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Oatly AB: Bringing Disruption to the Global Dairy Industry |
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While selling the oat milk, the people at Oatly realized that they had a valuable product in hand, but that their marketing strategy for it was poor. Because of this, the product had been languishing without growth for almost 20 years.
In 2012, Oatly finally hired Petersson and gave him the mission of changing Oatly from ‘a health drink seller to a lifestyle brand’. They specifically wanted someone without a background in the food industry with all the baggage that it entailed. Petersson was born in Gothenburg and had a Japanese mother and a Swedish father. |
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PayPal (11 USD)
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| In 2017, Oatly decided to further expand its horizons and so entered the US market. Analysts felt that Oatly’s entry into the US was strategically timed to take advantage of the growing alternative dairy market. Mike Messersmith (Messersmith), General Manager of Oatly, opined that there was a paradigm shift happening toward plant-based consumption. Americans were actively seeking out alternatives to dairy milk, whose consumption had been slipping for more than a decade. Schoolcraft said, “The United States is a very tricky market for a Swedish company to enter. But as we grew the brand, it became more apparent that the United States was a perfect match for what we were making... |
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| The rising popularity of Oatly’s oat milk led various coffee shops to stock it themselves to provide to their customers. It was a hit in Los Angeles and Chicago and other cities where coffee shops were popular. The first company to place an order with Oatly was Intelligentsia Coffee . James McLaughlin, President and CEO of Intelligentsia, said that drinks made with Oatly oat milk accounted for 13% of all beverages ordered across its 10 locations in the US in 2018, outpacing both almond milk and soy milk. He said, “It’s the first time my Baristas have gotten behind alternative milk in an intense way. We started stocking the liter cartons on our shelves because customers were like, ‘I want to take this home. .. |
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| Cow’s milk still remained the biggest competitive threat for oat milk, as it was nutritionally superior. Katie Brown, Senior Vice President of at the National Dairy Council , said, “Many people use oat milk as a substitute product for cow’s milk, but they have completely different nutritional profiles. Cow’s milk has a more powerful nutritional package – a good source of protein, calcium, vitamin D, and several B vitamins including B12. Oat milk tends to also be higher in carbs and added sugar.” Hence, the issue remained that people could end up choosing cow’s milk for its higher nutrition profile... |
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| Though Oatly had dreams of making oat milk a mainstream product, it found itself ill-equipped to turn this into reality. Industry observers pointed out that the rising demand for Oatly oat milk in the US had put a heavy stress on its supply chain. Speaking on the issue, Petersson said, “We knew that we would do well. But we weren’t quite prepared for this level.” Oatly was simply unable to meet the demand and it also failed at demand forecasting. ... |
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| Between 2008 and 2011, Öste spent a lot of time in China trying to convince authorities through research that oat milk was as good as cow milk. However, the company did not enter the Chinese market due to a difference of opinion among its Board of Directors. In 2016, Oatly launched its products in Hong Kong and over the years, it ensured their availability in supermarkets and cafes. ... |
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| As of 2019, oat milk sales in the US were US$ 29 million, up from US$ 4.4 million in 2017. Globally, the alternative dairy milk market was expected to reach US$ 38 billion by 2024 ... |
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Exhibit I: Reasons for the Rise in Demand for Alternative Diary Products
Exhibit II: Oatly’s Product line
Exhibit III: Investors of Oatly, as of 2019
Exhibit IV: Different Types of Milk and their Characteristics
Exhibit V: Independent Coffee Chains Stocking Oatly
Exhibit VI: US Sales of Alternative Diary Products – 52 weeks ending October 2019
Exhibit VII: Oatly’s Key Markets - 2018
Exhibit VIII: Growth of Plant based Milks vs. Cow Milk in Retail in the US in 2018,Compared to 2017
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