SWOT Analysis
Strengths
Global Reach: Oatly products are sold in 32 countries across the globe.
Strong Market Share: According to a report by Mordor Intelligence, Oatly owns 26.17% of the global market share for oat milk products, more than any other brand. This signifies Oatly’s advantageous position over its competitors.
Strong Brand Identity/Mission: Oatly self-identifies as a “sustainability company that sells oat milk” with a mission to make positive societal shifts, especially as it relates to climate change and protecting the planet (Oatly 2021). This mission is executed through the brand’s many initiatives regarding agricultural innovation, lobbyist efforts, responsible waste management, plant-based product advocacy, investment into R&D for sustainable farming, etc. In short, Oatly knows who they are, what they believe and acts accordingly.
Credible Founder: Rickard Öste, founder of Oatly, was the original inventor of oat milk alongside his brother, Björn Öste, in 1990. With over 25 years of experience and a strong scientific background, Rickard strengthens Oatly’s credibility and reputation as an innovative brand.
Investment in R&D: Since Oatly’s founding in 1994, the company has continued to innovate and perfect every step of the oat to oat milk process. In addition, Oatly is committed to reducing the climate footprint of its manufacturing and distribution processes through innovative methods.
Name Recognition/Trendiness: Oatly has become a household name within the plant-based product space due to a global surge in demand for oat milk and a strong market share.
Diverse Product Range: Oatly currently offers a wide range of oat-based products, including oat milk, coffee creamer, ice cream pints, ice cream bars, mini ice cream cups, soft serve and cream cheese.
Commitment to ESG and Climate Improvement: Oatly describes itself as a change-maker and an example of how brands should operate within the current climate crisis. Its actions, from printing climate footprints on all of its products, to investing in regenerative agriculture, clearly show Oatly’s conviction in its mission to protect the planet. Its annual sustainability reports provide more detail on how the brand is staying accountable to its ESG goals.
Weaknesses
Niche Audience: Despite a growth in demand for oat milk, plant-based products are still considered niche compared to mainstream dairy and meat alternatives.
Poor Stock Performance: Since Oatly (OTLY) went public on NASDAQ in 2021, its stock has dropped by over 94%. Analysts say this is due to high levels of capital spending, an “aggressive expansion plan” and “inefficient manufacturing operations” (Green 2023). If Oatly continues on this path, it could face adverse financial consequences.
Restructuring of Manufacturing Operations: In late 2022, Oatly announced a “reset plan” that would restructure its manufacturing operations and “reduce headcount by 25% across Europe, the Middle East, and Africa” (Ettinger 2022). Although these efforts are an attempt to improve Oatly’s financial results, “restructuring” often has a negative connotation that suggests a failing business model.
Supply Chain Issues: In recent years, Oatly has faced supply chain issues and product shortages due to drought conditions and rapidly expanding demand for oat milk products. This was exacerbated by export bans on oats and wheat as a result of the Russia-Ukraine conflict.
Declining Sales in Asia: Oatly’s second quarter 2023 financial results revealed a 15% drop in quarterly sales in Asia, resulting in a cut to its revenue forecast for the year. Analysts believe this is due to strong domestic competitors in the region as well as a “slow post-COVID-19 recovery in China” (Mridul 2023). It is too soon to tell whether Oatly’s improvement plan for this dilemma will be effective.
Opportunities
Diversification: Oatly has an opportunity to expand its product offerings with nutritional- and flavor-based variations of its current products, as well as entirely new products like oat-based cheese.
Social media: Oatly is very active on social media with 661.9K followers on TikTok and 361K followers on Instagram. To further engage its younger-skewing target audience, Oatly has an opportunity to continue expanding and honing its social media strategy.
Sustainability: As climate-related concerns increase, some consumers are more likely to make environmentally responsible purchasing decisions, and are “willing to pay more for sustainable products” (Bain & Company 2023). Oatly’s mission and branding appeal to this audience, providing an opportunity for sales growth among like-minded groups.
Plant-Based Diet Trends: According to the Plant Based Foods Association, the global percentage of individuals who eat plant based foods is on the rise. Oat milk and oat-based products have experienced a particular increase in popularity, which is expected to continue. This global trend offers Oatly an opportunity for sales growth among all of its products.
Partnerships With Retail Distributors: Recently, Oatly has expanded its partnerships with local and global distributors, including Carvel, a U.S.-based ice cream store, and The Coffee Bean & Tea Leaf, a global coffee shop with locations in 27 countries. Other partnerships include: Insomnia Cookies, Coffee Fellows, Meijer. Oatly has an opportunity to continue to expand these retail partnerships in order to broaden its reach and satisfy rising public demand for oat products.
Nut Allergies: Many plant-based products are made with tree nuts. According to a report by the American College of Allergy, Asthma & Immunology, 1-3% of the world’s population is allergic to tree nuts. Oatly’s oat-based products offer a safe and delicious alternative for those looking to eat plant-based.
Threats
Competitors: As reported by Commercial & Industrial Updates, the oat market is experiencing rapid growth. As the industry grows, so too does the number of industry players. Oatly’s wide range of plant-based products means the brand has more players to compete with, such as Beyond Meat, Vital Farms, Blue Diamond, Planet Oat, Chobani, etc. A rising number of powerful competitors could threaten Oatly’s market share and financial performance.
Greenwashing Accusations/Lawsuits: In 2021, Oatly was served with three lawsuits accusing the brand of “greenwashing,” defined by Investopedia as “the act of providing the public or investors with misleading or outright false information about the environmental impact of a company’s products and operations,” (Hayes 2024). These allegations threaten to harm Oatly’s credibility and brand reputation.
Advertising Bans: In January of 2022, the UK’s Advertising Standards Authority (ASA) placed an advertising ban on Oatly due to “misleading environmental claims” (BBC News 2022). The ban occurred shortly after a series of greenwashing lawsuits in 2021, thus exacerbating public scrutiny of the brand. This ban threatens to undermine Oatly’s credibility and leaves the company vulnerable to criticism.
Drought/Adverse Weather Conditions: Oatly depends on a high crop yield in order to satisfy high public demand for its products. The summer of 2022 was particularly tough for oat crops in Canada and the U.S., which saw extreme levels of heat and severe droughts. As a result, Oatly experienced product shortages that threatened to negatively impact its sales and public opinion.
Public Criticism: In recent years, Oatly began to lose its appeal as a healthy non-dairy alternative. A group of online critics voiced concerns about artificial additives on Oatly’s ingredient list and dairy-equivalent nutritional value. These concerns circulated the internet, threatening to harm Oatly’s overall brand reputation.