Centre for English Language Education

Introduction to Business and Management – CELEN041

Group Case Analysis Presentation (CELEN041 / 2022-23 S2)

Oatly: Oat your future

Founded by brothers Bjorn and Rickard Öste in 1994 in Sweden, Oatly Group AB (hereafter Oatly)
focuses on producing alternatives to dairy products from oats. The co-founder Rickard was a
researcher at Lund University, who had several patents approved for the oat extraction process.
Although Oatly’s products have been launched in the market for about 30 years, it wasn’t until
2012, started to be known at a global level after radical reforms and re-positioning on the brand.
According to Oatly (2018), selling consumers a value proposition is the foundation for their
success: rather than highlighting the function of the product itself, customers pay more attention
to the brand value and a healthy attitude towards life. The plant-based milk is continuously
growing strong worldwide, the growing customers include vegetarians, animal protectionists, and
people who are intolerant to lactose.

However, there are still a noticeable risks and uncertainties to impact its operations and financial
position. For example, the changing situation of COVID-19 pandemic and different measures
taken in different countries, international conflicts, interrupted supply chains and so on. Even with
the global disruption, at the end of 2020, its products were available in 60,000 retail stores and
32,200 coffee shops around the world. Oatly-operated factories were expanded from three to six
in 2021 and both firm revenue and gross profit continued to increase (shown in Figure 1).

Year 2021 2020

From the traditional plant milk manufacturer to the creative modern lifestyle leader, Oatly focuses
on “sustainable development”. Sustainability is at the core of Oatly’s brand and business model
to attain economic profits, social benefits, and environmental sustainability (Bocken et al., 2020).
Specifically, Oatly held internal workshops to further prioritize the sustainability areas, conducted
the stakeholder survey to relate their influence on human and labour rights, resource efficiency,
working conditions, and social ethics. In terms of packaging, from 2020 to 2021, they maintained
the share of 87% renewable or recycled packaging materials. Even though there is no regulation
requires the declaration of the climate footprint of a food product, Oatly has provided great
transparency into climate impact of the product. In terms of employee training, various programs
were conducted to ensure integrity in an ethical and socially responsible way, programs included
business conduct and ethics guidelines, anti-bribery and corruption policy, whistleblower policy,
code of conduct and environmental policy. The balanced gender representation has also been
committed across the company. At the end of 2021, there were 13 directors in the parent
company board, and among them 4 were identified as female, and the proportion of women to
all employees was 49% (Oatly, 2021).

Oatly in China

While lots of food & beverage brands locate distributors in China through different groceries and
supermarkets, it seemed not work effectively for Oatly at the beginning. Shanghai, where people
have fallen into the habit of drinking coffee since 1990s or even earlier, could be regarded as the
best choice for Oatly to enter the Chinese market. Given the surge in Chinese growing coffee
drinkers, in 2018, it rode the coffee wave by creating the barista edition, this flagship product

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Centre for English Language Education
Introduction to Business and Management – CELEN041

with strong demand from coffee shops across China. The partnership with Starbucks made Oatly’s
products appeared at some Starbucks 4,300 locations in China. Collaboration with restaurants
and healthy food cafes was another expansion of its products. Chinese social channels such as
WeChat, Weibo, Xiaohongshu, and others were widely used to promote its products
(MarketingtoChina, 2020).

To better adapt to local market, Oatly launched the collaboration with Chinese tea beverage chain
Heytea in 2019 and now launched the tea master collection since China is historically a tea-
drinking nation. At the end of 2021, China became the world third biggest market of Oatly.

Because of the huge number of Chinese consumer’s lactose intolerance and growing health
concerns, the demand for plant-based milk has increased in the past decades. Driven mainly by
food safety and health and environmental concerns, Chinese customers have been gradually
opening up to alternative proteins and the idea of sustainability. One report predicted that China
would be one of the biggest growth drivers of the alternative protein in the coming years, with
rapid demand growth by 200% within five years (Ho, 2021).

In November 2021, Oatly opened its first production facilities in Maanshan, China. The new factory
is part of a wider initiative from Oatly to build production facilities fit for its global market layout.
Besides the oat drinks production line, there is also a research and development center to improve
the existing products and innovate new oat-based products. David Zhang, Oatly's Asia president
said that “the opening of the first factory in China provides more capacity for Oatly in Asia,
supporting the global expansion and meeting the increasing market demand." Toni Petersson,
Oatly's CEO said, “the Chinese market is an important part of the Nasdaq-listed company's global
expansion, and the Chinese people play a big part in shifting toward a more sustainable and
mainstream plant-based consumption (Zhong, 2021).”

Questions
1. Based on the information in the case and additional information you may find through your
own research, build a SWOT analysis of Oatly Group nowadays.

2. Based on the information in the case and additional information you may find through your
own research, using Carroll’s Pyramid, what kind(s) of Corporate Social Responsibility can be
classified for Oatly Group?

3. Based on the information in the case and additional information you may find through your
own research, describe Oatly’s segmentation, targeting and positioning in China.

4. What Oatly could do to make itself more successful in China?

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Centre for English Language Education
Introduction to Business and Management – CELEN041

Acknowledgement
This case is based on the interviews and collaboration with Oatly China. We would like to express
our sincere thanks for their time and efforts.

Sources
This case is not meant to be an original work for publication and is only intended to be used for
discussion and assessment. The text of the case is taken combining the interview information and
sources below.

Bocken, N., Morales, L. S., & Lehner, M. (2020). Sufficiency Business Strategies in the Food
Industry—The Case of Oatly. Sustainability, 12(3), 824. https://doi.org/10.3390/su12030824
Ho, S. (2021). Oatly Opens Its First China Factory to Double Down on Asian Market. Accessed on
July 10. Available at: https://www.greenqueen.com.hk/oatly-factory-china/
MarketingtoChina. (2020). Oatly: Another Swedish Success Story in China. Accessed on July 10.
Available at: https://marketingtochina.com/oatly-another-swedish-success-story-in-china/
Oatly. (2018). Oatly Sustainability Report 2018. Accessed on July 11. Available
at:https://www.oatly.com/uploads/attachments/cjzusfwz60efmatqr5w4b6lgd-
oatlysustainability-report-web-2018-eng.pdf
Oatly. (2021). Oatly Sustainability Report. Accessed on July 20. Available at:
https://investors.oatly.com/static-files/b456a36e-21a8-44d5-9fc9-8651fb719b27
Zhong, N. (2021). Oatly opens its first factory in China. China Daily. Accessed on July 20. Available
at: http://www.chinadaily.com.cn/a/202111/19/WS61974989a310cdd39bc7662e.html