Oatly SWOT Analysis

Strengths:

  • Large Market Share in The Oatmilk Market Worldwide

In 2022, Oatly captured the number one spot in the global oat milk market, boasting a market share of 26.17%, underpinned by robust brand recognition (Mordor Intelligence, 2023). Despite diversifying its offerings, oatmilk remains a cornerstone of Oatly’s revenue, embodying the go-to choice for consumers seeking oat milk. In the United States, Oatly’s brand awareness is unparalleled among oat milk enthusiasts, with 54% of them familiar with the brand (Kunst, 2023). This level of recognition places Oatly at the pinnacle of consumer preference in the oat milk segment, distinguishing it from its competitors.

  • Strong Brand Messaging with Engaging Advertisements

Oatly’s advertising captivates its audience by using hand-drawn characters and illustrations across its packaging and promotions, creating a natural aesthetic that aligns with its brand ethos. This distinctive style ensures Oatly is instantly recognizable, differentiating it from competitors with less distinct identities. The brand’s copywriting, infused with humor and wit, communicates its ingredients and culture engagingly. Oatly’s unique voice turns promotional content into a conversation with consumers, adding a personal touch that endears the brand to its audience.

  • Diverse Partnerships with Coffee Shops, Retailers and Food Manufactures

As an oat-based food manufacturer, Oatly doesn’t just sell products directly to consumers; it has also forged strong partnerships with artisanal coffee shops and restaurants to broaden its distribution channels and increase its presence on people’s tables (LABBRAND, 2024). Notably, Oatly introduced a barista edition oat milk, specifically designed for collaboration with boutique coffee shops that prioritize a diverse selection of coffee beans and roasting methods. This move aligns perfectly with the preferences of Oatly’s target audience, who appreciate both aesthetics and a healthy lifestyle. Furthermore, Oatly’s collaboration with Carvel to create oat milk-based ice cream expanded their product line and tapped into a niche market, appealing to a growing segment of consumers who prefer plant-based foods and adhere to gluten and dairy-free diets (Washington, 2024). In Austria, Oatly introduced its barista edition oat milk to McDonald’s coffee, broadening its customer base and increasing brand visibility, encouraging more people to purchase Oatly products independently (Oatly, 2023). Through strategic partnerships with retailers and coffee shops, Oatly has solidified its leadership in the oat-based food market, appealing to both everyday consumers and larger food chains.

  • Eco-Conscious in Both Products and Manufacturing

Oatly adheres to stringent environmental standards in sourcing ingredients and production processes, notably opting for oats over animal-based raw materials to drastically reduce greenhouse gas emissions and water usage. Additionally, when comparing the production of milk from almonds and oats, oats require only one-eighth of the water needed for almond milk production (Willow, 2021). In 2022, Oatly successfully reduced its corporate climate footprint to CO2e/L from 0.629 kg CO2e/L the previous year (Oatly, 2023). The company commits to sustainability by selecting non-GMO, glyphosate-free, kosher-UD, and RDPO-certified ingredients, ensuring both high-quality products and environmental commitment. In its manufacturing practices, Oatly powers all its factories with 100% renewable electricity (Oatly, 2023). Moreover, by ramping up production in Asian facilities and minimizing shipments from Europe, Oatly has further diminished its carbon footprint, reinforcing its commitment to eco-friendly operations.

  • Diverse Product Portfolios

Distinguishing itself from competitors, Oatly has expanded beyond liquid milk to offer a variety of oat-based products, including creamers, yogurts, frozen desserts, and cream cheese. This broad selection provides consumers with ample choice for dairy-free alternatives, fostering brand loyalty as customers appreciate the consistent and familiar taste across a range of oat-based foods. Oatly’s strategy not only meets diverse dietary needs but also strengthens its market presence by being a one-stop brand for consumers seeking quality oat-based options.

Weaknesses

  • Financially Highly Dependency on Oat Milk and Weak Performance on Other Products

As a global company, Oatly’s diversification into various oat-based products presents a unique challenge in different markets, where local consumers may have stronger affiliations with established brands. Given that most of Oatly’s expanded product range has been introduced in the past four years, the brand has yet to solidify its foothold in some areas, leading to media scrutiny regarding its market potential abroad. For instance, upon launching its cream cheese in the US, media like Food Dive highlighted the competitive landscape of plant-based cream cheese, raising questions about Oatly’s ability to carve out a significant market share amidst established players (2023).

  • Capacity To Maintain Stable Supply Chain and Production

In 2023, Oatly scaled back its expansion plans by halting the construction of two manufacturing facilities in the Americas and EMEA regions due to operational challenges in the US, post-COVID-19 impacts in Asia, and foreign exchange difficulties (Nunes, 2023). To mitigate costs, the company also reduced headcounts within corporate and EMEA structures (Watson, 2022). Adopting hybrid manufacturing strategies through partnerships with YaYa Food and Innovations Foods led to a 12% reduction in the cost of goods per liter. To further optimize its supply chain and offset losses, Oatly significantly reduced its product variety in Asia by 70% and relocated 72% of its production from Singapore to northeastern China, bringing it closer to key distribution points (Magill, 2024).  

  • Boycott Due to Selling Stake to Blackstone’s Subgroup Whose Investment Involved Deforestation of The Amazon Rain Forest and Support for Donald Trump Election

In 2020, Oatly sold a 10% stake to a firm led by Blackstone, a move that surprised many of its customers due to the investment firm’s alleged links to Amazon deforestation, a stark contrast to Oatly’s strong sustainability stance and its critiques of cow milk’s environmental impact (Zhang, 2020). Additionally, Blackstone CEO’s significant donation to a political action committee supporting Donald Trump—a figure not widely recognized for prioritizing climate change action—further compounded the controversy (Schwartz, 2022). This decision led to a backlash from environmentally conscious consumers, some of them expressed disappointment and opted to boycott Oatly products, voicing their discontent on social media platforms.

Opportunities:

  • Consumers’ Growing Interest in Plant-Based Products

As health and environmental awareness among consumers increases, there’s a growing interest in transitioning to plant-based products, including oat-based options. Market research by the Good Food Institute reveals that 70% of consumers consider plant-derived proteins healthy, and plant-based products are now present in 53% of US households (2024). Moreover, 63% of millennials are actively incorporating plant-based foods into their diets, which resonates with Oatly’s target audiences (Statista, 2023).

  • Expand Into New Markets with High Potential

Oatly’s 2023 annual earning report shows that 83% of its revenue comes from the EMEA and Americas regions, highlighting significant growth potential in Asia (2024). The increasing consumer interest in plant-based products across the globe, particularly in Asia where dairy-alternative beverage launches have tripled, further underscores this opportunity (DKSH, 2023). In China, oat milk remains a leading trend in the category of oat-based products, with sales in the on-trade channel witnessing an 11.3% increase from 2020 to 2022 (Mordor Intelligence, 2023). Despite Oatly’s strong market presence in Asia, there is ample room for expansion through targeted marketing and the development of new products that cater to local preferences.

Threats:

  • Fierce Competition Among Plant-Based Foods Industry

The plant-based foods market is saturated, with numerous brands competing for market share. Oatly holds a significant portion of the oat milk market, yet it faces competition from other brands like Pacific Foods, Califia Farms, Minor Figures, Chobani, and Quaker, which also offer oat milk and oat-based products. Oatly’s challenge lies in its oat-based foods segment, where competing against well-established brands poses a considerable hurdle.

  • Suspect On the Healthiness of OatMilk

Oatmilk has recently been at the center of debate regarding its health benefits, as some brands’ versions contain added sugars and fats, potentially detracting from its perceived healthiness (Benton, 2024). Companies often add sugar to enhance flavor, further increasing the natural sugar content produced during processing, leading to concerns about its nutritional claims. Critiques have labeled oatmilk as “starch juice,” arguing it could spike blood sugar levels (Arnold, 2024). While these criticisms may overstate oatmilk’s drawbacks, and consumers can make informed choices by reading labels, the controversy could still impact consumer preferences.