Oatly: The Plant-Based Drink Soon To Be Ingrained On UK Soil
Swedish brand Oatly is one of the most popular oat-based milk drinks in the UK, with its market share valued at £84.3m in January 2021. Despite some controversy in the Summer of 2020 due to investor Blackstone’s questionable sustainability credentials, the brand continue to grow in popularity and as such have just announced their plans for their very first site in the UK.
Peterborough will be home to Oatly UK, the latest of 6 global production factories in the world set to produce 300 million litres of oat-based milk per annum.
Promoting The Plant-Based Revolution
Henry Sandercock wrote in his article for The Grocer, that Ishen paran, General Manager of Oatly UK, claims the move to be a an integral catalyst for the “global plant-based movement”.
Sandercock goes on to detail the growth in the plant-based dairy category, its retail value sitting at just under £600m before asking Hamish for his thoughts on the newest factory, who’s ambitious site space strongly supports the progressive forecasts for the brand.
“I think it’s a pretty well-educated bet because the liquid plant-based market doesn’t seem to be showing much weakness. It looks a lot like the free-from market of five to 10 years ago when it was growing merrily with high levels of growth and kept doing it”, says Hamish.
Why Peterborough?
Well, for one thing, Peterborough is conveniently located next to accessible motorway the A1 as well as being in the centre of an area in the UK experiencing impressive growth in the cereal space, allowing Oatly to source its oats locally. Selling Oatly in the UK using British grown oats could play directly to consumer demands which Sandercock states is becoming more and more attracted to home-grown products.
As luck would have it, the increase in local oat demand should not cause an issue either, as planting areas in England was up 26% in 2020 compared to the previous year due to a forced spring crop influenced by an unexpectedly rainy winter season. In fact, in the last 2 years there has been an excess of more than 50,000 oats (AHDB) which have then been exported.
A Friendlier Carbon Footprint
Using British oats will also serve to improve the environmental impact of Oatly production by removing the need to import. According to Sandercock, “one-litre UK Barista Edition oat drink is said to be responsible for 0.44kg of CO2 emissions”. He goes on to write, however, that the un-standardised calculation used by Oatly to measure its carbon emissions has attracted criticism from rival oat-based brand Alpro who suggested the choice of labelling was a “marketing gimmick”.
Moving Forward
Needless to say, there’s certainly room for Oatly to improve but the market opportunity for brand growth is undeniable. The new factory has influenced potential IPO changes and amendments to the labelled product claims such as “creamy texture” which may no longer adhere to EU legislation. Hamish describes these changes as significant if Oatly wish to evolve from a “small disruptive start-up to big, established FMCG player”.
Hamish is quoted as saying the growing brand revenue will mean “they’ll be awash with cash [so] they’ll probably be able to snap up disruptive brands if they want to, [and] they could streamline production so they’ve got a cost advantage if they need to weaponise price to see off smaller competitors.”
You can read Hamish’s words as told by Sandercock in the original article for The Grocer, Why is Oatly Building Its First UK Factory? Could you be the next Oatly? Contact HRA directly to see how we can help you develop your brand by e-mailing [email protected].
