Sweden's Oatly is expected to IPO this year. Here's how its popularity soared on its quirky grassroots marketing.

  • Started in 1994, Sweden's Oatly has soared in popularity since it came to the US in 2016.
  • Oatly, which CNBC reported is planning to IPO in 2021, elbowed its way into the burgeoning alt-milk market with grassroots and word-of-mouth marketing that uses quirky and irreverent messaging.
  • Oatly has also benefited from the rise of alternative milks and plant-based foods that have taken off for environmental and health reasons.
  • Despite contending with more competition in recent years, as well as increasing demand, it's managed to hold its own.
  • Visit Business Insider's homepage for more stories.

Editor's note: This article was originally published in 2019 and has since been updated.

In early 2017, Tim Gilligan chanced upon a new oat-based drink at his local cafe and decided to give it a try. He had a growing sensitivity to lactose, and his partner had a nut allergy, which had him looking for alternatives to almond milk.

Gilligan, who is a product manager at Capital One in New York, is an unabashed oat-milk enthusiast. He seeks out Oatly — the breakthrough Swedish brand that has become the face of oat milk — wherever he goes.

"I was an early adopter for sure, and my friends looked at me like I was crazy when I would trek across town to the only cafe that had Oatly," Gilligan told Business Insider in 2019. "It is the Kleenex of oat milk. It's nonpareil."

Gilligan is hardly alone. Started in the mid-'90s, the Swedish brand has soared since it came to the US in 2016, spawning legions of fans and at least one Slack channel dedicated to it. It's attracted a cult-like following and backers including Blackstone, Oprah Winfrey, Natalie Portman, and former Starbucks CEO Howard Schultz. And now, the brand is planning a 2021 IPO that could raise $1 billion, CNBC reported this week.

"Oatly has the wind in their sales," Erich Joachimsthaler, the founder and CEO at the branding firm Vivaldi Group, said. "It's a combination of excellent timing, knowing how to tap a discerning target market, a niche marketing strategy, and being razor-focused."

The company has taken a grassroots approach to branding

Oatly's rise has come despite it doing no traditional marketing. The company told Business Insider in 2019 that it's always had a small marketing budget and no chief marketing officer. A small creative team works on everything from package design to product. 

Oatly has leaned on quirky and irreverent messaging and grassroots word-of-mouth tactics. Oatly wouldn't say what it spends on media but said spend had risen "exponentially" in the US. Spending on a 2019 outdoor campaign in New York, San Francisco, Chicago, and Los Angeles totaled $1.2 million, according to the company.

"We don't follow the traditional playbook; we don't even have a traditional marketing department," John Schoolcraft, Oatly's global chief creative officer, told Business Insider in 2019. "Our secret sauce is that we're inconsistently consistent."

When CEO Toni Petersson started in 2012, he and Schoolcraft cooked up their rebranding strategy themselves on the latter's kitchen table before hiring the Swedish ad agency Forsman & Bodenfors to carry it out. And when Oatly came to the US in 2016, it had its sales reps give away cartons of Oatly at indie coffee shops and encourage baristas to try it themselves, leading some to become ambassadors for the drink.

"They developed a really strong alignment with baristas, roasters and coffee-shop owners — the ultimate influencers for devotees of specialty coffee," Lori Bartle, the president of the ad agency MeringCarson, said. "That's serious word of mouth, as these are the people who are more likely to recommend it not as a trend but as a lifestyle choice."

Oatly's quirky creative team helped it stand out

Oatly's quippy slogans and use of outdoor advertising has also helped it stand out. When the brand relaunched in 2014, it ran ads in Sweden poking fun at the dairy industry with phrases like "Wow no cow" and "Like milk, but made for humans." Petersson touted it playfully in TV ads.

That tone carried over to the US, where Oatly uses self-deprecating phrases in block-lettered font like, "You actually read this? Total success," and, "We made this mural instead of an Instagram post." While other challenger brands rely heavily on social and digital channels, more than 60% of Oatly's budget as 0f 2019 went to out-of-home advertising, Schoolcraft said.

Read more: LaCroix's retro branding and word-of-mouth marketing catapulted it to the top. But it also exacerbated the crisis it faces today, experts say.

"Their ads are creative and straightforward, and are all tied to their value proposition and product claims," Mike Stevens, the executive director of strategic planning and account service at the ad agency GYK Antler, said. "They strongly communicate who they are and what they stand for in a straightforward way that starts with their packaging and continues into digital, bringing their brand personality to life through content."

Oatly also uses its packaging to promote the product and pitch itself as good for the environment.

"We are honest, sarcastic, personable, and not afraid to poke fun at ourselves — we don't take ourselves too seriously," Schoolcraft said. "But that's because what we are fundamentally trying to address is so serious: that we are for everyone who cares what they put in their body and about having a planet in the future. How do you make nutritional health interesting without scaring people?"

Oatly's competition is quickly heating up

Fans have compared Oatly's taste to real milk, and baristas have praised its ability to foam for use in coffee. But Oatly has also benefited from timing, with people buying more alternative milks and plant-based foods for environmental and health reasons.

Plant-based milks represented 14% of the milk category in 2019, according to statistics from the Plant Based Foods Association, with oat milk's global market share poised to grow at an annual rate of 9.8% through 2027, according to Grandview Research. US store sales of oat milk have grown 222% year-over-year to $246 million in 2020, according to Nielsen data provided to Insider.

Oatly generated roughly $200 million in revenue in 2019 and was aiming to double to roughly $400 million by 2021, according to Mergermarket.   

"They found the perfect time to do what they do and couldn't have rebranded at a better time," Joachimsthaler said. "Customers today are environmentally conscious and are willing to pay a premium. They probably wouldn't have been as successful if they did it 10 years ago."

Oatly is now available at stores and coffee shops across the country, including Whole Foods and Wegmans. Between January 2018 and September 2019, nearly all of its more than 90,000 sentiment-categorized mentions online were positive, according to data crunched by Brandwatch.

But Oatly's competition has heated up as giants like Silk, PepsiCo's brand Quaker Oats and Chobani, as well as Califia Farms, HP Hood, and smoothie brand Innocent have rolled out oat-based milks.

Oatly has responded by ramping up production (it opened a new processing plant in New Jersey) and branching out to yogurt, or "oatgurt," and a frozen product similar to ice cream. But it's already faced a mass shortage and come close to another one in 2020 in the pandemic, which also slowed down the opening up of another plant in Utah.

"Managing this growth will not be easy, and scaling nationwide will be a big problem because the big corporations come armed with better supply chain, logistics, and distribution muscle," Joachimsthaler said back in 2019. 

Schoolcraft also acknowledged at the time that one of the company's biggest challenges has been meeting demand. But he said its commitment to its mission would help it stay on track.

"We see ourselves more as a company working on societal change than an oat-milk company," he said.

Exclusive FREE Report: Brand Investment in eSports by Insider Intelligence

Source: Read Full Article

Previous post WWI cannon found 4,000 miles away from where it was last fired
Next post Saweetie's Glamorous Dreams Come True