Small Business: Dunedin 'milk' firm partners up with Harraways - Otis

Tim Ryan, co-founder of Otis Oat Milk. Photo / Supplied

Chris Wilkie, co-founder of Dunedin plant-based milk manufacturer Otis Oat Milk, talks introducing a dairy-free milk into a dairy nation and how his company hopes to bring about environmental change.

What does your business do?

We're New Zealand's first homegrown oat milk. We currently produce our milk in the South Island from Kiwi-grown oats and sell it in cafes up and down the country. It's got this velvety smooth texture to it and we think it pairs perfectly with coffee. We've paired up with some of New Zealand's best coffee roasters and brands; Allpress, Mojo, and Ozone. At this stage we just have a barista product for cafes, but we do plan to expand further after that.

We produce about 1000 litres of the milk a day, so a very small scale, but we're going to be ramping that up quite quickly and by the middle of this year we should be able to produce a lot more, ultimately producing 25 and 50 million litres.

What was the motivation for starting it?

Tim [Ryan] and I began the company, and we began it a few years ago. We were over in Europe, and we did heaps of market validation work while we were over there, and then when we moved home we did the same here. We were looking at what consumers wanted. We could see the trends over there and we spent some time thinking about what it was going to be like in the next 10 or 20 years, and what the modern consumer would pay a premium for.

We'd seen the rise of these plant-based dairy alternatives and it was clearly growing, and now we're seeing it break into the mainstream. Both of us grew up on farms and knew that New Zealand grows amazing oats so that looked to be the clear winner for New Zealand. Soy, coconut, almond, macadamia, rice, New Zealand doesn't actually grow them so we thought the oat milk option was a no brainer.

We started developing the process and recipe 18 months ago, we started using food techs locally and looked for the best industry knowledge all around the world. We went out and met the oat growers and millers and built some strong partnerships with them. We decided we wanted to be making lots and lots of oat milk so we needed to know that our suppliers were secure, and so we got started on our ambition to be New Zealand's next world famous agricultural brand. We launched coming up to a year ago, April last year we launched in a single cafe in Dunedin and we now supply to over 150 cafes nationwide.

Otis Oat Milk supplies its product to more than 150 cafes. Photo / Supplied

We both grew up on farms and were away [from New Zealand] for a long time. I spent nearly 12 years in London, and Tim almost as much in London and Europe, and when we came back we were actually quite concerned at the impact intensive dairy farming was having on the environment; we arrived back just before the last election cycle, so we started it with a clear motivation that we wanted to start the conversation about the need to diversify the agriculture sector and because my family is still farming I know you can't just say 'You guys stop doing that', you have to give people something else they can make money off, and so we think farmers need world-class brands that can pay them a premium to grow different things.

How big is your team?

At the moment there are seven of us - three full timers and four part timers. The part timers are doing quite big part time roles and so we're expecting we'll need to expand quickly.

Who are Otis' suppliers?

We don't contract the farmer directly, we've got partnerships with them through our mill, which is the Harraways mill in Dunedin, it's been there 150 years, and so partnering through them we were able to go out and meet the growers. Our philosophy was 'New Zealand farmers are already doing a great job at growing oats, Harraways is already doing a great job of milling oats, we just want to add on to the end of that system'. All of our oats are grown in Southland or Otago; oats are grown best closest to the poles as you can, so you don't grow oats close to the equator - the best oats are grown in New Zealand, Sweden or Scotland.

What are you focused on this year?

We're going to bring out a second milk, an everyday milk, when we get onto the supermarket shelf in the middle of this year. Anything you can make with cow's milk you can make with oat milk; cream, cheese, yoghurt, ice cream, and all of that will come, but we're focused on the milk at the moment.

Chris Wilke. Photo / Supplied

What are your long-term plans for Otis?

There's a lot of challenges with scaling up, because we're sort of breaking into this new industry and what we want to do is solve those infrastructure challenges so we can first of all become a brand on every supermarket shelf of the country, and then export to Asia. We've really got our eye on Australia, and then China and Japan - they are both becoming very big cafe cultures when they weren't a few years ago. About 85 per cent of East Asian populations are lactose intolerant so even though they are drinking milk they really shouldn't be so that poses a big opportunity for New Zealand brands. Because our goal is to help create some environmental change, we can't do that by just selling a few thousand litres into cafes in New Zealand, we have to sell millions or hundreds of millions of litres overseas. I think New Zealand has a real opportunity to be a leader in plant-based foods - we see the future as being more plant-based.

What's your timeline for breaking into your first international market?

We've had some really cool cafes in Australia trial us, we just need to solve our scale up a little bit. We got that market primed and we will approach it in the same way as the local launch; get into some cool cafes and set up some demand with people.

We plan to launch into Australia in the third quarter of this year. We're ambitious, but we're realistic as well, there's more competition in Australia, but we think we'll have a competitive advantage as they don't grow their own oats.

How much competition are you facing?

As of today we're the first only and we've been in the market nearly a year. I definitely think there's scope for New Zealand to have at least two or three really good oat milk brands. As of the moment, I don't think anyone is using New Zealand oats, I think there's a few put their label on a foreign box. I think New Zealand is a little bit slower on trends, there's still a lot of people that haven't heard of oat milk. Another factor is there's not that much equipment in the country to make a bunch of it because it is really expensive.

How much have you invested to start the business?

We had some investment at the tail end of last year and at the end of this year we'll probably do a series b round, where we'll try to raise some more money, largely for equipment. The amount we've spent on development until now is about $500,000, developing our product to this point. It has been self-funded largely, with one investor so far who gave us some money for a share of the company last year.

What advice do you give to others thinking about starting their own business?

Go out and ask people that have been successful about it, and they don't have to necessarily be in the same field. We've been blown away by how many really successful senior business people and entrepreneurs have been so happy to help us free of charge. Give advice, be mentors to us. The other piece of advice is don't be deterred when things go wrong because that's all part of the journey.