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Oat Milk Shortage

Over the last several years, oat milk has been in short supply.  OM in the News posted on it a couple of years ago.  In spite of the lapse in time, shortages are still an issue for oat milk, and for its primary producer, Oatly.  The shortages of oat milk were impacted by the pandemic.

Shortages of hand sanitizer are understandable, but why a shortage of oat milk?

When the pandemic began, demand for oat milk increased.  Part of the appeal is that oat milk is a great-tasting, healthy, and sustainable product.

Oatly was able to reduce the initial shortage when it built its first US plant in New Jersey.  It started construction of a second plant in Utah.  However, COVID-19 has delayed its completion.

Video Spotlight: 

This post is based on the Bloomberg article, Oat Milk Shortages Reported Following Delay in New Oatly Plant, by Deena Shanker, March 25, 2021, and the YouTube video in the Spotlight. Image source: Westend61

Discussion Questions:

1. Why are there still shortages of oat milk?

Guidance: When demand increases rapidly, the ability to fill the demand is a challenge. Oatly had anticipated this increase in demand, and was adding a second US manufacturing plant.  Unfortunately, COVID-19 delayed its completion.

2.  What issue do the shortages pose to Oatly?

Guidance: Oatly is the originator of Oat Milk.  As a first entrant to the market, they command a good share of the market.  However, many competitors are entering the market.  It is important that the shortage not last too long, or their competitors may take market share.  Additionally, they are losing money by not being able to provide their product to customers at the moment.

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