Oats Overnight's founder, Brian Tate, details the strategic decision to vertically integrate their CPG production from day one. Faced with specialty formulation challenges and a desire for flexibility, the company built its own manufacturing plant. This allowed them to scale rapidly, growing DTC subscribers and retail presence, culminating in a move to a 50,000 sq ft facility to support their $25M revenue run rate. This episode is a masterclass in leveraging owned infrastructure for growth and quality control in CPG.
Key takeaways
Vertical integration from inception provides greater flexibility and control, especially for unique product formulations that co-packers may struggle with.
Scaling CPG production requires significant capital investment and a skilled labor force; plan for this early to avoid operational bottlenecks.
In-house manufacturing can be a powerful driver for rapid growth and market penetration, as seen by Oats Overnight's 150% YoY revenue increase and expansion into major retailers.
Supply chain vulnerabilities can be mitigated by owning your production, allowing for greater agility and sustained output during external disruptions and rapid growth phases.
A strong direct-to-consumer foundation can propel retail expansion; Oats Overnight leveraged its DTC subscriber base to secure partnerships with Wegmans, Whole Foods, and The Fresh Market.
Oats Overnight, a spoon-free, protein-based drinkable oatmeal, has been made in-house since the company began. Founder and CEO Brian Tate started Oats Overnight in 2016 out of his kitchen, and after about a year of formula development, began selling the bottled oats via the brand’s website.
Part of the decision to vertically integrate production was due to difficulties Tate found in securing manufacturers for the product’s unique formula. “At a very, very early stage, we opted to do it [production] ourselves for the flexibility,” Tate said on the Modern Retail podcast.
Fast forward five years, Oats Overnight has a growing customer base and new partnerships with Wegmans, Whole Foods and The Fresh Market. The brand tripled its active direct-to-consumer subscribers – from 10,000 to 42,000 – during 2021. This year, the company is up 150% in revenue year-over-year, hitting $25 million in sales in November.
As a result, the company’s existing 20,000 square foot Arizona plant wasn’t cutting it. With that came the need to upgrade to a bigger oats-blending plant, said Tate.
This year the company has grown to over 100 employees – including 40 on the production line – and is in the process of moving to a 50,000 square foot facility. But running a food plant isn’t as simple as it seems, and requires a lot of financial capital and labor to run smoothly, Tate explained.
This conversation is part of Modern Retail’s Chain Reactions series, in which we explore the quick and long-term investments retail brands are making amid the supply chain woes.
What does this episode say about supply chain & operations?
Vertical integration from inception provides greater flexibility and control, especially for unique product formulations that co-packers may struggle with.
What does this episode say about dtc strategy?
Scaling CPG production requires significant capital investment and a skilled labor force; plan for this early to avoid operational bottlenecks.
What does this episode say about finance & fundraising?
In-house manufacturing can be a powerful driver for rapid growth and market penetration, as seen by Oats Overnight's 150% YoY revenue increase and expansion into major retailers.
What does this episode say about founder & leadership?
Supply chain vulnerabilities can be mitigated by owning your production, allowing for greater agility and sustained output during external disruptions and rapid growth phases.
What does this episode say about supply chain & operations?
A strong direct-to-consumer foundation can propel retail expansion; Oats Overnight leveraged its DTC subscriber base to secure partnerships with Wegmans, Whole Foods, and The Fresh Market.
