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Hello Marketing Chroniclers.

For this month’s deep-dive column, I’m taking a closer look at one of the most recognizable brands in plant-based milk: Oatly.

The category has already crossed the mainstream threshold — with millions of households now buying plant-based milk regularly — but growth is no longer coming from discovery. The next phase is a tougher fight over habit, performance, and brand preference.

Which makes Oatly an especially interesting case study: a brand that helped shape the category’s cultural rise, now competing in a market that is maturing quickly.

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Enjoy 🧠

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The plant-based milk revolution has already happened.

For more than a decade, the category operated in discovery mode. Consumers were learning what almond milk was, then soy, then oat. The big question was simple: Would people actually try these products?

Today, that question has largely been answered.

In the United States, roughly 40% of households now buy plant-based milk, and repeat purchase rates sit comfortably above 70%. This is no longer a niche curiosity sitting on the fringe of the dairy aisle. It’s a mainstream category with real household penetration.

And yet something interesting is happening.

Despite strong trial and repeat behaviour, U.S. plant-based milk sales declined about 5% in 2024.

That tells us something important about where the category is today. The problem is no longer convincing consumers to try plant-based milk. The problem is winning share within it.

The category has moved from discovery to competition.

And that shift changes the strategic playbook for every brand in the space.

Most categories follow a similar lifecycle.

In other words, the battle shifts from convincing people to try something new to becoming the brand they reach for by default.

Plant-based milk now appears to be reaching the end of the second phase.

Which is why Oatly’s next challenge is fundamentally different from the one it faced when it first emerged.

Few brands have shaped the cultural trajectory of a category the way Oatly has.

The Swedish company transformed oat milk from an obscure alternative into a product that cafés, baristas, and consumers began actively seeking out. Its distinctive brand voice, irreverent packaging, and early focus on coffee performance helped create something rare in grocery: a brand that felt more like a cultural signal than a dairy substitute.

For years, that positioning worked brilliantly.

Coffee shops became a distribution engine. The Barista Edition product turned oat milk into the preferred alternative for cappuccinos and lattes. And the brand built an enormous amount of cultural awareness along the way.

But brand fame does not always translate into category dominance.

And today, Oatly finds itself competing in a category that has become far more crowded — and far more pragmatic.

Within plant-based milk, the first battle is not between brands. It is between plants themselves.

In U.S. retail, almond milk still dominates the category with more than half of plant-based milk sales, while oat milk accounts for roughly a quarter. Soy — once the original alternative — now sits in a much smaller position.

For Oatly, this means that part of the competitive fight is still ingredient-based. The brand must continue persuading consumers that oat milk is the best everyday option — particularly for taste and texture.

The second battle is happening at the brand level.

Competitors such as Silk, Califia Farms, and Alpro operate across multiple plant bases and product formats. Their portfolios stretch from almond and soy milks to creamers, yogurts, and coffee drinks. Compared with these platforms, Oatly remains more concentrated — with around 90% of its revenue still coming from oat milk.

That concentration creates both strength and vulnerability.

The final competitive force is perhaps the most overlooked: dairy itself.

In recent years, lactose-free dairy milk has grown rapidly, with roughly one in three U.S. households now purchasing it. For many consumers, the choice is not between dairy and plant-based on ethical grounds at all. It is simply a search for a product that fits digestive comfort or everyday routines.

In other words, the competitive set has expanded.

Oatly is not just fighting almond milk. It is also fighting dairy’s ability to reinvent itself.

If we step back and look at Oatly through the lens of brand tracking data, the strategic picture becomes clearer.

According to Tracksuit data in the United States, the plant-based milk category reaches roughly 40% of adults, representing more than 100 million consumers actively buying within the space.

Within that audience, Oatly’s awareness sits at 33%, below the competitor average of about 40% and significantly behind category leaders such as Silk and Almond Breeze.

But awareness is only part of the story.

The bigger challenge appears further down the funnel.

Oatly converts 21% of aware consumers into consideration and roughly 12% into usage, both below the category averages of 29% and 21% respectively. Preference levels are also modest: Oatly holds around 8% first-choice preference, compared with more than 30% for category leaders.

None of this suggests the brand is weak.

But it does suggest something more subtle.

Oatly is well-known but not yet habitual.

Tracksuit’s brand perception data also adds another layer to this picture.

Consumers often associate Oatly with terms such as oat, organic, rich, and premium. But another word appears frequently as well: expensive.

This perception reflects a deeper structural shift within the category.

Across Europe and parts of North America, plant-based milk is beginning to split into two distinct segments. At the lower end, private-label products are growing rapidly as retailers compete on price. At the higher end, branded products — particularly those linked to performance and quality — continue to command loyalty.

Oatly sits squarely in the latter group.

And that positioning is not a weakness. In fact, it may be the brand’s most defensible strategic advantage.

Because it is unlikely that Oatly wins a commodity price war in the milk aisle.

But it may not need to.

The real strategic asset behind Oatly’s brand is not simply oat milk itself. It is coffee.

Foodservice has played an outsized role in the development of the plant-based milk category. Cafés provide a highly visible point of trial: a place where consumers experience the product in a context that highlights performance.

For oat milk in particular, that context matters enormously.

When the product performs well in coffee — steaming properly, foaming smoothly, maintaining taste — it solves a real functional job for consumers.

That is why barista-style products have been one of the fastest-growing segments within plant-based milk. And it is why Oatly’s early focus on the café channel helped the brand achieve cultural relevance far beyond its initial size.

Coffee shops, in this sense, are not merely distribution points.

They are brand-building infrastructure.

If the category has moved from discovery to competition, the question facing Oatly becomes clear.

How does a brand that helped invent the category’s cultural momentum become the brand consumers reach for by default?

Three strategic priorities stand out. 

Tracksuit’s funnel data helps clarify where the pressure points sit: awareness lags behind category incumbents like Silk and Almond Breeze, signalling a mental availability gap, while pricing perceptions highlight the need to reinforce the brand’s premium story. 

First, Oatly must defend its coffee leadership. The café channel remains the clearest demonstration of the product’s performance advantage and a powerful source of trial.

Second, the brand must expand mental availability in mainstream grocery retail. Despite strong cultural visibility, the awareness gap with category incumbents suggests the brand is still not top-of-mind for many everyday milk shoppers.

And third, Oatly must double down on its premium narrative. If the brand is already perceived as expensive, the opportunity is to strengthen the value justification (leaning into taste, barista performance, and sustainability) in a market increasingly split between price-led private label and performance-led brands.

Challenger brands often win the first chapter of a category.

They introduce a new idea, capture cultural momentum, and persuade consumers to experiment with something different.

But the brands that win the second chapter are the ones that transform awareness into habit.

Oatly helped prove that oat milk could matter.

Now the challenge is simpler, but far harder.

Becoming the brand people pour by default.

About the data

The brand funnel and perception insights referenced throughout this piece come from Tracksuit. Tracksuit measures awareness, consideration, usage, and key brand perceptions, helping marketers identify where growth opportunities exist.

To learn more about the platform, visit https://www.gotracksuit.com/us

PPA

Pedro Porto Alegre is a seasoned marketing strategist with in-depth experience building brand and communications strategies for top-tier B2C and B2B organizations across North America. His repertoire extends from crafting and executing integrated multi-media brand marketing campaigns to the commercialization of performance-driven innovations for multimillion-dollar and nascent brands alike.

Disclosure: This article was written with the assistance of artificial intelligence as a research and drafting tool, with final analysis, interpretation, and editing by the author.