Oatly’s $10 Billion IPO
Oat Milk’s Day in the Spotlight
Oatly (OTLY), the trendy milk alternative company, raised $1.4 billion in its public debut yesterday. The Swedish company has been making oat-based milk products for nearly three decades, but its recent success in the US market has propelled it to a $10 billion valuation.
As of the end of 2020, Oatly’s products are available in 8,500 stores and 10,000 coffee shops in the US. Sales increased 106.5% year-over-year in 2020. Last summer the plant-based food company raised $200 million in venture funding led by Blackstone (BX). The round also included participation from celebrities Oprah Winfrey, Natalie Portman, and former Starbucks (SBUX) CEO Howard Schultz.
The Evolution of Oatly
Oatly was founded in 1994 by brothers Rickard and Björn Öste, who started out researching milk alternatives for lactose intolerant people. The company served that core market for years until Toni Petersson came on as CEO in 2014. He rebranded the company and set his sights on the US at a time when the milk alternative market was growing.
In order to resonate with consumers in the US, Oatly overhauled its branding and logos and changed its packaging from Swedish to English. Under Petersson’s lead, the company also commissioned a study which found that oat-based milk products took about 60% less energy to produce and required 79% less land usage compared to traditional dairy products. This information was helpful to Oatly as it courted environmentally conscious consumers.
From Coffee Shops to Grocery Stores
Oatly knew that convincing US consumers to try oat milk would be a challenge. The company began by connecting with baristas at high-end coffee shops in New York City. Oatly sent representatives to these coffee shops with oat milk samples, hoping they could convince shops to buy their products and encourage baristas to recommend the milk alternative to their customers. This strategy paid off. By the end of 2017, Oatly’s oat milk was in 650 coffee houses.
This marketing tactic helped Americans become familiar with oat milk. By creating product recognition, Oatly was able to successfully sell its oat milk in grocery stores for consumers to use at home. Remarkably, oat milk has become the second most popular plant-based milk on the market after almond milk. A number of other brands have recently debuted their own oat milk products to compete with Oatly. Now that Oatly is a public company with $1.4 billion from its IPO, it will work to continue growing its presence in the US and around the world.
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