Have you ever wondered why oat milk costs so much more than other types of milk?
Many things feed into the price of oat milk, including the cost of research and development, issues with economies of scale, marketing costs, the manufacturing process, and the lack of government subsidies. These result in higher prices, although this may not be the case forever.
In this article, we will explore the costs associated with oat milk in more detail and find out why this milk costs so much more than standard dairy milk.
Research & Development
Research and development are among the big reasons that oat milk costs so much more – it needs constant refining, and the manufacturers are always looking for ways to make their oat milk taste and function better.
You might be wondering what this involves, and it can vary between brands, but in general, it means looking at:
The texture of oat milk when used straight from the carton
The texture of oat milk and how it behaves when it is heated (for cooking or in hot drinks)
The taste of oat milk in different contexts (e.g., sweet vs. savory)
The look of oat milk and how it compares with other milk options
The shelf life and longevity of oat milk
How much the milk separates when stored and how you can minimize this
As you can see, there are many things that manufacturers have to consider when they make oat milk.
They need to keep testing and improving their formulas so that the milk competes with – or even outstrips – the benefits associated with traditional dairy milk.
This may be particularly important for how oat milk behaves when heated.
You may have noticed that many oat milks turn lumpy when heated.
If you add the milk to a hot drink, it often thickens and clumps up, which isn’t pleasant!
This is one of the biggest problems that oat milk has faced when competing with dairy milk because many people have milk in coffee or tea and don’t want it to be thick.
Some manufacturers have overcome this issue, but there’s still constant research and development to be done, so the manufacturers tend to have higher costs than those of dairy milk – which needs minimal research (if any).
This adds to the overall cost of the milk because the product is still being tested and improved.
Economies Of Scale
One of the other factors is the popularity of oat milk.
Dairy milk benefits from economies of scale.
The manufacturers have lower costs because they can take advantage of bulk purchasing and shipping and packaging large quantities of products.
They can also afford to make fewer cents per bottle because they sell so many bottles that the amount adds up very quickly.
Unfortunately, oat milk does not yet benefit from these economies of scale – at least to the same degree.
Although oat milk has grown in popularity, it can still only claim a small subset of the market, and the manufacturers, therefore, face higher costs and get fewer benefits.
They cannot bulk buy packaging to the same level, and they need to make a bigger margin on every carton that gets sold.
This is frustrating for consumers, who are paying the extra, but it is always the case with niche products.
As oat milk becomes more popular and widely purchased, oat milk’s costs will likely decrease.
Manufacturers will be able to take advantage of bulk buying and packing power and will also be able to make less profit on each carton because they will be selling more.
Unfortunately, the extra cost does slow this process down – because fewer people are likely to convert to oat milk due to the high price tag.
This means that the price tag stays high because oat milk brands cannot reach economies of scale.
It’s a vicious cycle that is likely to change gradually rather than quickly.
Marketing
Oat milk also has much higher marketing costs than dairy milk because it’s a relatively new product, and the manufacturers need to “sell” it in a way that dairy milk doesn’t require.
We all know the benefits of dairy milk (such as calcium), and we are all used to incorporating dairy milk in our lives, on cereal, in drinks, and cooking.
By contrast, many people don’t know much about oat milk and don’t know what they can use it for or how it will behave.
They may not be aware of the benefits of oat milk (even for hair and skin) or whether they can use it for breakfast or in milk sauces.
The manufacturers, therefore, have to put more money into selling the product, educating consumers, and making it an attractive option.
This price has to be passed to the consumer if the brands are to make money, which is another reason it costs more.
Related: Is Oat Milk Healthy?
Manufacturing Process
Although oats are a relatively cheap ingredient, turning them into milk can make the end product expensive.
When the oats arrive at the factory, the outer hull has to be removed, and the oats have to be broken down and mixed with water.
This all needs to be done by machine to process the number of oats involved, and the machinery can be expensive.
Once the oats and water have been mixed, they form the base of the milk, but there’s still a lot of processing involved.
The vat needs to be heated to a high temperature to sterilize the milk, which adds to the cost and time involved.
Next, the thick liquid must be strained to remove all the bits to get smooth, creamy milk at the other end.
This means pouring it through fine-mesh multiple times, taking out all the debris and husks, until the milk is completely liquid and contains no bits.
When the milk has reached this point, there are further steps and additional ingredients – which all represent costs.
The manufacturers must add vitamins and nutrients and sometimes include sugar (for sweetened oat milk) at this stage to improve the final product's taste.
All of these things represent additional costs, and although dairy farming also tends to be expensive, there’s no question that oat milk has high production fees.
No Government Subsidies
The lack of government subsidies is also a significant factor in the price of oat milk.
The government heavily subsidizes the dairy industry to keep dairy milk affordable since so many households depend on milk, especially when they have young children.
These subsidies massively cut the price of a bottle of cow’s milk.
By contrast, the plant milk industry does not enjoy any subsidies. The cost you see on the carton reflects the actual cost of manufacture, making the milk seem significantly more expensive.
This may change in the future as more governments move toward eco-friendly products, but at present, oat milk remains much more expensive for this reason.
FAQs
Is Oat Milk More Expensive Than Almond Milk?
Surprisingly, although oats are usually much cheaper than almonds, oat milk tends to be more expensive than almond milk.
There are several reasons for this, including:
- Many almond milk brands use a low percentage of nuts, while oat milk often uses a higher percentage of oats
- Almond milk is better established and enjoys greater market share and better economies of scale
- At present, the demand for oat milk often outstrips the supply; meaning manufacturers can charge higher prices
Related: Almond Milk vs. Oat Milk
Is Oat Milk More Expensive Than Regular Milk?
Oat milk is more expensive than regular milk and could cost more than twice as much, depending on your location.
This is due to the reasons mentioned above, including research and development, marketing, and government subsidies.
Is Oat Milk More Expensive At Starbucks?
Starbucks tends to charge more for plant-based milk, and you may find that you pay around 70 cents more for a drink with oat milk.
This cost difference may disappear as the wholesale price of oat milk drops, but at the moment, it costs a lot more to buy plant-based milk from chains like Starbucks.
Related: Does Starbucks Have Oat Milk?
Conclusion
Oat milk is more expensive for a whole range of reasons, including the cost of manufacture, the newness of the milk, government subsidies, and the current niche nature of the market.
Many of these things are likely to change as more and more people move toward a vegan lifestyle, and manufacturers need to invest less in marketing and development.
