February 16: Can Innovation Boost Oat Prices?

Right now, China and Canada lack the proper trade agreement to ensure a boost in oats exports for the latter.

Right now, China and Canada lack the proper trade agreement to ensure a boost in exports for the latter. But China and the U.S. are engaged in one positive force for the sector: Food innovation. Let’s take a look at a factor that is making oats an attractive grain in the future.

Recently, Richard Kamchen reached out to us about Chinese oats demand. When asked about oats demand, he highlighted the importance of innovation in the industry in the country.

“The Australian Export Grains Innovation Centre (AEGIC) is working on projects to determine the value of oat noodles, oat milk, and oat rice in China – mainly because they will help drive oats prices higher, he said in the interview. “This year, you’ll see an increase in whole grain oat flour for mooncakes during the country’s autumn festival.”

While we’ve noted that the Canadian government has a long way to go in order to get China to alter its trade policy in favor of North American oats, there is good news.

The innovation is real. And it’s moving quickly.

Food Business News released a report tracking innovation across the oats category. Quaker Oats has seen solid growth thanks to more targeted products. Its Overnight Oats (single-serve cups that combine oats, quinoa, flaxseed, milk, and yogurt) category targets Millennial-aged mothers.

This success has offset the decline in its legacy hot cereal product line.

The story goes on to profile several other firms that have specialized in new, innovative products experiencing significant demand. Changing consumers tastes (the big ones being organic and non-GMO) are providing companies an opportunity to play in the sand and create new products.

Now, this is a trade publication, so we’re not going to get a lot of numbers here. We’re going to have to dig them up soon to determine where those opportunities will emerge.

From a macro-perspective, it’s reassurance that new product categories in the U.S. and abroad will continue to evolve, and the oats category is ripe for growth.

Meanwhile, it’s also an important opportunity to reflect on the year ahead. It’s vital to think about how your acres fit into the broader trend of changing consumer tastes. Staying ahead of these curves will make it possible to obtain premiums and engage new buyers before others catch onto the changes in the industry. Something to consider heading into the weekend.

 

Oatmeal innovation boosts category

KANSAS CITY — When it comes to oatmeal, consumers are looking for a hot cereal that is more than just hot. Organic, high fiber, lower sugar and weight control are just some of the attributes that are being attached to products meant to warm consumers’ bellies during the winter months.

In the 52 weeks ended Dec. 31, 2017, dollar sales in the hot cereal/oatmeal category totaled $1,302,471,040, up 0.42% from the same period a year ago, while unit sales increased 1.7% to 490,017,408, according to Information Resources, Inc., a Chicago-based market research firm.

Quaker Oats Co., a division of Purchase, N.Y.-based PepsiCo, Inc., continued to flex its muscle in the category. Quaker accounts for nearly 61% of the hot cereal/oatmeal category, and in the 52 weeks ended Dec. 31 experienced a 1.6% uptick in dollar sales, to $788.6 million.

Quaker Weight Control oatmeal sustained a 26% decline in dollar sales during 2017, and Quaker High Fiber oatmeal fell 20%.

Quaker’s base oatmeal business turned in a solid performance during the year, with dollar sales up 2.6% to $635 million, but perhaps more encouraging for the company was the success of Overnight Oats. Targeted at millennial moms, Overnight Oats are single-serve cups that contain a blend of oats, quinoa and flaxseed that may be soaked in milk or yogurt. Varieties include Blueberry Banana & Vanilla Bliss, Toasted Coconut & Almond Crunch, Orchard Peach Pecan Perfection and Raisin Walnut & Honey Heaven. In the 52 weeks ended Dec. 31, Overnight Oats generated sales of $11.6 million.

The success of Overnight Oats helped offset declines in other hot cereal products for Quaker, including Quaker Weight Control oatmeal, which sustained a 26% decline in dollar sales during 2017, and Quaker High Fiber oatmeal, which fell 20%.

Elsewhere in the hot cereal/oatmeal category, Bob’s Red Mill Natural Foods, Milwaukie, Ore., had a solid 2017, with dollar sales up 13% to nearly $39.5 million. In October, the company expanded its line of oatmeal cups to include organic options. The new U.S.D.A. certified organic oatmeal cups are made with gluten-free ingredients, including whole grain rolled oats and stone-ground Scottish-style oats, and contain seven grams of protein or more per serving.

Bob’s Red Mill launches U.S.D.A. certified organic oatmeal cups in October 2017.
“More and more health-conscious folks are looking to add foods with wholesome ingredients to their diets so they can feel good about what they’re eating,” said Bob Moore, founder, president and chief executive officer of Bob’s Red Mill. “They asked, and we listened. Our new organic oatmeal cups make it easy for all people to enjoy our tasty whole grain oatmeal on the go, regardless of special dietary needs.”

Bob’s Red Mill’s organic oatmeal cups retail for $2.79 per cup and are available in four varieties.

Post Holdings, Inc., St. Louis, recorded a 1.4% increase in dollar sales in the 52 weeks ended Dec. 31, led by a 21% increase in Better Oats Raw Pure and Simple oatmeal. The gain helped offset some weakness in the company’s Better Oats Oat Fit (down 11%), Better Oats Oat Revolution (down 5%) and Malt O Meal (down 3.3%) brands.

Post Holdings recorded a 1.4% increase in dollar sales in 2017, led by a 21% increase in Better Oats Raw Pure and Simple oatmeal.
An interesting oatmeal story is taking place beyond the major manufacturers as well.

The latest endeavor from The GFB: The Gluten Free Bar, a Grand Rapids, Mich.-based business built on the burgeoning bar segment, expands the brand into a new frontier: oatmeal.

“We like to say it’s like oatmeal but better,” said Elliott Rader, who co-founded The GFB with his brother, Marshall. “It’s a high-protein product with no added sugar, with a healthy mix of additional things in oatmeal, like nuts, fruit and seeds. The best part and most innovative part of the product is the packaging.”

The GFB recently expanded into oatmeal with its new Power Breakfast line.

A single serving is packaged in a portable cardboard pouch that may be folded into a microwave-friendly bowl. Varieties include Coconut Cashew; Fruit, Nuts and Seeds; PB+J; Maple Raisin and Apple Cinnamon. The company also offers six varieties of nutrition bars and six varieties of snack bites, each made with ingredients like fruit, nuts, seeds and brown rice and pea protein. Products are manufactured in the company’s dedicated gluten-free facility and sold in more than 9,000 retail locations in the United States and Canada.

“It’s super convenient, super innovative packaging, along with a great-tasting product for that on-the go oatmeal space,” Mr. Rader said.

H/T: Food Business News
About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.