Oats Go Big: Oatly plans US stock market listing
March 17, 2021
3 min read
What's going on here?
Swedish alt-milk brand Oatly is planning a stock market listing in the US. The company is hoping for a valuation of around $10bn.
What does this mean?
Global demand for plant-based milk alternatives is soaring as more and more people are trying vegan and vegetarian diets to cut back on animal products. Oatly has been advantageously positioned within this field of growth. Sales were close to doubling to $200m in 2019 and predictions were circulating that suggested the same growth would be achieved in 2020. Such enormous growth could be put down to Oatly’s expansion in recent years beyond plant-based milk. It also offers plant-based ice cream, yoghurt, custard and cold coffee.
In the last week of February 2021, Oatly stated that it had submitted a confidential filing for an IPO with the US Securities and Exchange Commission. Whilst it is currently uncertain, sources report that the brand is looking at a New York listing.
What's the big picture effect?
The underlying theme of this story is the growth that dairy alternatives are seeing. In the US alone, total sales of non-dairy milk rose by 23% to an estimated $2.2bn in 2020. Consumers are continually embracing plant-based products, in particular those derived from nuts, seeds and grains. Almond milk alone contributed to $1.3bn of the US sales figure last year, and oat-based products tripled in the US in 2020 to $288m; oats overtook soya as the second most popular plant-based milk.
Such vast growth will not go unnoticed among European plant-based brands. France’s Danone has already branched out from its traditional dairy roots to plant-based alternatives such as the Alpro brand, and London-based organic dairy-free alt-milk brand Rude Health has an expansive product range including oat, almond, rice, coconut, cashew and even tiger nut milk. Rude Health saw PepsiCo acquire a minority stake in its business in 2020, which is likely to pit it against brands like Oatly that are vying for continued growth. This will only make the industry more competitive.
One potential concern regarding the listing is the backlash Oatly has faced previously as a result of its investors. Whilst the brand boasts celebrity names on its investment portfolio, which include Oprah Winfrey, Natalie Portman and Jay-Z, Oatly came under fire from consumers in 2020 following its decision to accept investment from Blackstone, a leading global investment company. Blackstone has faced criticism in the past for its lack of commitment to sustainability in its investments. In an age where ESG (environmental, social and corporate goverance) is enjoying global prevalence, businesses that are failing to commit to external sustainability and climate change agreements may find themselves losing out on business in the long term. This, of course, is rather ironic in relation to Oatly, being a brand focused on plant-based alternatives (which reduce carbon emissions sizably in comparison to animal-based food production), which should mean that it would look for sustainable investors. Therefore, those looking to invest in Oatly when it floats may be put off by its commitment to investors that have an ethos that goes against the grain of its business model. Pardon the pun.
Despite there being a limited number of details on the prospective IPO at present, investors have a hot possibility to consider with Oatly. Plant-based alternatives are only going to grow, particularly amid the increasing importance of sustainability in the context of climate change. Note that the US has re-entered the Paris Agreement; this may now be a point of great importance for companies looking to float in the US and gain investor confidence across the pond – after all, to look good nowadays is to comply with sustainable investment.
Report written by Evangeline Taylor
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