Preston's Oato celebrates double digit growth

Oato’s growth journey began in 2021 when it secured funding from the first Northern Powerhouse Investment Fund (NPIF), through FW Capital, to support development of its bottling plant in Preston. The company has since repaid the loan in full and reported double-digit growth after winning major contracts with UK supermarkets Sainsbury’s, Tesco, Ocado and Waitrose, and a network of independent milkmen and regional retailer Booths.

Oato was founded in 2019 by Carl Hopwood, who studied chemistry at Edinburgh University. He set out to develop a fresh, barista-grade oat-based dairy alternative aimed at challenging long-life and UHT products. While almost all other oat dairy-alternative brands on offer are UHT, Oato says it is produced and sold fresh. A central part of the business model has been reviving the traditional milk round, delivering its oat-based product in reusable glass bottles via milkmen across the country. Since inception, Oato says it has distributed more than 30 million pints.

The product is manufactured in Preston using 100% British oats at a solar-powered production facility. The company says this supports the local economy while helping to minimise its carbon footprint. Hopwood said the early FW Capital investment enabled Oato to establish its Preston bottling plant and that the brand is now stocked in thousands of national supermarket stores, with more than 30 million pints sold.

Alistair Igo, Portfolio Executive at FW Capital, said Oato illustrates the innovation and ambition in the North West and that access to funding at the right time can support growth.

Building on examples such as Oato, the British Business Bank has launched the £660m Northern Powerhouse Investment Fund II (NPIF II). FW Capital manages NPIF II – FW Capital Debt Finance, providing loans in the NPIF II area with a primary focus on the North West regions of Cheshire, Cumbria, Greater Manchester, Lancashire and Merseyside.

Sue Barnard, Senior Investment Manager at the British Business Bank, said Oato’s progress demonstrates the strength of the North West’s manufacturing sector and the long-term impact of targeted investment. She said Oato is producing innovative, British-made products at scale, has built a position in a growing market, and is creating jobs and supporting economic growth in the region. Barnard added that the Bank is continuing this work with NPIF II to help Northern businesses access capital to scale and grow.

NPIF II covers the entire North of England and provides loans from £25,000 to £2m and equity investment of up to £5m to help small and medium-sized businesses start up, scale up or stay ahead. The fund aims to increase the supply and diversity of early-stage finance for smaller businesses, including firms that might otherwise not receive investment, and to address barriers in access to finance. Under the programme, FW Capital will provide debt finance options from £100,000 to £2m to businesses based in the North West of England, with some flexibility to lend across the North.