Plant-Based Milk Players Invest in New Texas Facilities Amid Growing Oatmilk Demand

Citing increasing demand for oatmilk in retail and foodservice, plant-based milk producers Oatly and SunOpta are ramping up production, with both companies announcing plans for new facilities in Texas set to open over the next few years.

Oatly yesterday unveiled plans for a new production facility in Fort Worth, Texas set to open in 2023. Once completed, the planned 280,00 square foot facility will be the Swedish company’s third and largest North American facility, producing approximately 150 million liters of oatmilk annually and employing more than 100 people.

The new facility is one of nine Oatly aims to build worldwide in the next two years, joining previously announced sites in Singapore, Maanshan, China and Peterborough, England. The company opened its first U.S. manufacturing center serving the East Coast in Millville, New Jersey, in 2019, and began operations in its Ogden, Utah-based factory this spring to service West Coast distribution. All employees at the new facility will receive the same benefits as those at its other U.S. facilities, the company said.

Fort Worth is “ideal” for Oatly’s next U.S. facility due to its central location within the country, allowing the company to further build out distribution of its oatmilk, frozen dessert and oatgurt products to the middle of the U.S., a company spokesperson said. Oatly products are currently distributed in more than 7,500 retailers and 10,000 coffee shops nationwide.

The location was also attractive because of its skilled manufacturing workforce, a company spokesperson said, as well as its easy rail access to help reduce the company’s transportation carbon footprint.

“We’re facing a global climate crisis,” the spokesperson said. “As a result, our goal as a company is to transform the food system into one that demands less resources and is healthier for people. To do this, we are building facilities in strategic locations around the world that enable us to deliver high-quality, great tasting oat-based foods to people as quickly and efficiently as possible.”

The expansion comes as Oatly has seen increased demand for oatmilk outpace its current supply, the company said. Sales of oat milk products in the U.S. grew 202% from 2019 to 2020, according to Nielsen, and the plant-based milk space is now valued at $2.5 billion in the U.S., making up 15% of the milk category.

According to its IPO filing earlier this year, the company secured $100 million in revenue in the U.S. last year, with retail sales up 182%. The company has faced setbacks since its IPO, with its stock taking a hit in July amid since-denied allegations of exaggerated revenue and sustainability claims. Still, the company projects continued growth, designing the new factory, as well as its New Jersey facility, with long-term growth in mind with the ability to expand and increase production over time if necessary.

“Every time someone decides to take their coffee with oatmilk or have an Oatgurt for their afternoon snack, we believe they’re making a choice that’s healthier for them and the planet. And more and more people are making those choices every day,” said Mike Messersmith, Oatly President North America, in a press release. “We’re excited to break ground on this factory in Fort Worth, which we believe will allow us to meet the growing demand for Oatly’s products and grow our positive impact on the planet.”

Oatly isn’t the only company expanding capacity amid a spike in demand for plant-based milks. SunOpta yesterday announced its intention to establish a new facility in Texas to expand production capacity for its Plant-Based Foods and Beverages segment. The manufacturer, which produces a variety of plant-based milks and ingredients including oatmilk, soymilk and almondmilk, is in the final stages of negotiating a lease to construct a new “mega facility” in the Dallas-Worth area, CEO Joseph D. Ennen said in SunOpta’s second quarter earnings call yesterday. The 275,000 square foot facility will be operational by late 2022, he said.

SunOpta’s Plant-Based Foods and Beverages segment brought in $111.4 million in revenue for the company in its second quarter, a 21.4% year-over-year increase. Growth in this segment this quarter has been driven largely by the rebound of foodservice, Ennen said, with SunOpta operating as a secondary oatmilk supplier for Starbucks, which also struck a nationwide partnership with Oatly earlier this year.

The news of SunOpta’s expansion follows the company’s plans announced earlier this year to expand plant-based production capacity at its facilities in Allentown, Pennsylvania and Modesto, California. It also purchased two non-dairy beverage brands from Hain Celestial in April. Ennen said these projects will grow SunOpta’s capabilities, broaden its geographic footprint and eventually improve its margins.

“The project…in Texas is a major strategic unlock for us against our priority of doubling the plant-based business,” he said. “This gives us plants in or within a 100 miles of four of the five biggest states in the US with Texas, of course, being the second biggest state in the US, and so we’re excited about that as a further insulator for the business.”