Oatly by Julia Dettmer | 4th September, 2020 | Personalities
Shrewd marketing and a convincing communication strategy have turned Oatly into a hugely popular lifestyle brand. All over the world, people are discovering the Swedish market leader’s sustainable oat-based products. It all began with founder Rickard Öste and a crazy idea in a lab more than 30 years ago.
The brilliant idea came to Rickard Öste when he met a grains trader: oats!
The year is 1989. A small team of scientists at Lund University in Sweden is grappling with a dilemma: how to produce a plant-based milk from oats. Rickard Öste, now 72, was the professor leading the experiments at the Institute for Applied Nutritional Science.
In fact, he had been concerning himself with the subject for the past 25 years. After all, when he was a student himself in 1963, his own professor Arne Dahlqvist discovered lactose intolerance, a condition in which the body is unable to digest cow’s milk. So Öste was eager to find a solution for something that was plaguing people around the world. The idea to use oats to create an alternative to cow’s milk suddenly came to him during a meeting with a grains trader: “That’s when I realized the potential of oats with regard to both taste and nutrition. In addition, the grain was very well suited to our rainy, cold Swedish climate,” the researcher says, describing his eureka moment in an interview with GG. So Öste put together a small group of scientists from various disciplines to develop a plant milk made from oats.
It took several years of research and experimentation to ensure that the oats retained their nutritional value when the enzymes were added. Öste even traveled to Japan to learn how soy milk was produced, but he decided to stick with oats, going on to celebrate his finest moment in 1993. That’s when he came up with a recipe for a good-tasting oat milk prototype. As reward for his work, he was granted a patent in 1994, which laid the foundation for Oatly’s future.
Today, some 30 years later, Öste’s vision is an integral part of many people’s lives. Almost every café or coffee shop offers oat milk as an alternative to cow’s milk and people are increasingly choosing a non-dairy alternative because they no longer want to consume animal products as much or at all. They are passionately living the dream that Öste had worked so hard to make reality by developing a nutritious beverage for people with lactose intolerance and creating an alternative for those not wishing to drink cow’s milk. And in the process, Öste achieved the even greater goal of smoothing the road toward more sustainable consumption of our planet’s resources.
But every success story has its stumbling blocks and Öste’s path had its share. When he and his team tried to sell their patented innovation to other food producers, none showed much interest. So in the mid-nineties, under the label Mill Milk, Öste himself launched his new product in Sweden and the U.K. It was a huge success. Oatly was founded in 2001 and the first production facility opened in 2006. The eco friendly company is now a popular lifestyle brand.
The man largely responsible for this successful positioning was Toni Petersson, who took over as CEO of Oatly in 2012. A now legendary promotional video from 2014 features the businessman in a casual T-shirt with gelled-back hair, standing at a keyboard in the middle of an oat field and accompanying himself singing “Wow, wow, no cow, no, no, no,” – a song he wrote himself. The video naturally featured the unmistakable Oatly milk carton as well.
The stunt was self-deprecating, authentic and evidently very appealing. It received 2.5 million views on YouTube and countless comments from people asking for the “full version of the song,” a clear indication of how well the company was communicating its new image. Simple, catchy slogans such as “It’s like milk but made for humans” helped make Oatly a highly desirable love brand.
Wow, no cow!
Another setback came in 2015. The Swedish dairy industry objected to the already famous claim that oat milk was like cow’s milk but made for humans (unlike cow’s milk), and took Oatly to court. The small company was no match for its powerful adversary but viewed its defeat as confirmation that it had done the right thing by questioning established norms connected with the consumption of cow’s milk.
And by openly communicating its position on its website, Oatly won the hearts and minds of consumers – a smart move that translated into a sales increase of 45 percent. Today, the company no longer considers itself a combatant in a “milk war” but rather as a crucial player in a larger movement to create a more sustainable future.
What began as a stumbling block become a milestone, and several more would follow. Helge Weitz of Oatly Germany, one of two general managers, says: “A further milestone was the introduction of our barista edition, something not yet available among non-dairy milk alternatives. Its perfect frothing capabilities, great taste and the fact that it didn’t curdle in coffee helped it establish itself in the excellent environment of top quality cafés.” The ensuing hype was so great that the company encountered supply bottlenecks a year after entering the U.S. market in 2018.
The third milestone was Oatly’s launch in German supermarkets, although according to Weitz, this was anything but a walkover: “There were just two of us when we started out in late 2017, and we had to deal with many reservations from our trade partners. They refused to believe that Oatly would ever be anything but a niche product. They also told us that our communication was too Englishfocused, the packaging had too much writing on it and that German consumers were different and needed to be targeted in a different way.” So it took a while to convince buyers to add Oatly to their range, but today, the brand can be found in almost every German supermarket.
The brand’s sustainable lifestyle image naturally helps to amplify Oatly’s luster.
Influencers with broad social media reach like Ella Mills, the food writer and entrepreneur behind Deliciously Ella (1.7 million followers on Instagram) or Madeleine Alizadeh, the activist, podcaster and author behind Dariadaria (more than 290,000 followers on Instagram) use their channels to feature delicious plant-based foods and explain that it’s not all that difficult at all to find alternatives to animal products.
Looking around in the supermarket, you’ll notice that the Oatly products are not relegated to the natural foods, organic or special diet section. Instead, they’re on the shelf right beside the cow’s milk. And the selection of products is considerable: In addition to regular oat milk there’s the previously mentioned barista edition, a number of low-fat versions, an organic oat milk and one fortified with calcium. The product design is uniform, consisting of natural shades of beige and brown with touches of blue, white and black as well as plenty of written text. The packaging underscores the brand’s laidback but authentic image and scores points for recognition value.
A quarter of a million followers on Instagram regularly “like” the company’s nonsensical postings like the one where a young man sets up an inline skating course marked by empty Oatly cartons only to trip over them awkwardly in the end. But Oatly’s social media strategy isn’t just based on naive humor; rather, the company consistently communicates its sustainable values. Producing a liter of oat milk, for instance, releases less than a third of the carbon dioxide that producing a liter of cow’s milk does.
At Oatly headquarters in Sweden, we glance at some figures and are duly impressed: The company achieved sales of 1 billion SEK (roughly 95 million euros) in 2018 and almost double that in 2019. Oatly is still quite small compared to most dairy milk producers in Europe but the company is growing fast. With a market share of nearly 40 percent, it’s the market leader among oat milk producers in Germany. And what started out as a twoman show almost three years ago is now a company with 30 employees. Worldwide, Oatly employs more than 500 people.
But the company has no intention of resting on its laurels. “We can make anything out of oats that can be made from milk, and our products range from beverages to ice cream to cream cheese alternatives,” says Tobias Goj, Oatly Germany’s other general manager. And although he isn’t permitted to say exactly what the company has in the pipeline, he intimates that the inventive Swedes still have quite a few surprises up their sleeve.
All of Oatly’s new products are painstakingly researched and developed in Öste’s lab, just as they were 30 years ago. This degree of investment in a scientific approach is one of the reasons why it’s impossible to get a liter of oat milk for the same price as a liter of cow’s milk. Added to that, Oatly is competing in a market that is determined by dumping prices. If you consider what it costs to produce cow’s milk and then throw the term “animal welfare” into the equation, what you get is nothing short of a scandal, says Goj. There’s something else that needs taking into consideration, in Germany, at least: “Our oat milk is classified as a beverage as opposed to a foodstuff, which means that the value-added tax rate on our products is 19 percent rather than 7 percent, the rate applying to milk.”
Meanwhile, consumption of cow’s milk in Germany has decreased. According to the Federal Ministry of Food and Agriculture, 2.5 percent less milk was produced in 2019 compared with the previous year. Per capita consumption has also dropped by 3.6 percent. And as people are drinking less cow’s milk, they are drinking more plant-based alternatives, with consumption rising rapidly to more than 30 percent over the course of a year, and the trend is upwards. In other words, the needle of the food compass is quite clearly pointing toward plant-based milk alternatives.
Oat milk fans can check out the interactive map on oatfinder.oatly.com to find the stores, coffee shops and cafés selling oat milk products close to where they live. In Europe and the U.S., the map is already covered with black dots. So you don’t have to be clairvoyant to predict that before very long, the rest of the world is sure to follow.