Oatly Reveals Revenue Gains, Mounting Losses in IPO Filing

Oat-based product maker Oatly (Oatly Group AB) has officially filed for an initial public offering.

The much-heralded Swedish company, which entered the U.S. in 2017, has emerged as leader in the $2.5 billion plant-based milk space, which now represents 15% of the milk category according to data from the Plant Based Foods Association and the Good Food Institute. Oatly generated around $421 million in revenue last year, according to paperwork filed with the U.S. Securities and Exchange Commission (SEC). The brand’s success — including a nationwide retail partnership with Starbucks — has helped push oat to become the second most-popular non-dairy milk in the U.S. this year, and has given Oatly momentum as it moves into other food categories such as ice cream and yogurt.

Along the way, it has attracted attention and investment from celebrities including Oprah Winfrey and Natalie Portman, as well as global investment firm Blackstone. Oatly products are currently sold in 7,500 retail locations and approximately 10,000 coffee shops nationwide.

In 2020, revenue increased 106.5% year-over-year, outpacing the 72.9% growth from the year prior, with U.S. revenue representing $100 million, according to SEC documents. Citing Nielsen data, the company reported that retail sales in the U.S. grew 182% year-over-year. Gross profit for 2020 was $129.2 million, while the company reported a loss of $60.4 million for the year (up from $35.6 million in 2019), which it said reflected “our continued investment in production, brand awareness, new markets and product development.”

“Going forward, we intend to continue to invest in our innovation capabilities, build our manufacturing footprint and expand our consumer base, all supporting our growth trajectory,” the company stated.

Outside the U.S., Oatly has focused on expanding its presence in Asia through food service, including a branded partnership with Starbucks China in over 4,700 stores. As of December, Oatly products were in 11,000 coffee and tea shops and more than 6,000 retail and specialty shops across the continent, and the company is planning to open two additional production facilities later this year in Singapore and Maanshan, China. The brand has also found traction online: e-commerce accounted for 21% of revenue in China for 2020.

The documents also reveal that Oatly has an agreement in place for an additional listing on the Hong Kong Stock Exchange if it generates more than 25% of revenue from sales in the Asia-Pacific region for two consecutive fiscal quarters. The company’s largest shareholder, Nativus Company Limited, is a subsidiary of China Resources Verlinvest Health Investment Ltd., a 50-50 joint venture between Belgian firm Verlinvest SA and Blossom Key Holdings Limited

The documents also make reference to future potential challenges to Oatly’s supply chain. Acknowledging that “financial performance depends in large part on our ability to arrange for the purchase of raw materials in sufficient quantities at competitive prices,” the company stated that neither supply nor price were “assured” and that any disruption amongst its five global oat suppliers could cause delays or shortages. “We may have general difficulties in obtaining raw materials, particularly oats, due to our high quality standards,” the company stated.

Oatly also sources a variety of enzymes used in its production process, including a specific type for its Barista Edition. In the filing, the company noted: “While we believe we maintain a good relationship with this supplier, there can be no assurance that we will be able to continue purchasing the necessary enzyme from this supplier on favorable terms, or at all, in the future.”

The impact of climate change looms as a potential threat as well. In addition to dealing with increased frequency of extreme weather and natural disasters, the company “may also be subjected to decreased availability of water, deteriorated quality or water or less favorable pricing for water.”

Ramping up production will be a key part of serving rising global demand for oat milk, as reported in the documents. Following the opening of an additional four facilities currently in development in Utah, Singapore, China and the United Kingdom, the company projects it will increase output to 600 million liters of finished oat base in 2020, up from 301 million liters last year. That will increase to 1 billion liters by 2022 and 1.4 billion liters by 2023. Just over half of Oatly’s 52% products were produced through co-packing and complete outsourcing in 2020, with 24% through a hybrid model and 24% through the company’s own end-to-end manufacturing. Last month, Millville, New Jersey-based Innovation Foods announced that it is building a new $45 million processing and packaging facility to produce plant-based aseptic and extended shelf life beverages for the Swedish oat milk maker.