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Starbucks Is Seeing More Demand For Oat Milk Than It Can Meet

Starbucks Corporation (NASDAQ: SBUX) is facing a shortage of oat milk at some of its cafes in the United States, CNN reported on Tuesday.

What Happened: Oatly AB’s — the maker of vegan food and drink products — oat milk is in short supply just a month after Starbucks introduced it across its stores in the United States. 

The Sweden-based soon-to-be-listed Oatly is a key Starbucks supplier for oat milk, which has recently become popular due to a shift in demand for plant-based milk alternatives. The coffee chain uses the Oatly product to brew vegan lattes.

Oatly is facing supply constraints due to construction delays at its much-delayed facility in Utah, according to the CNN report. Both companies didn’t elaborate if the temporary shortages that some Starbucks locations are facing were directly related to the supply constraints.

“Due to high demand, some customers may experience a temporary shortage of oat milk at their store,” a Starbucks spokesperson told CNN Business on Tuesday, adding that customers can expect oat milk to be back “soon” without offering a specific time frame.

Starbucks and Oatly’s parent Havre Global had announced the partnership in February soon after revealing plans to list its stock.

Why It Matters: Starbucks launched oat milk lattes in 2020 and started offering Oatly last month. Oatly’s ultimate growth prospects may hinge on its ability to attract and retain new customers such as Starbucks.

Sales of oat milk rose more than 170% for the 52-week period ended Feb. 13, 2020, compared to the prior year, according to earlier reports.

Oatly AB sold a $200 million stake to a group of investors including private-equity giant Blackstone Group Inc (NYSE: BX) and celebrities Oprah Winfrey, Natalie Portman, and the entertainment company founded by Jay-Z.

Starbucks also has struck partnerships with other plant-based food companies, including Beyond Meat Inc. (NASDAQ: BYND) and Impossible Foods.

Price Action: Starbucks shares closed 1.92% higher at $113.15 on Tuesday.

© 2021 Benzinga does not provide investment advice. All rights reserved.

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