has finally delivered sustainable business to every consumer.
Oatmeal latte is not a popular online product
In 2018, the second year of entering the Chinese market, the most common argument around OATLY is that this is not an online celebrity brand?
Before making a conclusion, let's first look at the background. In 2018, the average cup of coffee per capita in mainland China was only 6.2 cups per year, while in the United States on the other side of the Pacific Ocean, the figure was 261.5 cups per year. At the same time, OATLY, an oatmeal milk company originated in Sweden, made a rather bold decision. It was not ready to play its retail expertise - in Europe, OATLY's retail advantages had been successfully verified by the market. On the contrary, OATLY wanted to take the edge and cut in from boutique cafes in Shanghai.
Boutique coffee, just like its name, also represented a quite new and fashionable lifestyle in Shanghai at that time. Six years ago, when coffee was not yet popular, it was hard for people to imagine that coffee could not only be drunk every day, but also be classified into boutique and commercial products. They could even hold a cup in hand and sit freely between the vast buildings and green spaces, sneaking into everyone's life.
It was at this time that OATLY became one of the earliest friends of Chinese coffee. Coffee blended with OATLY oatmeal milk has quickly become a new trend. Someone was surprised to find that this new product, called "oatmeal latte", neutralizes the bitterness of coffee and has a natural grain fragrance. More importantly, it solves the pain points of a large number of lactose intolerant people in China when drinking traditional milk lattes.
At that time, because of the niche of the coffee track itself, the oatmeal latte brought into China by OATLY was once rated as "Internet celebrity". It was new, exquisite, unique and impressive, but no one knows how long this product will last.
However, six years later, it is not difficult to answer this question. China's coffee market has experienced its own exciting six years. Foreign brands have continued to expand. Local brands have completed their amazing scale from birth, rise to Wandian in just a few years. Coffee has also gradually infiltrated into the capillaries of more cities from the first tier cities. Until today, the per capita coffee cup volume in China has jumped to 16.74 cups/year.
Look at what OATLY has done in the past six years. Its experience is so consistent with the rapid development history of Chinese coffee. After boutique coffee, OATLY has settled in thousands of cafes in less than half a year. In 2020, OATLY entered the coffee chain, and the oatmeal latte quickly became known. Now, following the wave of chain coffee in China, OATLY has appeared in the product menu of coffee brands at all levels.
A track has been made on paper. If OATLY was small and beautiful in the past, today is the whole scene of health drinks for mass consumers. From the new products of boutique coffee shops to the standard menu configuration of popular coffee chain brands; From fashionable and fresh in first tier cities to daily drinks that sink into the market; In the field of instant coffee, along the broad B-end channel, oatmeal lattes have become familiar products. In the retail ready to drink scenario, OATLY is also delivering oatmeal lattes directly to thousands of households with the help of e-commerce platforms.
What's more, the state of the Chinese market itself is complex, diversified and rich. Coffee is an imported product. In the broader beverage field, the new plant base represented by oatmeal milk is aimed at consumers of all levels and tastes. This is why, from 2018 to 2023, OATLY's oat milk sold in the Chinese market can be made into about one billion cups of oatmeal lattes, becoming a phenomenal consumer product.
The new plant base behind oatmeal milk is also moving from a race track with nascent aura to a precipitation period of continuous breakthroughs in industrial research. For example, Qiaqa Food obtained the patent authorization for the invention of "a kind of plant based yogurt" in February this year, and Ximai Food is also conducting experiments and application research around the development of oat enzymolysis technology and oat milk series products recently. Behind the enterprise's investment, it shows that the market is optimistic about oat milk and new plant based track in the long run.
Today, unlike in the past, people can only buy oatmeal lattes in boutique cafes. People can place orders to get a cup anytime and anywhere in various cafes, even in the county. Even at home, you can even use a bottle of OATLY coffee master oatmeal milk to make a cup of oatmeal latte.
Six years later, the answer is clear. Oat latte is not a new product or new trend. It has been integrated into people's daily life and has become a way of life. It has really become normal.
As for those "Internet celebrity" arguments, they naturally disappeared.
OATLY is changing
China is never short of new consumer brands, just throw away those bright stories. A brand is easy to rise, but difficult to survive. From the perspective of result orientation, OATLY seems to be an extremely lucky company, which has stepped into the consumption trend in advance and quickly became the head of the industry along with the growth of coffee scale. However, the fact is that in the six years of rapid development in the coffee industry, there have been countless entrants and distributors, and there has never been a shortage of those who have fallen down and retired in dismay. The judgment of "lucky" is too hasty and impetuous.
Why can OATLY break through the label of "Internet celebrity"? The new coffee products in China are surging, and the ebb and flow are normal. Why can the oatmeal latte become a popular product after the freshness fades?
To solve this problem, we must look at the product itself. Milk coffee, especially latte, has always occupied the mainstream position in China and is the favorite coffee category of Chinese consumers. In other words, if you want to compete in the Chinese coffee market, it is very important to make a good latte.
Over the years, behind a cup of latte, coffee giants have shown their ambition to compete for share. Local brands have innovated one after another, and foreign coffee brands have followed suit, constantly developing latte products that meet the "Chinese taste". Data shows that by 2022, there are 733 chain coffee brands in China, and this number is still growing. In the face of highly homogeneous product competition, brands need to be innovative to avoid being swept away by the waves.
This also means that for upstream service providers like OATLY, they need to be more sensitive and change than coffee brands in order to seize the market opportunity.
The market is growing, and so is OATLY. Innovation is one of the labels of OATLY. Over the years, OATLY has been actively cooperating with coffee brands to help different brands innovate personalized "oat milk+" products. Zhang Chun, president of OATLY Greater China, once introduced that within OATLY, the work of the three teams of product, R&D and brand is to make oatmeal milk produce two, two, three and all things, and finally achieve "everything can be OATLY".
Pistachio oatmeal latte is one of them. This product with dopamine color and happy attributes has been launched in several mainstream coffee brands this year. The dense milk foam emits a faint aroma of nuts, which has been loved by consumers since its launch.
In terms of product portfolio, OATLY always has some fantastic ideas and is quite familiar with the humanistic complex of Chinese consumers behind plants. Once, the OATLY team found that the taste of oatmeal milk and sweet scented osmanthus was unexpectedly delicious after trying to mix oatmeal milk and sweet scented osmanthus. The sweet smell of sweet scented osmanthus mixed with the grain fragrance of oatmeal, and the two got along very well, adding some sweetness to the taste. The osmanthus fragrance is the most familiar autumn fragrance engraved in Chinese memory. This sweet scented osmanthus latte was soon launched in the boutique coffee shop cooperated by OATLY, and this inspiration has also successfully made the latte further "localized".
Just like everything can be OATLY, except pistachios and sweet scented osmanthus, pumpkins and bananas are also one of the "good friends" of oatmeal milk. When they are combined into the hands of consumers, they become popular pumpkin lattes, banana lattes, strawberry oatmeal lattes and more in coffee stores.
The product is changing, so is the scene. In today's China, coffee is not only about business and social activities, but also about work, life, study and leisure. As an OATLY who has long been dealing with the B-end channel and has experienced the high turnover of the Chinese coffee market, it is clear that in the future, consumers will have greater dominance over coffee.
One data is that the sales volume of China's household coffee machine market increased from 1.11 billion yuan to 2.37 billion yuan year by year from 2018 to 2022, with a compound growth of 22.7%. In other words, more and more Chinese people drink coffee at home. In contrast, there are more than 100000 cafes and nearly 400000 teahouses in China, but this is far less than the penetration prospect of more than 400 million families.
OATLY launched the "Coffee at home" scene this year, and also made three product designs on the package of the classic product coffee master. 250 ml can be taken with you, and a cup of oatmeal latte can be made for small families. 500 ml is suitable for small families. As for 1 liter, it provides a choice for large families and professionals.
This also means that at home today, people can freely decide the shape of a latte - pick up a bottle of OATLY coffee master and pour in freshly ground, instant or freeze-dried coffee. If you are a coffee gourmet, you can also use the coffee master to bring a DIY flower, so a cup of oatmeal latte is born easily.
However, multi specification production also challenges the supply chain. In 2021, OATLY built its first Chinese factory in Maanshan, which is also the largest planned capacity factory in Asia. In the past, all OATLY products in the Chinese market were imported from abroad, which required a long transportation chain with high cost and long duration. Now the implementation of localized production can not only effectively improve the efficiency of supply chain management, but also continue to expand OATLY's channel layout and category expansion in the Chinese market.
From products to scenarios, OATLY has been actively seeking change and innovation. "The process of OATLY entering China, in a word, is that where consumers are, we will follow them," said Zhang Chun, president of Greater China.
In addition, different from the Nordic market where OATLY started, China has a long tea drinking culture. After opening up the Chinese coffee market with a coffee master, OATLY is also thinking that since oats are the king of grains and coffee masters can get through, why can't China have its own tea drinking master?
By the end of 2023, OATLY has entered 50000 teahouses successively, and has cooperated to produce many popular products of "oatmeal+". For example, OATLY's customer% tea tries to combine oats with Chinese elements, and uses bamboo scented oolong with oatmeal milk to create a "bamboo grows empty". In more than a year, this product has sold more than 20 million cups in more than 400 brand stores.
Do something that "overestimates one's ability"
If a company has spent six years with the growth of the coffee market, and has created a classic product - oatmeal latte, which has been popular so far, and achieved what any brand has always dreamed of, has the company reached the finish line?
For OATLY, in addition to bringing oatmeal lattes into the lives of every Chinese, another thing is equally important, that is, to create a new plant based track in China.
However, it is not easy to do this. In Chinese people's perception, the products linked to plant based have always been soy milk and almond milk. To build a new plant based track, OATLY has to not only start from zero, but also break the inherent cognitive barriers, which is full of difficulties.
Zhang Chun still remembered that a friend first asked him after drinking oatmeal milk, "Isn't this soybean milk?"
This statement also confirms the dilemma of OATLY when it entered the Chinese retail market in the early days. When they confidently placed oatmeal milk on the shelf of Ole 'supermarket, however, because oatmeal milk has no category in China and no consumer education, the product was soon submerged in the "sea of water", and even one store could sell one bottle in two days.
Zhang Chun is not convinced. Since the taste, nutrition and health of OATLY oatmeal milk have been verified in the European market, if there is no such category in China, why can't we do the opposite, bring the new plant base led by oatmeal milk into China, and simply do something "beyond our ability".
The reason why we dare to "overextend ourselves" is that there are three threshold differences between the new plant base represented by oatmeal milk and the traditional plant base. First, the new plant base uses new technology, second, the new plant base needs both beauty and taste, and third, the new plant base adheres to environmental protection and sustainable development. As for oat milk itself, OATLY's unique enzymolysis technology retains dietary fiber in oats, and makes the taste of oat milk more smooth, mellow and full, giving full play to the advantages of oats. The technical threshold is quite high.
In the face of these barriers, OATLY initially took a long view and put category construction and the future of the industry first when promoting oatmeal milk. Along the way, it has also found many like-minded forward partners. In the past five years, OATLY, together with Starbucks, Manner, KFC, McDonald's, Whole Family, Ole ', etc., have promoted category innovation and jointly achieved the development of today's new plant-based market.
Therefore, OATLY is not only a brand, but also a category company. The ceiling of a brand is ultimately determined by its category.
Looking back, OATLY's "overconfidence" has also made it today. Since 2018, OATLY has insisted on bringing new plant base into China, and has established a benchmark for new plant base with oat milk. In 2023, according to the data of the Prospective Industry Research Institute, the market size of Chinese plant base will reach about 82.6 billion yuan, and China is also the fastest growing market of oat milk products in the world.
This is a decision to test the long-term principle. OATLY boldly chose the former as the pioneer or follower of a track that is heading for a scale of 100 billion yuan.
For the new plant base, a broader narrative is that plant base and human are closely related to the sustainable development of the earth. According to the data, every cup of "refreshing" drink with oatmeal milk will reduce by about 68% [1] The climate footprint of one liter of coffee master oatmeal milk produced by OATLY's first factory in China is 0.60kg CO2 equivalent, which is already a very excellent figure in the beverage industry.
For the future sustainable development goal, OATLY also has a clear and systematic plan - by 2029, the climate footprint of each liter of oat milk will be reduced by 70% compared with 2020, and 100% renewable energy (electricity and heat) will be used in production.
Sustainability has always been a grand proposition. For OATLY, it is the goal of the whole industry chain. In the future, OATLY's food system will drive the upstream and downstream industrial chain of oatmeal milk through carbon reduction, improving biodiversity and increasing farmers' income, and eventually penetrate into planting, production, packaging, stores, and even every consumer, to practice the sustainable values of full industrialization.
Among them, OATLY regards sustainable development as the most fundamental principle in every detail and direction, from material suppliers to warehouses and the choice of logistics partners.
This year is the sixth year of OATLY's entry into China. In the words of Zhang Chun, President of Greater China, this "small company" has always had a "big dream", that is, to persist in doing things beneficial to the earth and mankind. For every consumer of OATLY, OATLY is also simplifying the concept of plant based. Just a cup of oatmeal latte can help reduce carbon emissions.
In the longer term future of the Chinese market, OATLY is persistently delivering seemingly unreachable sustainable goals to everyone in the simplest way.
Data source: China Urban Coffee Development Report in 2023, Smart Research Consulting, Ovi Cloud, Prospective Industry Research Institute, Starbucks China, CarbonCloud, 04/2024. Climate footprint of coffee master oatmeal milk produced and sold in China.
[1] Blonk Consultants (2024), LCA of Oatly Barista China and comparison with cow's milk, Stages include raw material to point of sale and packaging waste management for average L produced and sold in China.
