Oatly gets a sprinkling of stardust as it rides the wave of alt-milk

Jay-Z and other celebs pile in as Swedish brand reaches $2bn valuation on plant-based product

As tastemakers go they don’t get much bigger than celebrity power couple the Carters, with Jay-Z’s investment in the Oatly drinks brand sprinkling stardust on the booming alt-milk industry.

Last week, the Swedish oat milk-maker was valued at $2bn (£1.56bn) after it sold a 10% stake to a star-studded cast of investors that included Oprah Winfrey, Jay-Z’s entertainment company Roc Nation, Natalie Portman and US private equity firm Blackstone.

Toni Petersson, chief executive officer of Oatly
‘I’m doing this because I have kids,’ says Oatly’s chief executive, Toni Petersson. Photograph: Bloomberg/Getty Images

“We are a grassroots brand and wanted to bring in people who are generational voices,” says the Oatly chief executive, Toni Petersson. Jay-Z and Beyoncé have encouraged fans to try plant-based foods as has Winfrey, while Portman is a high-profile advocate of veganism.

The $200m-share sale is a big moment for the food business, which, after several decades in the Swedish wilderness, is enjoying stratospheric growth thanks to a combination of guerrilla marketing and good timing. When one first-time drinker declared “it tastes like shit!” the company printed the view on its cartons.

Petersson, who claims to hate the limelight, has also featured in its ads, memorably where he is standing alone in a field with a synthesiser, singing “Wow, no cow!” over and over. “I hate being in any commercial but I also understand the company is its people,” he says. “It’s not a logo.”

Sustainability reports are typically a dry affair but Oatly’s cut to the chase, offering a no-nonsense translation of what its promise to be “a good company” means. In short: “Don’t be evil fucks!”

This irreverent style has made oats sexy to under-40s trying to make more sustainable food choices. Oatly’s sales nearly doubled to $200m in 2019 and Petersson sees similar growth this year albeit with a coronavirus-sized caveat.

Petersson, who is half Japanese and did not eat dairy products as a child, says: “It’s about getting a lot of people to make small changes, and by doing that, creating a shift on a massive scale rather than try to turn everybody vegan.”

The cash injection will be used to build a global network of factories. With the US now its biggest market. a second site is being built in Utah while a plant in Singapore will help its push into Asian markets. “Beyond that we need more factories and, the final decision has not been made, but it will probably be the UK because it’s going to be such a massive market for us,” he says.

Although founded in the early 1990s, Oatly was little known outside Sweden until the arrival of the arrival of Petersson in 2012. The entrepreneur has made the brand stand out by hammering home the message that oat milk is better for the planet than producing cow’s milk, which generates higher greenhouse gas emissions.

“I’m doing this because I have kids,” says Petersson of his motivation, which was informed by a five-year sabbatical spent living in Costa Rica. “When you’re there you’re so in tune with nature and you see climate change first-hand. You see extreme drought and extreme rainfall and what that does to people. I realised that when I moved back to Sweden I wanted to do something that mattered.”

Oatly milk cartons and glass of oatly milk
Oatly milk was developed at Lund University by Prof Rickard Öste, who is still the company’s head of science. Photograph: Maddie Red Photography/Alamy

Oatly has come a long way from the labs of Lund University where in the early 90s Prof Rickard Öste – who co-founded the company with his brother Björn – set out to develop a plant-based alternative to cow’s milk. Öste’s patents underpin the manufacturing process and the academic remains the company’s head of science.

The company is being tipped for a stock market listing although Petersson is tightlipped about what the future could hold. Big investors have been pouring money into plant-based food companies such as Beyond Meat, gambling that the number of people embracing vegan and vegetarian diets or becoming flexitarian (reducing their meat intake) will continue to grow.

It has taken a hit from the lockdowns, which have crippled the coffee shop trade that was key to creating demand for alternative milks with their Instagrammable oat cold brews and coconut milk lattes.

But grocery market data, for the UK anyway, points to supermarkets picking up the slack. Faced with bare shelves, many consumers have tried for the first time plant-based milks, which have the added benefit of a longer shelf life. In the 12 weeks to 16 May, Oatly’s sales jumped 123% to £21m, according to market researcher Nielsen, while market leader Alpro had growth of 25%, taking its sales to £64m.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Alex Beckett, an analyst at Mintel, suggests the trend is evidence of people’s desire to make a difference: “Even before Covid-19, we were seeing a growing interest in plant-based food and drink. It may well be the pandemic is accelerating this trend.”

The naysayers however, say we are less than five years away from peak plant milk. While oat milk sales are booming, the demand for soy and almond milks has already plateaued in the UK. But Petersson bats away suggestions that oat milk is a fad, insisting the market is only in its infancy.

“Ten years from now, when generation Z and millennials have the strongest spending power globally I don’t think anybody is going to say sustainability and health don’t matter anymore – ‘why don’t we start consuming more animal-based products?’. It is inevitable that [the shift to plant-based foods] will happen. The question is how fast.”


Zoe Wood

The GuardianTramp

Related Content

Article image
How Quorn makes the filling for Greggs' vegan sausage rolls
Factories turn unappetising mycoprotein into foodstuff snapped up by shoppers

Rebecca Smithers Consumer affairs correspondent

17, May, 2019 @2:17 PM

Article image
Turkey reprieve: one in 12 dream of meat-free Christmas dinner
UK supermarkets expand their vegan and vegetarian ranges as flexitarian trend grows

Rebecca Smithers Consumer affairs correspondent

08, Dec, 2018 @9:00 AM

Article image
Third of Britons have stopped or reduced eating meat - report
Figures from Waitrose suggest animal welfare, environmental and health concerns driving sea change in UK diet

Rebecca Smithers Consumer affairs correspondent

01, Nov, 2018 @12:01 AM

Article image
Swedish alt-milk brand Oatly seeks $10bn US stock market listing
Sales have soared for the Malmö-based firm as more people embrace a vegan or vegetarian diet

Zoe Wood

23, Feb, 2021 @7:04 PM

Article image
'Wow, no cow': the Swedish farmer using oats to make milk
Swedish drinks company helps farmer shift away from livestock farming and cut climate impact with his own oat milk brand

Tom Levitt

26, Aug, 2017 @6:00 AM

Article image
One in three Britons drink plant-based milk as demand soars
Shoppers spent £100m more in 2020 on alt-milks, with sales driven by environmental and health concerns

Zoe Wood

16, Sep, 2021 @11:01 PM

Article image
Tesco sets 300% sales target for plant-based alternatives to meat
In UK first, supermarket’s five-year commitment aims to offer more sustainable options

Rebecca Smithers Consumer affairs correspondent

28, Sep, 2020 @11:01 PM

Article image
Dairy wars: when a glass of milk is really a glass of m*lk
Following an EU court ruling that only animal products can bear the label ‘milk’, dairy farmers are calling for supermarket segregation from ‘frustrating’ plant- and nut-based rivals using the term

Tom Levitt

23, Jul, 2017 @2:00 PM

Article image
Vrimp your shrimp: Nestlé launches faux seafood product made from seaweed
Swiss food firm says product boasts ‘authentic texture’ as it seeks to capitalise on rise in meat-free diets

Zoe Wood

06, Oct, 2021 @3:05 PM

Article image
Can Oatly milk it? Oatmilk brand gears up for US stock market
Swedish company has begun work on US flotation as plant-based foods enter mainstream

Zoe Wood

27, Feb, 2021 @8:00 AM