Starbucks joins the oat milk revolution, adding Oatly to its menus nationwide

Beginning Tuesday, Starbucks (SBUX) will officially add Oatly oat milk to its menus nationwide.

This will be the fourth non-dairy alternative to be featured on the coffee giant's permanent menu, where soy, coconut and almond are already mainstays. Dunkin', a Starbucks competitor, had already added oat milk to its menu last year.

Starbucks' move underscores the rapid growth in popularity of oat milk, which has become one of the fastest-growing dairy alternatives: According to Nielsen data, the category has rocketed by more than 170% year-over-year.

At Starbucks Biennial Investor Day in December, the company announced plans to bring the milk alternative to its menus as "customers redefine health and wellness."

The coffee giant was among the first to use soy in lattes (over 20 years ago, according to the company) before adding coconut and almond along the way. Health-conscious consumers can lower the calorie count by requesting sugar-free syrups, or nixing whip cream.

In addition to oat milk, Starbucks is also debuting a spring menu that will include a new Iced Brown Sugar Oatmilk Shaken Espresso, and a Honey Oatmilk Latte. Additionally, on the food side, the chain will add Chickpea Bites & Avocado Protein Box, which are meat and dairy free.

'The most dominant shift in consumer behavior'

The COVID-19 pandemic has accelerated the use of plant-based brands like Beyond Meat (BYND), Impossible Foods and Oatly. All have gained momentum as locked-down consumers focused on healthy alternatives.

In the company's first-quarter earnings report, Starbucks president & CEO Kevin Johnson alluded to this shift to plant-based, referring to the growth in demand for soy, coconut, almond and oat milks as "probably the most dominant shift in consumer behavior ... in both in beverage and in food."

He added: "And then on the food side, you see what we've done with things like the Impossible Sausage Breakfast Sandwich and you're seeing more and more plant-based proteins in our food menu."

Johnson also noted that at least one Starbucks store in the Seattle area is a "100% plant-based food menu."

Starbucks' Tryer Center has become a "sort of a test area when we innovate, and create things here in our support center," according to Johnson. It quietly opened in November of 2018, and is dubbed "the company’s secret sandbox" to try new ideas "from product to process to store design."

The shift to plant-based is also part of a company-wide initiative to curb Starbucks' carbon footprint by 50%. Shares of Starbucks are up nearly 26% from a year ago.

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma

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