(ENG)The Rise and Fall of Oatly: The Cost of Innovation

Oatly, a pioneer in the plant-based milk industry, shook up the dairy market with its innovative oat milk product.

 

Through bold and provocative marketing strategies, Oatly became more than just a beverage brand; it became a symbol of a new lifestyle focused on health and environmental consciousness.

 

However, behind its rapid growth, operational issues, rising production costs, and increasing competition began to mount, eventually leading the company into a deep crisis.

 

In this regard,

I introduce the program titled "Der tragische Absturz von Oatly" from the Was kostet die Welt? in August 2024.

Reference: Youtube channel "Was kostet die Welt?"

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1. Oatly's Rise and Fall (00:00 - 00:31) :

Oatly revolutionized the dairy industry by creating oat milk and launching bold marketing campaigns. However, despite its high prices, Oatly has been experiencing major financial losses, including a $400 million deficit last year, with its stock price plummeting from over €18 to under €1.  

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2. Oat Milk Invention (00:31 - 05:46) :

The company was founded in 1994 after Richard Öste discovered oat milk as a viable plant-based milk alternative. Despite early struggles in marketing, Oatly saw steady growth, eventually adopting a bold "anti-dairy" campaign in 2014 that gained widespread attention.

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3. Rapid Expansion and Challenges (09:41 - 12:43) :

Oatly expanded aggressively, opening factories worldwide and producing over 500 million liters of oat milk by 2021. However, this rapid growth strained their operations, leading to costly production issues, delays, and mounting expenses.

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4. Financial Struggles (14:45 - 15:47) :

Despite high sales, Oatly's production costs remain too high, with a gross margin of just 20%, far below industry standards. The company has lost over $120 million, while also facing pressure from inflation and competition from cheaper supermarket brands. (14:45 - 15:47) 

 

 

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5. Leadership Changes and Uncertain Future (13:14 - 16:52) :

In June 2023, Tony Peterson stepped down as CEO, replaced by Jean-Christophe Flatin. Oatly stopped its U.S. production and outsourced it to experienced partners. However, the company continues to struggle, and its stock has lost nearly all its value. 

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Oatly led the plant-based milk market with its innovative product and bold marketing, but it failed to address critical operational and production challenges amid its rapid expansion.

 

While leadership changes and outsourcing production were attempts to resolve these issues, price competition and high production costs remain significant hurdles. Oatly's future remains uncertain, but the brand's value is still strong.

 

The key question is whether Oatly can improve its production efficiency and regain consumer trust, something that will determine its path forward.