By Spencer Feingold

Facing unprecedented demand from U.S. consumers eager for dairy-free milk alternatives, Oatly is currently dealing with a shortage of its popular oat-based beverage.

“It is beyond all our expectations,” Toni Petersson, the company's CEO, told Cheddar on Wednesday. “We simply cannot produce enough and that's it. We are trying as hard as we can.”

While Oatly may be a relatively new craze in the U.S., the company was founded 25 years ago in Malmo, Sweden. Yet in recent years, demand has skyrocketed as people seek out healthier and more environmentally sustainable substitutes to dairy.

“There is a huge movement going on in the world, especially driven by young people trying to make this world better,” Petersson said.

The dairy alternative market was estimated to be nearly $12 billion in 2017 with soy and almond milk leading sales, according to the business consulting firm Grand View Research. But oat milk is now offering a new option for consumers, which is especially attractive to those with nut allergies or sensitivity to soy — or for those just looking to diversify their diet.

“From a macro nutritional perspective … it has everything you need,” Petersson said. “We have designed something that is made for human beings and is balanced.”

Oatly is vegan, gluten-free, and fortified with various vitamins and minerals. Its fat content also make it a favorite for coffee drinkers and baristas.

In North America, the company produces Oatly in Quebec, Minnesota, and New Jersey. Petersson said the company hoped the New Jersey facility will reach full production capacity in the coming months and help alleviate the Oatly shortage in the Northeast.

Like other milk-alternative companies, Oatly has faced objections from the U.S. dairy industry, which has taken issue with dairy-free products being labeled as milk amid plummeting sales. The industry lost over $1 billion in sales in 2018, the Dairy Farmers of America reported.

“I’m not sure it matters really. I think it is way too late,” Petersson said of the concerns coming from the dairy lobby. “It is an act of desperation.”

In Europe, Oatly also produces several other products ranging from oat-based ice cream to sour cream. “We have to be very disciplined in how we are going to roll those out” in the U.S., Petersson said.