Starbucks' Oat Milk Stockout
It is one thing to hype a product, but if you cannot deliver, that’s just bad supply chain management. And Starbucks’ oat milk stockout in 2021 was an unfortunate example of this.
Continue reading to find out what exactly happened and the inventory management lessons from the story.
Key Nuggets
- Starbucks misread demand for oat milk and triggered a nationwide shortage.
- A single-supplier model plus a delayed new plant at Oatly constrained capacity.
- Shortfalls spilled into related items like brown sugar syrup and strained operations.
- Starbucks added suppliers, re-prioritized inventory, and improved ordering systems.
- Durable lessons: sharpen forecasting, diversify sources, pace launches, and protect customers.
How an Oat Push Became a Nationwide Drought
After testing Oatly at 1,300 stores in 2020 with great success, Starbucks rolled out its milk oat nationwide in March 2021 and paired it with new oat-based drinks that exploded in popularity.
Like every new product, the company had hoped these drinks would be popular with customers, but the supply chain was not ready for the ensuing demand explosion.
The Iced Brown Sugar Oatmilk Shaken Espresso gained traction on social media and pulled new customers at an unusual speed. Stores sold through early allocations, and within weeks, many locations marked oat milk unavailable in the internal app to prevent broken orders.
Read More: Sourcing Lessons From Ford’s Semiconductor Crisis.
Why Did the Starbucks Oat Milk Shortage Happen?
Ultimately, the root cause was a demand spike that exceeded planned assumptions by a significant margin. Internal expectations were surpassed by an unexpected surge that felt similar to an invasion at times.
According to Starbucks executives, the response to oat milk was “overwhelmingly positive,” with the new shaken espresso far exceeding expectations and driving a 53% year-over-year jump in plant-based milk beverage sales.
The 53% jump pulled in volume across the coffee chain faster than replenishment could restore balance.
Baristas at multiple locations noticed the craze immediately – one Louisiana employee noted “customers could almost never order this drink with all its components intact” in the month after launch because either the oat milk or the special brown sugar syrup (or both) would be out of stock
In their words, “I don’t think I’ve seen a drink rolled out so horribly” in terms of supply issues. Clearly, Starbucks had tapped into a major consumer trend – but the company and its supplier were unprepared for just how big the oat milk wave would be.
Supply couldn’t close the gap because Oatly was still scaling a U.S. footprint under pandemic constraints. A new processing site in Utah was riddled with COVID-related delays, which unfortunately kept the true run-rate below Starbucks’ order velocity.
The oatly facility was initially slated for the summer of 2020 but finally came online in 2020, months behind schedule.
When Starbucks came knocking with nationwide orders, Oatly’s existing production and inventory were insufficient.
“The truth is, there is not one supplier in this country that could supply that demand for oat milk. The capacity doesn’t exist,” Oatly’s CEO Toni Petersson later admitted. That quote framed the challenges and limits of relying on a single supplier with unusual clarity.
External friction compounded the squeeze through labor shortages at factories and distributors, as well as slower transport, which was another direct impact of the limitations in place because of COVID-19.
Baristas also ran out of the brown sugar syrup tied to the hero drink, which magnified service friction. Some regions faced a tight raw oat supply after poor harvests, adding pressure on upstream inputs. The result was a perfect pile-up of hot demand and a thin buffer.
Read More: Lessons From Coca-Cola’s CO₂ Supply Hitch in 2018.
The Impact Of Starbucks’ Oat Milk Stokout on Customers and Operations
Customers hoping to try the new Iced Brown Sugar Oatmilk Espresso (or swap dairy for oat milk in any drink) often arrived to find that oat milk was unavailable.
Social media was filled with complaints from disappointed fans; even Starbucks’ internal ordering app began marking oat milk as out of stock.
In fact, Starbucks temporarily removed oat milk as an option in its mobile app and website ordering system to prevent customers from placing orders that the stores couldn’t make.
But Starbucks’ supply crisis went beyond milk shortage and spread to flavor syrups, causing incomplete drinks and awkward workarounds. It got so bad that stores spent time explaining outages instead of moving queues.
Sometimes, even when the oat milk was available, the syrup was not.
Workers suggested substitutes, but customers said the drink wasn’t the same. One employee noted online that “for a new product, they have to estimate order quantities – and that is very hard,” especially with oat milk in high demand across the market.
The result was long wait times, substitutions, and disappointment at the counter.
The timing of Starbucks’ oat milk stockout exacerbated the situation because Starbucks introduced the new drink just as spring and summer traffic returned, with customers eager to return after pandemic restrictions.
However, the oat milk shortage reflected a bigger pattern. By June 2021, Starbucks had at least 25 items on “temporary hold,” including hazelnut syrup, chai tea bags, breakfast pastries, and even lemonade. Oat milk was one of many, but it drew the most attention.
The company apologized, noting “a visit to Starbucks is an important part of our customers’ day” and promised the shortages were temporary.
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How Starbucks’ Supply Chain Reacted to The Oat Milk Shortage
Starbucks instituted smart supply chain strategies such as:
1. Store-Level Adjustments
To cope in the short term, orders were adjusted and managed judiciously. Some stores limited oat milk to certain drinks or sizes, while others paused upselling until supply recovered.
Starbucks was also able to track inventory more closely with the help of AI-based tools that could forecast demand and self-trigger re-orders. These systems helped stores avoid over-ordering slow sellers while concentrating on top items like oat milk.
COO John Culver explained: “We focused our production effort on high-volume items… not out of the woods yet, but we feel very good about the path we’re on.”
2. Scaling Supply with Partners
The bigger fix came through supply chain partnerships. Starbucks collaborated with Oatly to increase production, but the demand was so intense that even Oatly had to bring in a second manufacturer.
By late 2021, Starbucks had also added new suppliers, widening its base so no single bottleneck could disrupt stock again. And it worked because oat milk was fully available by the holiday season.
3. Supporting Supplier Capacity
Starbucks also helped suppliers tackle labor shortages. In some cases, it backed higher wages so factories could recruit and keep enough staff. More workers meant more shifts, fewer shutdowns, and faster recovery.
As Oatly’s new Utah plant came online and staffing improved, supply finally caught up with demand.
Read More: How Tesla Navigated The Model 3’s Production Bottleneck in 2017 & 2018.
Inventory Management Lessons From Starbucks’ Oat Milk Stockout
After analyzing Starbucks’ 2021 oat milk stockout, experts believe it to be a cautionary tale with valuable insights. Here are key lessons you can pick up from the incident:
1. Don’t Single-Source Critical Inputs During Scale-Up
Qualify multiple suppliers or co-packers before introducing a product into the market. Map true capacity and contracted volume so marketing doesn’t outpace supply.
2. Invest in Faster Sensing and Simpler Assortments
Use demand-sensing tools to spot spikes early and re-prioritize production. Trim fringe SKUs when a hero product needs line time for replenishment. Starbucks shifted focus to high-volume items to protect availability.
3. Build Supplier Partnerships That Share Constraints Openly
Ask vendors to disclose staffing, maintenance, and raw-material risks. Consider joint solutions, such as wage support or shared co-packing, to unlock extra capacity. Starbucks collaborated with vendors on labor to enable plants to get to the production capacity the company needed.
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Hype Without Supply Breaks Promises
It goes without saying that chasing buzz without supply readiness invites shortage.
The case of Starbucks’ oat milk shortage is a stark reminder of how a viral product (in this case, a drink) can outrun planning and expose bottlenecks. But the lesson here isn’t to never bet on trends; it is always to be sure your supply chain can carry the weight.
Obinabo Tochukwu Tabansi is a supply chain digital writer (Content writer & Ghostwriter) helping professionals and business owners across Africa learn from real-world supply chain wins and setbacks and apply proven strategies to their own operations. He also crafts social content for logistics and supply chain companies, turning their solutions and insights into engaging posts that drive visibility and trust.
