The Economist

52 Business The EconomistAugust 4th 2018

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Food labelling

Got oats?

T

HE humble oat doesn’t exactly ooze

Instagrammable cool. Yet it is fast

becoming the star in trendy coffee shops

favoured by baristas as their faux milk of

choice thanks toits “mouthfeel”taste

and ability to foam and be swirled into

“latté art”. Demand for alternatives to

dairy has accelerated over the past six

months says Robert Robinson the co-

founder of Notes one coffee chain in

London where oat milk has become the

firm favourite over soya and almond. “It

works so well with the acidity of espres-

so and just tastes better” he adds.

Plant-based milks are booming as

consumers seek to eliminate dairy from

their cereal bowls and coffee cups mostly

for health welfare or environmental

reasons. A survey by Mintel a research

firm found that half of a sample of

Americans bought non-dairy milk over

the past three months. Last year Britain’s

Office for National Statistics added non-

dairy milk as a subsection of mainstream

goods in its consumer-price index—a sure

sign that the trend is here to stay. Innova

Market Insights expects the global market

to surpass $16bn in 2018.

As consumers separate the wheat

from the chaff soya the original alt milk

has been losing market share. Experi-

ments with peas pecans and flax all had

their problems. Almond milk an estab-

lished favourite in America suffered

when its environmental credentials were

questioned; one almond requires five

litres of water to produce.

Oat milk’s environmental footprint is

modest by comparison and its health

properties are solid. Albeit from a low

base sales in Britain grew last year by

76% according to Nielsen compared

with 24% for coconut (also a newcomer)

14% for almond and 5% for soya milk.

Europe’s leading producer Oatly has

made the drink for decades though

mostly just for people with dietary re-

strictions. After it revamped its branding

a few years ago and decided to appeal to

consumers via baristas rather than retail-

ers “the snowball just started rolling and

hasn’t stopped” saysIshen Paran a

spokesperson. Customers started de-

manding supermarkets stock it first in

Europe and now in America. It all led to

an oat-milk drought in late 2017 with

prices on Amazon soaring as well-off

parents scrambled for the goods. A sure

sign of a fad critics scoffed.

The dairy sector would certainly like

to think so. It is lobbying for protection in

Europe and America and promoting

educational campaigns such as #Milk-

Truth. Last year the European Court of

Justice ruled in its favour and forbade the

use of terms such as “milk” and “butter”

for plant-based products which now call

themselves “drinks”. Producers in Ameri-

ca want the same. In July Scott Gottlieb

head of the Food and Drug Administra-

tion said the agency would clarify what

could be marketed as milk adding that

“an almond doesn’t lactate I’ll confess.”

Not all dairy firms are resisting. Some to

their credit have brought out lactose-free

or dairy-free products. Following the

consumer after all is usually the best

route to a cash cow.

Plant-based milk alternatives disrupt the dairy business

Cream of the crop

A

BRANCH of Renaissance a Japanese

chain of fitness centres would not

seem the likeliest place to find crowds of

the elderly but they abound. Older wom-

en chat as they leave the facilities with wet

hair; a couple of seniors sit in the lounge

reading books and sipping coffee. The

lounge is something the chain introduced

with the grey-haired in mind. “Our older

clients like community and hospitality”

says Naoki Takazaka of Renaissance. All

staff must make time to chat with them.

Japan’s population is ageing more rap-

idly than any other country’s. Those over

65 years of age make up 28% of the popula-

tion a proportion expected to rise to 40%

by 2065. Any business that wants to

prosper has to cater to their needs. It is an

opportunity rather than a problem says

Masahiko Uotani chief executive of Shi-

seido Group a cosmetics behemoth: older

people live longer are active for longer

than past generations and are relatively

rich. “But you have to take the time to find

out what they actually want since it is often

not what you expect” he says.

The obvious opportunities are in care

of the elderly and end-of-life services such

as funerals. Big companies such as Kobe

Steel and Hitachi two industrial heavy-

weights sell private housing to seniors.

Several providers of nursery schools have

also started care homes for the more nu-

merous people at the other end of life. Ro-

botics firms are developing tools to help

old people live independently for longer.

Manufacturers of walking sticks and adult

nappies are faring well.

Unexpected avenues of business are

also opening up. Renaissance realised ear-

lier than other companies that older peo-

ple want to stay fit and started to offer dis-

counted memberships for those over 60.

By 2016 30% of its customers were over 60

compared to just over 3% in 1994. People in

this age group are much less likely than

Business and demography

Silver linings

TOKYO

Japanese firms get better at selling to the

country’s legions of elderly

sons for Facebook’s shrinking margins is

that it has been hiring thousands of moder-

ators to vet users’ posts). The firm’s earn-

ings call should be seen as a “big reset of in-

vestor expectations” says Mark Mahaney

ofRBCCapital Markets a bank.

The second group benefits from the fact

that companies continue to embrace cloud

computing particularly as it starts to en-

compass artificial-intelligence services.

Amazon’s record profits were generated by

its cloud-computing arm as were Micro-

soft’s expanding revenues. Google too is

making more money from the cloud al-

though it still depends on advertising as its

main engine. As for Apple being mainly a

hardware-maker it stands apart. Although

it did not ship as many iPhones as expect-

ed it sold them at a higher average price. Its

services business which includes the

iTunes music store and the iCloud bundle

of offerings had its best quarter ever post-

ing revenues of nearly $10bn.

Overall tech firms will continue to

thrive says Brian Wieser of Pivotal Re-

search. Yet all bets will be off should Amer-

ica’s trade war with China continue to get

hotter. Apple is most vulnerable. Not only

are most of its devices made in China but

the country is its second-largest market. If

Apple gets hit by tariffs another company

is likely to get to $1trn first. But right now

that prize seems within its reach. 7