From the ‘dusty UHT shelf’ to the dairy aisle: Oatly’s journey to category disruption

By Flora Southey

- Last updated on GMT

One of the ways Oatly is working to increase plant-based market share is by diversifying its product range. In the UK, the company recently launched a new oat-based soft serve. Image source: Oatly
One of the ways Oatly is working to increase plant-based market share is by diversifying its product range. In the UK, the company recently launched a new oat-based soft serve. Image source: Oatly

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While significant disruption has already been achieved, Oatly says it’s ‘only the start’. We catch up with UK general manager Bryan Carroll to ask how the plant-based major is expanding the alt dairy aisle to entice new consumers.

In many cities around the globe, Oatly is a household name. But this was not always the case.

The plant-based dairy company was founded more than 25 years ago by professors at Lund University in Sweden and remained a ‘niche’ business for a good number of years, explained Oatly UK general manager Bryan Carroll. “In the UK, it’s only really in the last five years that it’s suddenly catapulted from that niche into the more mainstream.”

The result of that catapult is that Oatly is now commonplace in retail and foodservice, and in some supermarkets the plant-based dairy alternative even sits alongside its conventional counterpart. Undoubtedly some market disruption has already been achieved, but it’s ‘only the start’, Carroll told us at FoodNavigator’s recent Protein Vision​ event.

Diversifying offerings to gain market share

Plant-based dairy alternatives account for around 6.5% of all dairy sales, but Oatly wants the category to achieve a 50% disruption.

The brand is aware of its own contribution to market disruption in the last couple of years. “We started out on the dusty UHT shelf and now are proudly sat alongside dairy in a lot of supermarkets you walk into,” ​explained Carroll.

Most consumers of the plant-based dairy alternative category only started buying such products within the last couple of years. But at the same time, only just over a third of UK households have tried a plant-based alternative drink, said the Oatly executive, suggesting there remains much room for growth.

“We see lots of exciting headroom, and within the last year from Oatly specifically, 50% of our growth has come from people who are new to the category as well. So we’re far from maxing out the opportunity in dairy alternatives.”

One of the ways Oatly is working to increase plant-based market share is by diversifying its product range. What started out as one oat milk drink product is now at least nine, ranging from its Oat Drink Barista Edition to the newly launched Oat Drink ‘No’ Sugars.

Beyond oat drinks, Oatly has also expanded into plant-based alternatives to yoghurt (Oatgurt), crème fraiche (Creamy Oat Fraiche), and soft serve ice cream.

Deciding which plant-based dairy product to bring out next…

How does Oatly decide which category it wants to play in next? The company takes a less conventional approach, according to Carroll. “We’re a little bit different as you might expect.”

Instead of conducting extensive research and ‘mining lots of data’ as per a ‘corporate business’ approach, Oatly works more intuitively. “Yes, we use a little bit of data, but it’s really about using that intuition, talking to experts, and being brave and fearless with some of the decisions that we make,” ​we were told.

“We’re really happy to be pioneers and take that leap of faith that allows us to be fast-paced and perhaps take risks that other companies aren’t prepared to take.”

Not all risks pay off, of course. According to Nielsen Brandbank, around 80% of new product development launches fail within the first year. “No matter what method you approach, it’s not a guarantee of success,” ​said Carroll.

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Oatly largely relies on intuition to decide which alt dairy category to play in next, we were told. Image source: Oatly

Oatly has undoubtedly had more NPD successes than failures, but the executive could point to one product that has recently been removed from shelves in the UK. “We launched an ice cream tub which has been successful, was on sale in many markets, and does very well for Oatly. But it didn’t hit the milestones we expected from a UK perspective.

“Like most businesses, we’re always looking to review our ranges, working out what’s working…and we decided that the ice cream tubs weren’t working well enough for us, and that’s why we’ve launched the new Oatly Soft Serve. It’s much more disruptive, a bit more iconic…and we can add a bit more of the creative flare that we’re known for.”

Working to achieve a ‘level playing field

Another tool in the plant-based dairy toolbox is accessibility. Oatly says it is passionate about making choosing plant-based ‘as easy as possible’.

no sugars
What started out as one oat-based drink SKU has now expanded into at least nine, including its newly launched 'no' sugars offering. Image source: Oatly

Carroll described this strategy as ‘levelling the playing field’. It’s about making plant-based dairy alternatives readily available in diverse environments, from supermarkets to coffee shops, on trains, in schools, and even in hospitals. “It’s making sure that if you want to make that switch, it’s as easy as possible for you to do so.”

This ‘levelling playing field’ strategy is also reflected in Oatly’s foodservice partnerships. The oat milk company has recently collaborated with McDonald’s in Austria, 7-Eleven stores in the Nordics and Baltics, and with airline Swiss Air.

“Foodservice has been at the core of Oatly, with our partnership with the coffee community and baristas – that’s where we started. It’s still a really important partnership for us today.

“But what is exciting for us now, is that plant-based milks are about 40% of the compendium within the specialty coffee sector.”

Within foodservice more broadly, plant-based milk alternatives make up around 10% of milk consumption. Again, Oatly sees this statistic as opportunity for growth. “We see lots of potential to really take what we started in specialty coffee out into more mass and mainstream sectors like hotels and airlines for example.”

Indeed, in the UK Oatly has recently secured partnerships with rail network London North Eastern Railway (LNER), hotel group Eden Hotels, and recently launched into some football stadiums.

Some changes afoot, but marketing guru staying put

Oatly is undergoing some changes in the C-Suite. After 10 years as CEO, Toni Petersson is transferring to a different role within the company: co-chairman of the board of directors. Jean-Christophe Flatin, who joined Oatly as global president in 2022, took on the role of CEO last month.

It was under Peterssen that Oatly made the move from niche towards the mainstream, with creative marketing campaigns serving to raise consumer awareness and​ eyebrows – the most notable being the ‘It’s like milk but made for humans’ campaign.

With Flatin now taking on the CEO role, analysts have descried the move as a transition from a ‘marketing-focused CEO who helped build the brand’ to a more ‘operations-focused’ leader.

Carroll agreed Flatin has supply chain expertise. “He’ll be able to bring some new things to Oatly, but what’s really key is that having known Jean-Christophe for a while, he’s [not dissimilar] to Toni. All of those values that have held Oatly absolutely true will be protected and nurtured under Jean Christophe and Tony working in partnership.

“I don’t see any major change. They’ve both been joint architects of the strategy over the last 12 months and will be working in partnership to deploy that.”

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It was under ex-CEO Toni Petersson that Oatly first launched its controversial 'It's like milk but made for humans' campaign. Image source: Oatly

Carroll also confirmed that John Schoolcraft, global chief creative officer at Oatly, is staying on as part of the executive team.

Schoolcraft is the ‘brains behind the marketing’, he explained. “So that marketing focus, that unique tone of voice, and those consistently inconsistent Oatly campaigns that you keep seeing out there will absolutely be continuing… But hopefully with some of Jean-Christophe’s supply chain expertise could make us an even more powerful partnership to help us deliver on that mission in the future.”

Missed Protein Vision 2023? Don’t worry, all four sessions profiling cutting edge innovation in the alternative meat and dairy space are still available to view. Register here​ to watch on demand.

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