Oato: “What Began as an Idea and a Question Is Now the Largest Supplier of Fresh Oat Milk in the UK” – vegconomist

UK brand Oato prides itself on offering oat milk that is fresh rather than ultra-heat treated (UHT). The company uses 100% British oats, and started out by offering home deliveries in reusable glass bottles as part of the traditional British milk round.

In February, Oato announced it had secured its first brick-and-mortar listing with retail chain Booths, launching at stores in Lancashire, Yorkshire, Cumbria, and Cheshire. The brand’s Barista Whole product became one of very few milk alternatives to be available in recyclable HDPE poly bottles, reminiscent of cow’s milk packaging. Earlier this month, Oato announced another retail listing at 229 Waitrose stores UK-wide.

We caught up with founder and Managing Director Carl Hopwood to find out more about Oato’s rise to success and vision for the future.

Introduce us to Oato and the company’s journey thus far.
I worked for a software company in sales, travelling across Europe. I noticed that as more colleagues switched from cow’s milk to oat milk, a great pile of cartons was stacking up — ones that are not widely recycled, which meant many of them would be heading for landfill or incineration. With a background in chemistry, I thought there was a way to use my expertise to develop fresh oat milk in glass bottles to stop the increase in oat milk cartons ending up in landfills or incineration.

I then began Oato in 2019, with one distribution channel via the British milk rounds. What started as requests for 1,000 bottles a week quickly became hundreds of thousands of pints a month. We moved the production site to a solar-powered facility in Lancashire and took on the risk to grow with the demand. This year is our first year in retail with our HDPE 100% recyclable poly bottle, and we have also signed with a handful of wholesale partners to bring Oato to coffee shops and hospitality venues too. I am proud to say what began as an idea and a question is now the largest supplier of fresh oat milk in the UK.

Tell us a bit about Oato’s fresh production process and how it contributes to a better taste compared to UHT oat milks.
UHT stands for ultra heat treated, where a product is heated under pressure to about 135 degrees. Instead, we pasteurise Oato at 75 degrees, the same as how dairy milk is pasteurised; this means the proteins and vitamins are better maintained and it gives a great-tasting product. UHT milk tastes sweeter and thinner, the same is true for dairy alternatives. Once you’ve tasted fresh Oato you’ll never look back!

What makes Oato’s fresh barista-grade oat milk stand out in the competitive dairy alternative market?
Oato is one of the few fresh alternatives in a category that is predominantly UHT. We are also the only plant-based milk on the shelf in Waitrose to be in an HDPE poly bottle, which is synonymous with dairy. Just as you wouldn’t usually drink UHT dairy out of choice, the same option should be available for milk alternative drinkers. We are Barista grade which means you can use Oato in your morning brews as well as in your breakfast or in cooking. We also produce everything in the UK from our solar-powered site and use 100% British oats.

How has leveraging traditional milk rounds impacted your logistics and carbon footprint?
Our glass bottles are used on average 25 times across all our customers, we wash and refill these in our solar-powered site in Preston. We’ve sold more than 20 million pints since launch, that’s a lot of single-use packaging that didn’t get created! Logistically, we need to make sure our fresh milk gets to doorsteps quickly, so we run a just-in-time production process which means we produce to order, reducing wastage. Each time we deliver to our milk round customers we also collect empty bottles, which means we’re not doing extra journeys just for the empty bottles.

How do you assess the current situation in the plant-based market following the well-documented industry struggles last year?
As a small brand with a strong distribution network across the milk rounds, we have had to focus on ensuring our product quality never falters. Our main distribution channels are not oversaturated, which was one of the well-documented struggles for the plant milk sector in retail. This is also why we have entered the plant-based milk alternative market with strong brand positioning and a unique pack format, away from the multi-layered cartons — to stand out amidst the competition.

With the plant-based sector being a fast-growth industry, any struggles will be highly publicised. At Oato, we are very focused on catering to our channels and growing at a pace that suits our brand and capacity.

Who is your target consumer group?
Our target consumer groups are both vegans and flexitarians. Due to our fresh and creamy taste profile, we also receive feedback from dairy drinkers who enjoy our oat milk. We are an inclusive brand that aims to be accessible to all.

What challenges and opportunities have you encountered in expanding Oato’s distribution network across the UK?
People love how Oato tastes and our story of supplying across the traditional milk rounds, so it’s been a challenge to keep up with demand as we’ve grown. We’re now in a state-of-the-art facility, with the capacity to supply all doorsteps across the UK and also retail. It’s been a challenge but also great fun.

What strategic steps did Oato take to secure national distribution with major retailers like Waitrose and Booths?
We approached the major retailers with statistics on our success in the British milk rounds and how we envisioned positioning ourselves in the plant milk category at an affordable price point without compromising on quality or taste. We have been incredibly fortunate to receive such a positive response in our initial conversations with buyers, leading to being listed by those who were also keen to champion a locally produced oat drink.

What has been the response from both consumers and retailers to Oato’s entry into the supermarket sector?
The response from consumers has been overwhelmingly positive. One of our key reasons for launching into the supermarket sector was to reach consumers who can’t receive a milk round, such as people living in flats, students in halls of residence, and inner-city convenience shoppers. Retail buyers have commented that we offer something unique to the category, with our products being fresh, not UHT, and supporting British producers.

How do you foresee the plant-based milk market evolving in the next five years, particularly in the UK?
We foresee the plant-based milk market expanding rapidly in the next five years. Consumers for this category are not just vegans; as they become more informed by researching ingredients, it paves the way for more NPD (new product development) within the category. This includes plant-based milks made from different grains and enhancements to existing lines to include more protein and vitamins. It’s an exciting time for plant-based milk creators, and staying ahead of the curve will always be our priority to be first to market.

What is next for Oato?
Oato will continue to support British milk rounds with our glass offering and expand our retail-ready products with multiple listings this year. We have a handful of NPDs up our sleeve with one of our milk round partners, driven by the popularity of its dairy shake version. We cannot give too much away as we want it to be a surprise. Let’s just say we anticipate it to be as popular as our Strawberry and Chocoloato oat shakes!