- Swedish oat milk brand Oatly sold a $200 million, or roughly 10% minority stake in its company, to a group of investors including Blackstone Growth, Oprah Winfrey, Natalie Portman and former Starbucks CEO Howard Schultz, the company said in a press release.
- The investment will be used to expand Oatly's manufacturing capacity and increase its distribution in Asia, Europe and the U.S. The Wall Street Journal said Oatly has been profitable in the past but lost money in recent years as it reinvested back into its business. The company had $200 million in sales in 2019, double what it recorded a year prior.
- “There are very few brands out there that have this level of scale globally and yet are still early in their consumer-brand life cycle,” Ann Chung, managing director at Blackstone Growth, told The Wall Street Journal.
Oat milk has seen its popularity surge during the pandemic — building on its upward trajectory in recent years.
Nielsen reported sales of oat milk grew 32.5% for the year ended in August of 2018 compared to the prior year. However, that figure pales in comparison to this year when, in the first week of March, oat milk sales spiked 347.3%.
Plant-based milks have become desirable for many consumers looking for alternatives. Oat milk has carved out a niche due to its appeal for those with nut allergies or who have lactose or gluten intolerances. In addition, oats are relatively plentiful and cheap, making it a product that can be produced on a large scale and distributed widely. Oatly has exploited these advantages to its favor, with a report from Mergermarket noting the firm has seen triple-digit annual growth for three years running. The report noted the company has targeted doubling U.S. revenue to $400 million in 2020.
With such growth on the horizon, Oatly could become profitable again, which would put it in an ideal position to pursue an IPO or another strategic options such as a sale. It is interesting that none of Oatly’s investors in the latest round are from major dairy companies. This contrasts to the plant-based meat space, where animal protein companies such as Tyson Foods have not been reluctant to invest in alternative meat products.
Investors in Oatly appear confident in its growth trajectory.
“I’ve been investing for the last 20 years in food and beverage brands and have rarely been that impressed by the growth trajectory,” Eric Melloul, Oatly’s chairman and a managing director at Verlinvest, a Belgian investment holding company started by founding families of AB InBev, told The Wall Street Journal.
It is clear that growth and profitability are the goals for Oatly. Not only is the company racking up a roster of investors but it is also pursuing avenues to expand the reach of its oat-based products. Earlier this year, it announced a partnership with Starbucks — perhaps where it attracted the interest of Schultz — to serve as its oat milk supplier for a trial run in 1,300 cafes in the Midwest. By April, the coffee chain had introduced Oatly into its stores in China. Oatly also launched its first national U.K. campaign beyond London last month to connect with potential customers about "the post-milk lifestyle and further its market penetration."
This latest investment is likely to further accelerate this growth in global markets and help Oatly compete with competitors like Califia and Chobani. At the same time, the alternative milk market is crowded with several plant-based options made from almonds, hazelnuts, walnuts and rice, among others. While consumers enjoy choice and the category of non-dairy options is growing, not all the varieties are likely to carve out a meaningful niche in the marketplace. The latest $200 million investment in Oatly by no means guarantees success, but it should give the company a boost to keep and even grow its recent momentum.