- Oatly will voluntarily stop advertising its unsweetened oat milk beverages as having "no added sugars" following a challenge by Campbell Soup Co. on behalf of its subsidiary Pacific Foods, which also makes an oat beverage. Campbell argued Oatly's production process breaks down oat starch into simple sugars, Food Navigator reported, so declaring some Oatly products contain "no added sugars" is misleading.
- The National Advertising Division, an investigative unit of Better Business Bureau National Programs, said in a release it did not assess Oatly's compliance with FDA guidelines for the Nutrition Facts panel, but it recommended the company not use the panel's "no added sugars" line in its advertising.
- Oatly will permanently discontinue its "no added sugars" claim in advertising for its Barista Edition Oatmilk, Oatmilk Chilled, Low-fat Oatmilk Chilled and Chocolate Oatmilk Chilled.
Campbell's challenge of Oatly's "no added sugars" advertising is likely a move to keep the companies on even footing in the competitive oat milk space.
Campbell's subsidiary Pacific Foods has oat milk products that use a similar production process. Pacific Foods' organic oat beverage lists 17 grams of added sugars per one-cup serving, which the company said comes from simple sugars derived from oats. As more brands compete for consumer attention, oat milk labels might continue to be scrutinized, and companies may want to sort out the "no added sugar"claims.
In addition to Pacific Foods and Oatly, consumers can choose from Oat Yeah, sold under Danone's Silk brand, PepsiCo's Quaker Oats Beverage, Planet Oat, Elmhurst, Thrive Market, Happy Planet and others. These products are considered more sustainable and may resonate with those who have nut allergies, are vegan, lactose-intolerant or gluten-free.
Oatly has attracted a lot of attention since it first entered the U.S. in 2016 through New York City coffee shops. It has expanded to about 10,000 coffee shops today and is sold in many retail locations. By last summer, Oatly faced shortages as its popularity surged, resulting in prices three times higher the usual on Amazon, CNN reported. To meet demand, the company established a production plant in New Jersey and plans to open another in Utah in 2020.
Given this momentum, the company may have decided to stop touting its "no added sugars" claim rather than fight an established legacy brand such as Campbell and conjure up negative publicity. Instead, it can focus on leveraging a booming segment. The global market for plant-based milk alternatives could hit $18 billion this year, up 3.5% from 2018, Euromonitor figures cited by CNN show. At the same time, demand for soy, almond and oat milk is projected to increase by more than 5% in 2019, while the market for cow's milk will drop by 2.5%.
Oatly, however, will need to contend with the FDA's upcoming requirement to list added sugars on Nutrition Facts panels, but the compliance date is about two years away so it still has some time to figure that out.
Whether this complaint and its resolution leave any lingering fallout may depend on how inclusive the FDA is willing to be about Oatly's labels. However, in such a competitive space as plant-based beverages, it's a good bet Campbell and other makers of oat milk will be watching closely to make sure none of their rivals retains what they consider an unfair advantage.