Oat milk, a niche and avant-garde beverage category just emerged a few years ago, has entered a period of rapid development in the Chinese market. The pioneer player Oatly generated around 300-million-yuan revenue in China in 2020. It seems the Chinese market has become a cash cow for this Swedish company.
Meanwhile, a large number of local competitors emerge in China. As of May 2021, the number of oat milk brands on Taobao and Tmall platform has exceeded 501, increasing 152% year on year. The investment sector particularly favors these new brands. From March to April 2021, Oatoat, Plantag, OCAK, and Oat Planet completed new financing rounds.
These new Chinese brands recognize the value of plant-based protein drink, but do not believe the market will be satisfied with a single perspective -- as Oatly’s battle with milk -- and are starting to challenge the brand’s leading position in different ways.
Chinese Oat Milk Brands
Chinese entrepreneurs are keen to localize Oatly's success story.
“Milk substitute” vs. “milk supplement”
Oatly went viral for going head-to-head with milk. But in the Chinese market, the selling points of "oat milk is a milk substitute" or "oat milk is healthier than milk" will not be all plain sailing.
This stems from the social and cultural differences between China and the West. In the European and American markets, there has been a social culture of "rethinking milk consumption" – How healthy milk is, whether the milk industry suppresses animals and whether it makes environmental protection backward. People’s reflections on these issues help oat milk gain increasing recognition.
For example, plant-based milk has become the largest segment of the U.S. plant-based food market, with a household penetration rate of 39%2. U.S. milk consumption per capita is among the highest globally. Plant-based milk now accounts for 15% of U.S. milk consumption. Combined with the culture of reflections on milk, it is evident that "milk alternative," "household consumption," and "sustainable development" are the driving forces for the development of the oat milk category in the U.S..
But for the Chinese market, people have not reached the stage of "reflecting on the milk consumption", and milk itself is not as pervasive and used as it is in the West.
Compared with using milk substitute as the selling point, milk supplement or supplement to the afternoon tea, milk tea, and other drinks would be more feasible in the Chinese market.
According to ChemLinked’s observation, many Chinese new oat milk brands has set the following appealing selling points catering to the demands of young people:
Relieving discomfort brought by greasy food such as hot pot.
Rich dietary fiber in oat milk can bring satiety, which is suitable for who are in weight management and who want to maintain a good body shape.
Oat milk is ideal for people who want to control sugar intake.
A refreshing breakfast plan
A low-calorie and low-salt diet plan compared with takeaways
A healthy lifestyle when your body is beset by irregular eating and sedentary working
A desirable meal replacement choice
Helping keeping a balanced diet
Whole-grain nutrition
Young people’s social gift
Promoting environmental protection concept
Innovative flavors
Solving the trouble of people who get pimples because of animal milk protein
For example, the local brand Cereal Planet provides cactus mango and avocado-flavored oat milk. It also sends various seeds randomly with each order to encourage consumers to take practical actions to reduce carbon emissions and make the planet better.
Cereal Planet’s environmental protection poster
Oat milk can shine without coffee.
Besides the battle with milk, Oatly’s successful “oat milk + coffee” practice has become a paradigm for the new entrants. Some new brands choose to follow Oatly’s road to launch "Baristas products". Brands such as Saving Moo and Ye Plant are even created by coffee practitioners and start their product promotion from coffee shops.
But is “oat milk + coffee/coffee shop” the only option for oat milk promotion in China?
Oat milk is matched with coffee for its supporting role in bringing a good drawing shape and the icing on the cake effect on the taste of coffee. But in the Chinese market, oat milk consumption should not be limited to coffee drinkers, as Chinese people have a long tradition of drinking plant-based milk (i.e. soymilk) during breakfast. Therefore, some local brands including Liuyang try to untie oat milk and coffee, and emphasize the direct drink taste and healthy features.
In addition, the key to the long-term growth of oat milk should be to enter the mass retail channels rather than to struggle in the niche coffee market. Many Chinese new oat milk brands have started to harness the power of e-commerce platforms Tmall and the WeChat Mini Program to reach a wide range of consumers. Brands such as Oat Planet also starts to look for new offline retail channels such as convenience stores, boutique supermarkets, light food restaurants, and guesthouses.
