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Go With The Grain

31 October 2019 by Food&HotelAsia

By: Asian Consumer Intelligence 

The demand for plant-based milk products has been growing globally. In Asia, the long-standing dairy alternative soymilk has seen recent competition from grain, nut and pulse milks made from almond, cashew, macadamia, rice, pea and hemp compete for aisle space.

One of the fastest growing items in the plant milk category is oat milk, a product that has rapidly found its way onto the menus of leading foodservice outlets throughout Asia Pacific, as well as into grocery carts in the world’s most populous region.

According to a recent study by Future Market Insights, the global market for oat milk is forecast to grow at a CAGR of 8.2 per cent between 2018 and 2027, underscoring the increased consumer as well as foodservice demand for the relatively recent product.

A scan through consumer publications including Shape, Forbes, Business Insider, Livestrong through to regional journals including the South China Morning Post have all run reports this year on oat milk with headlines that range from “Is 2019 The Year of the Oat?” through to “Oat milk is my new favourite dairy-milk alternative – here’s why.” On AI-powered flavour database Capchavate, a search for ‘oat’ returns a number of products that span categories as diverse as ice cream, yogurt as well as oat milk used in vegan cheese sauces.

The popularity of oat milk has been mainly driven by the grain’s taste as well as texture along with its positive environmental perception. With consumers turning to plant-based alternatives for a variety of reasons, oat milk has rapidly become a firm favourite because its application in beverages does not compromise on taste or mouthfeel, which can often be the case with some plant-based substitutes.

Oat milk, like other plant-based milks has a health halo for a number of reasons but one is its nutritional profile that provides it with around 2-4g fibre versus 0g against a glass of whole dairy milk. Beyond its health positioning, the key reason oat milk has become so popular with consumers is because of its creamier mouthfeel and neutral taste when contrasted against almond and soy milk. This makes it a more versatile option than soy and almond milk as an addition to foodservice beverages.

Leading brand Oatly has become closely associated with the oat milk category. Its focus on creating a product aimed at foodservice called Oat Drink Barista Edition helped propel the brand into global beverage foodservice outlets and make it a firm customer favourite. Its foamability enables the viscosity needed to create lattes and other creamy based beverages while its application stays intact when directly poured in with tea and coffee. This contrasts with many almond milks that curdle when they come into contact with hot beverages.

Pepsico leveraged its association with the breakfast oats category with its January 2019-launched beverage line Quaker Oat Beverage. Available in three varieties; Original, Original Unsweetened and Vanilla initially in the U.S, the line followed an earlier launch in India in 2017 called Quaker Oats + Milk, co-created with the country’s retired cricketing hero Sachin Tendulkar.

Quaker Oats + Milk was developed to tap into the value-added dairy segment, forecast to grow in India to an estimated US$2 billion by 2021. While this launch was not considered a true oat milk because it contained dairy milk with the addition of oats, the launch provides insight into the potential for oats in a range of regional applications.

The applications oat milk can be found in at Asia’s leading chains include its usage in the region’s arguably most popular beverage among Gen Z and Millennial consumers; bubble tea. Oatly branded oat milk was used as a LTO (limited time offer) at one of China’s top milk tea chains, Hey Tea (喜茶) during a promotion held 10-23 July 2019. The limited edition Oatly Bobo Milk tea was notably Hey Tea’s first flirtation with a plant-based milk in its signature layered and social media friendly drinks.

In Southeast Asia, Singaporean milk tea chain LiHO introduced a LTO called the Taro Oat Latte + Taro Q, a beverage marketed as a “pleasant surprise to the taste buds.” Customers could choose to purchase this drink with brown sugar pearls and fresh milk with Taro Q or choose to drink it with oat milk.

Meanwhile, at some of KL’s more fashionable coffee bars, Malaysian baristas often opt for minimalist British brand Minor Figures Oat M*lk, where it can be found on offer at third wave coffee joints including. Pulp, Three Little Birds and RAGE and poured into a range of menu items.

So what? Plant-based alternatives have long been consumed in Asia for cultural, religious, value and taste reasons. While the category was largely stagnant from an innovation perspective, the development of alternatives to the ubiquitous soy milk which is found throughout much of Asia Pacific has kickstarted new consumer demand. We predict the application of plant milks will grow beyond a dairy substitution and impact categories in the region such as yogurts, cheeses, and frozen desserts as they have started to do in the U.S and Western Europe and make their way into more of the imaginative drinks and Asian puddings found in the region’s popular speciality drink and dessert chains. With as many as 95 per cent of people in some parts of Asia estimated to be lactose intolerant and consumers demanding plant-based alternatives for sustainable and ethical reasons, demand across applications looks set to grow rapidly.

Find more similar reports on Asian Consumer Intelligence website here.