The plant-based milk track is getting increasingly crowded, especially with oat milk. Recently, global oat-based brand OATLY announced its Q4 and full-year 2021 financial results. The report shows OATLY's full-year revenue was $643.2 million, up 52.6% year-over-year. Among that, Asia revenue was $126.9 million, up 136.5%, showing the strongest growth momentum. At the same time, in China, the oat milk and even plant-based milk market has entered an acceleration phase. According to the "2020-2025 China Plant Protein Beverage Industry Market Demand and Investment Planning Analysis Report" released by Qianzhan Industry Research Institute, the plant milk industry is expected to maintain an average annual growth rate of over 20% in the coming years, with the market size projected to exceed 300 billion yuan by 2025. The hot consumer market has also attracted capital to plant-based milk startups. New brands like oatoat, Plant Label, Aomai Planet, and Xiaomai Oye have seen continuous financing news, and many established companies like Yili and Vitasoy are also betting on plant-based beverages. According to iyiou Think Tank statistics, from July 2020 to August 2021, Chinese plant-based food startups received a total of 48 financings, with total funds exceeding 1.2 billion yuan. Among them, according to incomplete statistics, plant milk brands alone had at least 7 financings, including Daily Box, Plant Label, and Keke Manfen, with most brands founded after 2020. It seems the prospects for oat milk are bright. Oat Milk: The Fastest-Growing Category First, let's look at the definition of oat milk: what is oat milk? Oat milk, also known as "plant milk," is a gluten-free grain beverage primarily made from oats. What people commonly call oat milk is actually a colloquial and systematic expression; many related oat products have different names across brands, such as oat drink, oat beverage, grain beverage, etc. In 2021, the oat milk category saw a major explosion, with plant-based beverages and foods becoming hot targets for capital. OATLY is a prime example. In 2021, OATLY successfully listed on Nasdaq, known as the "first oat milk stock on Nasdaq." In its first post-IPO financial report, full-year revenue was $643.2 million, up 140.2% from $267.7 million the previous year; in 2021, Asia revenue was $126.9 million, up 136.5% from $53.7 million the previous year; in comparison, Americas revenue was $179.8 million, up 79.8%, and Europe, Middle East, and Africa revenue was $336.5 million, up 25.7%. However, in terms of global gross profit, Q4 2021 was $29.6 million, with gross margin down 1180 basis points to 15.9%; net loss attributable to parent company shareholders was $79.8 million, more than double the $37 million net loss in the same period last year. The Asian market, led by China, is OATLY's fastest-growing highlight. But clearly, OATLY is still not profitable. Why not? OATLY explained that the main reasons are additional costs incurred for the startup of three new facilities compared to the same period last year (including depreciation, Singapore plant startup costs, and higher-than-planned co-packing production share), and OATLY also faced higher inflationary pressures last year, including high logistics costs in Europe, Middle East, and Africa, and rising container shipping costs from Europe, Middle East, and Africa to Asia. Although not yet profitable, OATLY's determination to enter the Asian market is evident, and while Asia's growth data is not a large share of OATLY's global market, the growth rate is enough to give OATLY confidence in the Asian market, even the Chinese market. Dairy analyst Song Liang said: "In the future, China will definitely be a country with high consumption of high-quality protein. As people's living standards and health awareness improve, they will consume more high-quality protein. Among them, animal protein intake is mainly from milk, while plant protein intake has no fixed source. In this context, various plant milks will flood the market. The future of plant milk is very promising, and as a type of plant milk, oat milk undoubtedly has significant room for development." In Between: Is Oat Milk a Beverage or a Dairy Product? The introduction of oat milk has been controversial. Where does the controversy come from? "Plant-based beverages" as an overseas concept has not been widely educated in the domestic market, and there is a certain understanding barrier for the general public. In fact, Chinese food is mainly plant-based. The Huangdi Neijing states: "Five grains are for nourishment, five fruits are for assistance, five animals are for benefit, and five vegetables are for supplementation." This means grains (staple foods) are the foundation of human survival, while fruits, vegetables, and meats are auxiliary, beneficial, and supplementary to the staple diet. For example, soy milk is very familiar to Chinese people, deeply ingrained, but we often call it "grain food" rather than "plant-based." Plant-based beverages like coconut milk, almond milk, and walnut milk are also familiar; they all belong to the "plant-based beverage" category. So for oat milk, there is no consensus in the market: is it a beverage or a dairy product? In response, OATLY directly took on milk in its marketing, establishing category awareness by benchmarking against milk. This is because Chinese consumers' meta-cognition of oat milk largely compares it to soy milk. Why benchmark directly against milk? First, during production, oat milk adds a small amount of vegetable oil and uses special enzymes to hydrolyze the oat slurry to a certain extent, retaining dietary fiber while giving it a slight sweetness, so it blends well with coffee without overpowering it. From this perspective, anywhere milk can be used, oat milk can be tried as a substitute, which is its most distinctive feature. Second, according to third-party data, in the past three years, 32% of U.S. consumers have reduced or stopped milk intake, and two-thirds of consumers have shifted at least some dairy consumption to plant-based milk alternatives, using these products in similar occasions as animal milk. So OATLY believes that Asia, led by China, is one of the biggest opportunities, and if it can achieve multi-channel penetration in China, it will lay a foundation for rapid future growth. To this end, OATLY sells through three channels: foodservice, food retail, and e-commerce. The foodservice channel mainly refers to coffee shops, which are also an important way for OATLY to enter the market. By penetrating complex and opaque distribution networks, it uses the concept of oat milk + coffee to occupy consumer minds. In its prospectus, OATLY stated that it has a "strong and difficult-to-replicate business" in independent specialty coffee shops, with solid relationships with baristas, playing an important role in driving consumer awareness of plant-based dairy. In the food retail channel, OATLY partners with 60,000 stores globally, expanding distribution from the initial plant-based market to traditional and natural grocery channels, including Walmart and Whole Foods. In the e-commerce channel, OATLY has expanded to Amazon, Ocado, Tmall, and JD.com. OATLY stated that e-commerce has played a very important role in its Asian expansion. In 2020, according to Tmall's plant-based beverage brand ranking, OATLY's GMV was at least three times more than competitors. In 2020, OATLY's online business accounted for 21% of its total revenue in China. OATLY's omni-channel rollout has clearly defined the consumption groups, scenarios, and positioning of oat milk. OATLY's Path to Breakthrough Growth OATLY's full-channel coverage has pushed the oat milk category into a high-speed development stage, while also helping OATLY open up the Asian market, including China. From OATLY's financial report, in 2021, Europe, Middle East, and Africa contributed half of revenue, reaching 52%; Americas contributed 28%; and Asia accounted for the smallest share at only 20%. Although the base is small, growth is significant. The growth is closely related to OATLY's channel expansion in China. For example, Starbucks, COSTA, Tim Hortons, Manner, Heytea, Naixue Tea, and Haidilao have all become OATLY partners. These brands' store layouts and supply needs in the Chinese market provide strong support for OATLY. In contrast, Swiss brand Ovaltine, which also entered the Chinese market, changed hands several times and was loss-making for a long time. Ovaltine entered China early, but its development was not smooth. Due to years of losses, in 2008, Bright Food Group, which had just completed restructuring, transferred its 20% stake in Shanghai Yinglian Food & Beverage Co., Ltd. at a price of 17 million yuan on the Shanghai United Assets and Equity Exchange. In 2017, Master Kong Beverages was authorized to exclusively produce and sell Ovaltine malt nutrition ready-to-drink milk series products under Associated British Foods in mainland China. This was the second "financier" for Ovaltine beverages after Shanghai Bright. Today, compared to OATLY's fame, Ovaltine seems much more desolate. Where is OATLY successful? The answer: channel focus, scenario aggregation, and crowd concentration. Channel focus: as mentioned, OATLY has focused on three channels: foodservice, food retail, and e-commerce. Through the focus on these three channels, it achieves scenario aggregation. The so-called "scenario" refers to something happening at a certain time and place with a certain person. Obviously, a scenario includes not only consumers, products, and consumption behavior, but also the two axes of time and space. OATLY appears in different scenarios such as restaurants and coffee shops, creating multiple consumption demands. By releasing users' multiple consumption identities through scenarios, scenario focus undoubtedly creates unlimited growth space. In this growth space of scenario focus, a chain reaction of "crowd concentration" is likely to occur. People in the same consumption circle have high "infectiousness"; their emotional connections are closer, and their behaviors tend to converge. When someone in the circle does something, it easily "infects" others. For example, if someone in a girl's circle of friends buys a certain lipstick brand, other girls will soon discuss that brand and even buy the same "bestie color." For brand communication in the internet era, this "infectiousness" is particularly important because it increases the efficiency of person-to-person transmission. In the current era of consumption stratification, a brand's choice of a certain circle is to reach target customers more precisely. OATLY's "focus strategy" has achieved rapid growth in the Asian market and become a leader in the oat milk category. More importantly, it is highly instructive for many new market entrants: when the market lacks category awareness, use single-product entry, occupy key regions, and gather target groups through scenarios. When the category's activity and aggregation in the market are maximally released, it may accelerate its entry speed. It seems the upward momentum of oat milk is attractive, but telling a good story in China is not easy. Tracing its origins, oat milk is always an imported product; in Europe and America, it may be able to tell this story well, just like milk's status in China. Under national advocacy and universal education, milk's status remains unshakable. Oat milk is more of a daily beverage beyond milk, and Chinese people do not have extra expectations for it. Therefore, to get consumers to accept this new category, there is still a lack of a clearer driving force. Just like the hottest Swedish oat milk brand OATLY, when it first entered the Chinese market in early 2018, few people cared. When the C-end market was slow to open, cooperating with chain coffee shops became a "side path." For oat milk brands fighting alone, it will take longer and require broader market education. Are you "watching" me?