Got nut milk? Investors can’t get enough of it.
Los Angeles-based almond and oat milk producer Califia Farms announced Tuesday it raised $225 million in funding. The new funding comes on the heels of declining dairy milk sales and consumer demand for plant-based alternative foods.
The funding was led by Qatar Investment Authority and included Temasek Holdings, an investor in plant-based burger maker Impossible Foods, among others looking for the next plant-based cash cow following the success of Beyond Meat and its vegan offerings that mimic meat.
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The demand for dairy-free drinks is on the rise as consumers consider options outside of the dairy beverage category. And in November, America’s biggest milk producer Dean Foods said it was filing for bankruptcy due to the continuing decline in consumer milk consumption.
Califia Farms said it would use the new funding to expand its portfolio of oat-based products and develop new items outside of the beverage category.
“The more than $1 trillion global dairy and ready-to-drink coffee industry is ripe for continued disruption, with individuals all over the world seeking to transform their health and wellness through the adoption of minimally processed and nutrient-rich foods that are better for both the planet and the animals,” Greg Steltenpohl, Califia’s founder and CEO, said in a statement.
Milk sales plummeted to $12 billion in 2019 from $15 billion in 2015, according to market research firm Nielsen. Almond milk sales, meanwhile, have grown almost 6 percent to $1.35 billion, while oat milk surged 662 percent to $59.8 million last year, Nielsen data show.
While plant-based milk seems to be growing in popularity among Americans, it can be costly. Almond, oat and soy milk costs $3 more for a half-gallon (64 ounces) and nearly $6 for a 32-ounce quart of cashew or hazelnut milk. Dairy milk costs $3.09 per gallon and $3.09 per a half gallon.
Oat milk, in particular, has shown continued growth. When dairy alternative milk brand Oatly announced last year it sold out of its Barista Edition Oatmilk (which retails for $25 online for a six-pack of 32-ounce cartons) people started selling their supplies on Amazon for as much as $226 for a 12-pack.
Some mainstream eateries and restaurants are also broadening their milk options as a result. Grab-and-go sandwich shop chain Pret A Manger said it would no longer charge customers extra for plant-based milk.
The plant-based food sector grew 20 percent in retail sales, while all other foods have seen just 2 percent growth, according to the Plant-Based Foods Association-commissioned data from Nielsen.
“Of course, we’re seeing the rise of plant-based in every category and the dairy alternative category has a lot of room to grow," Michele Simon, executive director for the Plant-Based Foods Association, told FOX Business. "Califia has gone big into all kinds of plant-based milk -- whether it's almond or oat milk -- but also has started to venture into other categories like yogurts.
“I suspect that what this investment signals is a confidence in the growth of this category, and a company like Califia is well poised to really get into some of the other dairy alternative categories that are growing quickly as well.”