Tough times for oat milk company Oatly: disappointing figures, round of layoffs announced

Full of bravura, Oatly made its entrance to the New York Stock Exchange a year and a half ago. Market value: $10 billion. With the IPO, the Swedish oat milk company finally offered investors the opportunity to invest in a promising market: that of plant-based dairy. But now the quarterly figures of the oat milk producer are disappointing, and Oatly is his promising one air lost.

On Monday, Oatly announced that it’s going to lay people off next year. It is not yet clear how many of the approximately 1,300 employees in total will lose their jobs. It is clear that Oatly wants to save costs through a reorganization.

The company therefore turned in much less this year than it had expected: instead of the estimated 800 to 830 million dollars, the turnover will probably be 100 million dollars lower at the end of this year. The company also lost $108 million last quarter, more than double the year-earlier quarter.

Enough things to disappoint investors. After the announcement, Oatly’s share price plunged on Tuesday. At the IPO, a share in the company was worth around $ 17, on Tuesday the share was just over $ 2.

Oatly says it is suffering from corona measures in Asia and unfavorable exchange rates. It also has problems with the production chain, mainly in the United States. Oatly does not specify what those problems are, but according to financial media it cannot cope with the demand. That was last year already noticeable in Dutch supermarkets: there, oat milk lovers regularly found empty shelves.

It does not seem that the consumption of plant-based dairy is on the decline again – although critics who consider oat milk mainly an expensive drink for highly educated people would like to see it differently. Figures rather suggest the opposite: the demand for plant-based dairy is increasing. According to figures from Euromonitor, the global plant-based dairy market will reach USD 20 billion by 2021.

Also read this nutrition section: Meat names are okay, but calling something just milk? no

Vulnerable

It makes Oatly vulnerable to competition. The company was seen as one of the forerunners in the field of plant-based dairy, but large food groups such as Nestlé are now also selling plant-based alternatives to dairy. According to the Financial Times already there are more than a hundred companies that make oat milk. Planet Oat and Chobani, among others, have recently gained market share.

In its quarterly report on Monday, Oatly announced it was moving to an asset-light strategy. According to the FT it means production will be outsourced to other parties and that Oatly itself will build fewer factories. Now Oatly is made at a production location in Vlissingen, among other places, and the company also has factories in Singapore and Utah, USA.

Oatly has gained fame in recent years through deals with, among others, the American coffee chain Starbucks. The oat milk producer also managed to make a name for itself by cultivating a somewhat rebellious image. In commercials, for example, it regularly seeks confrontation with the dairy industry. For example, the company claimed in British advertisements that oat milk is better for the climate than cow’s milk. This led to criticism from the dairy industry and a reprimand from the British Advertising Code Commission. The latter ruled that not all of Oatly’s claims were sufficiently scientifically substantiated.

ttn-32