HomeFoodOatly prioritizing growth investments over profitability | 2021-08-17

Oatly prioritizing growth investments over profitability | 2021-08-17

MALMO, SWEDEN — Revenues at Oatly Group grew 50% within the second quarter as client urge for food for dairy alternate options continued to rise, notably in eating places and low outlets.  

The firm, which accomplished its preliminary public providing in May, now expects full-year revenues of greater than $690 million, a 64% enhance from the earlier yr.  

Oatly is utilizing the capital from its IPO to gasoline new manufacturing capability as world demand for its plant-based milk alternate options outpaces provide. The firm lately opened two new amenities in Ogden, Utah, and in Singapore, and doubled capability at its facility in The Netherlands. It at the moment is investing to increase its oat base capability on the Utah plant by 50%, and a second manufacturing facility in Asia is anticipated to open later this yr in China. Two extra amenities within the United States and the United Kingdom are slated for 2023.

Produced completed items quantity for the second quarter amounted to 106 million liters, up 43% from 74 million liters a yr in the past. The firm expects its manufacturing to double by the tip of 2022. 

“Production capacity has been a major constraint on our growth, and we have made substantial investments to scale our production capacity and address supply shortages due to the massive demand for our products globally,” stated Peter Bergh, chief working officer at Oatly, in an Aug. 16 convention name with analysts.

The firm’s enlargement hasn’t come low-cost, with second-quarter losses widening to $59.1 million from $4.8 million in the identical interval a yr in the past. Revenues for the second quarter ended June 30 elevated 53% to $146.2 million from $95.3 million.

“We continue to prioritize growth investments over profitability to best position Oatly to serve customers and consumers alike,” stated Toni Petersson, chief government officer. “We believe these priorities are critical for accelerating conversion from the global dairy market, which we estimate to be worth approximately $600 billion in the retail channel alone as of 2020.”

Nearly 40% of adults in key markets are shopping for milk alternate options, with 70% becoming a member of the class prior to now two years, he added.

“This conversion demonstrates the accelerating trajectory of the category and growth potential for further penetration,” Mr. Petersson stated. “We believe a majority of the market is wide open for the taking, and we’re approaching a major tipping point of conversion to plant-based alternatives.”

To drive conversion, Oatly is pursuing a foodservice-led technique geared toward constructing demand organically by way of trial in eating places. Key to this technique is its partnership with Starbucks Corp. because the espresso chain’s unique oat milk supplier within the United States.

The Starbucks partnership accounted for 27% of the corporate’s gross sales within the second quarter.

“Last year, we shifted volumes away from foodservice to retail,” Mr. Petersson stated. “This year, we’ve been able to strategically increase sales back into foodservice to drive consumer trial and brand awareness, which helps us to create an acceleration in conversion across all sales channels, not just foodservice.”

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