Recently, the Swedish oat-milk maker Oatly AB has sold a $200 million stake to a group led by private-equity giant Blackstone Group Inc. that includes Oprah Winfrey, Natalie Portman, former Starbucks Corp. chief Howard Schultz and the entertainment company founded by Jay-Z. The move is a sign of growing interest in milk made with plant alternatives.
What is Oatly?
Oatly is a vegan food brand from Sweden which produces alternatives to dairy products from oats. It was founded in 1990 using research from Lund University and today, Oatly is Scandinavia’s leading brand of plant-based products.
Oatly entered the US market four years ago and the product proved so popular it created shortages. Oatly announced its first factory in the US in 2018 and plans to open a second this year, part of a wider effort to add plants close to its customers. The firm's products are available at 50,000 locations across 20 countries.
In addition, in 2016, it formed a Joint Venture with China Resources Corporation (CRC) which is a Chinese state-owned conglomerate that owns a variety of businesses in Hong Kong and Mainland China. In early 2018, Oatly started its operations in China and its APAC HQ is in Shanghai. It has since opened an office in Shanghai and deployed a new Chinese character for “vegan milk” to attract more milk drinkers to its products. Oatly is now sold in supermarkets, as well as Starbucks and Pacific coffee shops.
Reasons of Oatly partnerships
Prior Oatly investors include Belgium-based Verlinvest and China Resources, a state-owned company.
Then Oatly chose to partner with Blackstone Group because of their enormous resources and unique reach.
The $200m investment announced on represents about a 10% stake Oatly, putting the firm's value at about $2bn. The commitment of its new partners in supporting us and promoting our mission is a clear indication of where the world is going, which is in a new, more sustainable direction.
Indeed, Oprah's recent investment in Oatly aligns with her interest in helping the environment. She is only the newest star to invest in plant-based food companies. Snoop Dogg is an investor in Beyond Meat, as well as Leonardo DiCaprio and others.
Growth of Oatly products demand in US and China
Plant-based milk, specifically oat milk, continues to increase in popularity. Oatly is one of the closest tasting plant milks to the real thing and consumers have adopted it because of this close semblance to dairy.
Oatly sales doubled in 2019, growing from $100 to $200 million in less than a year, as more plant-based consumers expanded their tastes beyond soy, almond, and coconut milks. Therefore, sales of oat milk are expected to increase rapidly in coming years, also due to an increased dairy allergies and concerns about dairy's environmental impact which push shoppers to look for alternatives.
In US about 41% of households purchased vegan milk last year. In addition, Oatly has expanded its products from milk, to ice cream and yogurt and is seeing great growth in China.
This successful fundraising round will allow Oatly to further extend its supply network to Europe, the United States and China.
Oatly's efforts for eco-sustainability
Oat milk is full of protein and has a low impact on the environment, and Oatly is known as one of the most environmentally-conscious companies.
Oatly is hoping to inspire others in the industry to follow its sustainable lead. In recent months, the company has made significant changes to its business model to help fight climate change.
As stars continue to invest in the plant industry, more consumers will become aware of the positive impact that plant-based foods have on human health, the environment and farm animals.
What will Oatly's future look like?
The company faces increased competition, as firms such as PepsiCo's Quaker Oats and dairy giant HP Hood launch their own brands.
New milk alternatives, made from products like peas, have also gained in popularity among consumers. In the US, dairy companies, which have lost ground to the alternatives, have also attacked plant-based rivals over the sector's nutritional claims.
Therefore, despite its success today, what will Oatly's future be?
If it continues to have such innovative marketing strategies and adapt to local markets and local demand, it will certainly have no problems.
To know the reasons of Oatly’s success, read the following article: