Popular Swedish oat milk brand Oatly will soon be producing directly out of Singapore, in what will be Asia's first oat milk manufacturing facility.

This is part of a long-term and "strategic" partnership between Oatly and local beverage company Yeo Hiap Seng Ltd (Yeo's), the latter revealed in a press release on Mar. 29.

First factory in Asia

Oatly's oat milk will be manufactured at Yeo's Senoko Way manufacturing site, and both companies have jointly invested S$30 million in the facility and the equipment.

Yeo's will manage, run and maintain the new facilities, and both parties will undertake end-to-end manufacturing for the Oatly products.

This will be first time Oatly products will be produced outside of Europe and North America, and the products produced in Singapore will be exported to markets across Asia.

Production will begin the second half of this year, and the oat milk will head for China first before being sent to the rest of Asia.

Additionally, the partnership with Oatly will initially create over 50 new jobs at Yeo's, and the capital investment will be funded from internal reserves.

Oat milk a booming industry

Oatly uses patented enzyme technology to turn oats into food products like oat milk, oatgurt and ice cream.

Oatly's products are lactose-free and high in beta-glucans, a type of soluble fibre that helps to lower bad cholesterol levels.

The brand launched in Singapore only last year and its products are currently available at supermarkets and online retailers.

Oat milk is becoming increasingly popular as more people turn to vegan diets and reduce consumption of dairy products.

A study by Dublin-based Research and Markets expects the oat milk market to grow at 13.4 per cent CAGR (Compound Annual Growth Rate) from 2020 to reach US$6.8 billion (S$9.1 billion) by 2026.

According to the press release, the partnership between Yeo's and Oatly is "in line with Yeo’s purpose of nourishing every home with natural goodness across generations" and "reinforces the company’s reputation as a leading Asian food and beverage company".

This contributes to Yeo's growing line of plant-based and soy milk products.

Yeo's CEO Samuel Koh added that this "dairy alternative segment" will continue to "grow exponentially as consumers become more aware of the impact of their food and beverage choices on their health and the environment".

Top photo from Oatly / FB