- PepsiCo discontinued its Quaker Oat Beverage less than a year after it launched, Food Navigator reported.
- The beverage focused on highlighting its heart-healthy attributes — part of a larger brand revamp by Quaker — and was made from oat bran concentrate, making the beverage higher in fiber but lower in sugar and calories than competing brands.
- The drink stood out in the category because it came in a plastic bottle and was labeled as an "oat beverage" rather than the more conventionally used "oat milk" terminology.
As new brands packed the shelves, many predicted 2019 would be the year of oat milk. That prediction seems to have come to fruition, but despite the segment's growing popularity, it seems the most legacy brand in oatmeal, Quaker Oats, was unable to tap into that market.
For the year ending Aug. 25, oat milk sales grew 32.5% — nearly three times as fast as almond milk, Nielsen data found. With market statistics clearly indicating this segment was ripe for investment, combined with Quaker Oats' ample experience creating oat products for consumers, it is surprising the PepsiCo-owned brand dropped its oat beverage so quickly.
Although there was no explanation from the company as to why the beverage was discontinued, it could have to do with the packaging. The plastic bottle featured heart health claims that were popular in decades past, and it looked to be appealing to an older demographic — not typically consumers interested in alternative milks.
While it was potentially wise for Quaker to try to capture a more mature audience that was not yet loyal to smaller oat milk brands, it may have been a little too early in the product's lifecycle. Greg Steltenphol, founder and CEO of plant-based dairy company Califia Farms, told Food Navigator oat milk consumption has been driven by consumers on the coasts as well as the natural food segment, but has not yet crossed over into widespread adoption.
Another potential problem was the company’s focus on heart health. While functional benefits are in demand for today's consumers, they seem to be more interested in the addition of specific nutrients, like protein. Marketing products with umbrella health statements — like "heart healthy" — is no longer as trendy and could even increase the probability of litigation.
Quaker's decision to label the drink as an "Oat Beverage" could have been another issue. Quaker's clunky-sounding product name could have alienated potential customers. This choice was an overt nod to the dairy segment in the ongoing argument between the traditional industry and plant-based milk manufacturers. There has been no formal decision to disallow plant-based alternatives from using the term "milk," and an online survey from the International Food Information Council found about three-quarters of consumers know that plant-based milk doesn't contain cow's milk.
But the problem with Quaker Oat Beverage could have been the taste, which is the number one purchasing motivator for younger consumers. Reports indicated that the beverage was thinner in texture than Oatly.
The competition Quaker Oat Beverage faced was stiff. Some of the heavy hitters in the category include Sweden’s Oatly brand — which is credited with bringing oat milk to the U.S. several years ago — as well as Planet Oat, Silk, Elmhurst, Thrive Market, Pacific Foods and Califia Farms.
All of this competition is fighting for a small market share. According to SPINS data reported by Food Navigator, oat milk makes up only 2.7% of the dollar volume in the refrigerated plant-based milk category.
Despite being a leader in the oat category for 142 years, it appears Quaker Oats was outmatched by smaller brands in making beverages. But Quaker's Oat Beverage is not the first plant-based milk alternative to fail. In May, Elmhurst discontinued its peanut milk after just two years on the market. GoBeyond Organic Flax Hemp Milk and the Hemp Dream Milk Alternative were also recently discontinued.
The overall oat milk category is growing. SPINS data showed that sales of refrigerated oat milk grew 2094% to $48.5 million in the 52 weeks ending October 6, Food Navigator reported. Oat milk became so popular that it has crossed into other products. Monster Energy is a notable example as it released the first 100% vegan energy drink called Java Monster Farmer's Oats, made with oat milk, coffee and Monster's energy blend.
Plant-based beverages posted impressive gains from 2012 to 2017, with sales up 61% during that time. Sales of dairy milk dropped 15% between that same period, according to Mintel figures. But Quaker Oat Beverage's mistakes are a cautionary tale for the industry. There is plenty of interest in the category, but brands will need to take careful steps to attract consumers in this competitive space.