Contrary to the “wow, no cow” lyrics of Oatly CEO Toni Petersson’s song in the brand’s first Super Bowl commercial, it may be about time for investors to have a cow.
Oatly has been one of the hottest brands in food in the recent past. Ever since the company’s oat milk first appeared in U.S. coffee shops in 2016, it’s been the must-have dairy substitute. Its creamy texture, relatively neutral taste, sustainable farming credentials and plant-based ingredients have made it popular with consumers.
As people have spent the past year mostly in their homes because of the COVID-19 pandemic, that popularity has skyrocketed. Through Oct. 3, 2020, dollar sales of oat milk were up 212%, posting the largest increase of any food item compared to 2019, according to Nielsen. Oat milk is now the second most popular plant-based milk in the United States, according to SPINS.
Oatly has been in front of that growth. In 2019 it produced 165 million liters of oat milk for customers worldwide — 93% more than in 2018, according to the company’s sustainability report. Oatly’s sales grew 88% worldwide in 2019, and it had a turnover of $206 million, the report says. Aside from its signature plant-based milk, in the United States the company also sells Oatly frozen desserts and non-dairy Oatgurt.
In July, Oatly sold a $200 million stake — roughly 10% of the company — to a group of investors including Blackstone Growth, Oprah Winfrey, Natalie Portman, Jay-Z’s entertainment company Roc Nation and former Starbucks CEO Howard Schultz. Oatly said this investment would help expand the company’s manufacturing capacity and increase distribution in Asia, Europe and the United States. At the time of this investment, The Wall Street Journal reported Oatly had once been profitable but lost money in recent years as it invested in its business.
The rumors that Oatly would go public have been rampant, and investors have been excited about the chance to put money into the plant-based company. Until this morning, Oatly never directly commented on whether it would pursue an IPO.
“The growth that we’re seeing across markets — Europe, United States, China — is consistent,” Oatly North America President Mike Messersmith said in an interview with Food Dive in November. “…The goal of the company, the imperative, from a climate and sustainability standpoint to continue to grow and scale is at the front of our minds, and present even since the beginning.”
While Oatly is a very different company from Beyond Meat, looking at that company’s stock charts shows a potentially profitable path forward. Beyond Meat initially went public at $25 per share in May 2019. In its first year, its share price went as high as $138.95. Even through the rough patches last spring, as foodservice shutdowns related to the coronavirus pandemic cut into Beyond Meat’s sales, its share price didn’t dip below $50. As investors await Beyond Meat’s next quarterly results this week, it’s trading at more than $140.
Even as the coronavirus pandemic is beginning to abate, the popularity of oat milk is expected to keep growing. Oatly’s huge sales growth, its sustainability commitments, and continued innovation will keep the brand popular. And if the company is still falling short on profits, an IPO is likely to boost it back into the black. According to a fact sheet from law firm Orrick, it typically takes the SEC 90 to 150 days to review filings for an IPO, so Oatly could be the hottest thing both in the dairy case and the stock exchange this summer.