Strengths

Brand recognition and reputation

Oatly is recognized as a leader in the oat-based food industry. Rickard Öste, founder of Oatly, invented oat milk in 1990 and created a brand that expanded its products beyond oat milk (The Full History of Oat Drink). Oatly has a pioneering role in popularizing oat milk and creating a shift from consuming dairy products to plant-based products. 

The company also focuses on authenticity and transparency which helped create a loyal customer base and reputation for the brand. In addition to its website, Oatly even has a separate website – fckoatly.com – where the company openly talks through its crises (Fck Oatly). Oatly openly communicates its values, sourcing practices, and sustainability initiatives with its consumers through its website and social media posts.

Diverse range of products

Though Oatly is most famous for its oat milk, the brand has expanded its oat-based product portfolio. Oatly currently offers oat-based frozen desserts, yogurts, creamers, and cream cheese (Stuff We Sell). The brand is continuously finding new avenues to create more oat-based products such as a recent collaboration with Carvel, where the brand created a non-dairy soft serve using Oatly’s oat milk (Oatly Announces Sweet Collaboration With Carvel®, One of America’s Most Beloved Ice Cream Destinations 2024).

Commitment to sustainability

Oatly is committed to sustainable food production and using oats as the primary ingredient for all its products. Oats are more environmentally friendly compared to cow milk production that emits a significant amount of CO2 (Sustainability Report: Oatly). In addition to using oats, Oatly also makes sure that all other factors in creating its oat-based products are sustainable and good for the environment. In Oatly’s 2022 Sustainability Report, the company reported that it used 100% renewable electricity in all Oatly factories and that 89% of packaging were sourced from renewable or recycled materials (Sustainability Report: Oatly).  

Strong marketing and communication

Oatly is not only well-known for its oat-based products, but also for its strong and quirky marketing and communication. Oatly has a unique branding appeal with its famous light blue, black, and white color palette. The brand uses this color palette on all its social media platforms and ads, which gives Oatly a recognizable look. The brand has a “hippie” persona which is demonstrated through its social media posts that stay up to date with trends, such as responding to negative Reddit posts (Oatly on Instagram). Oatly has 362K followers on Instagram and posts frequently to promote its products in funny ways that stay related to oats (Oatly (@oatly)).

Weaknesses

Dependency on oats

Oatly’s heavy reliance on oats as a primary ingredient has forced Oatly to raise prices due to a strain in oat supply. In Oatly’s 2022 Q4 earnings call, CFO Christian Hanke said that Oatly will begin expanding sourcing options for oats due to poor harvest conditions (Zimmerman, 2022). The drought and equipment delay among suppliers were the also main factors of low oat supply. But in areas like Western Canada, railroads were flooded, so there were rail shipping issues in addition to the shortage of oats (Zimmerman, 2022).

Supply challenges caused Oatly to increase the prices of its products and pull back on certain investments (Zimmerman, 2022). The increase in oat prices and production costs could ultimately deter consumers from buying Oatly’s products due to the high pricing.

Product availability

While Oatly has experienced rapid growth in consumer demand for its products, ensuring consistent product availability across all distribution channels remains a challenge. Continuing from Oatly’s dependency on oats, there is constantly Oatly oat milk shortages which caused some resellers to sell 12-packs of Oatly oat milk for around $225 on Amazon (McDowell, 2018). Limited availability has left consumers frustrated, turning to social media to let out their anger and buying Oatly’s competitors’ products instead.

Pricing

Pricing presents a weakness for Oatly, primarily due to the cost associated with producing oats. While Oatly strives to offer high-quality, sustainable alternatives to traditional dairy products, the cost of sourcing and processing oats are higher compared to conventional dairy ingredients. For one cup of milk, dairy milk costs $2.17 while oat milk costs $5.29 on average (Settembre, 2019). The higher cost of production translates to higher retail prices for Oatly’s products which can deter price-sensitive consumers.

Despite Oatly’s emphasis on sustainability and quality ingredients, some consumers may still perceive plant-based products as more expensive or less valuable compared to their dairy counterparts. Convincing consumers to justify the premium price point for Oatly’s products requires effective communication of the brand’s unique selling propositions.

Opportunities

Growing demand for plant-based products

The growing demand for plant-based products presents an opportunity for Oatly to expand its market reach and increase its customer base. For example, many customers that drink Oatly oat milk are lactose intolerant. In East Asia, 90-100% of adults are lactose intolerant (Why lactose-free is going to be massive in Asia 2022). Oatly is currently available in East Asia, but Oatly needs to gain more awareness for its products there as there is a demand for non-dairy milks. By utilizing its strong brand recognition and reputation, Oatly can gain a bigger and wider customer audience interested in plant-based products.

Oatly can also focus on leveraging its existing product portfolio and brand recognition to attract new customers interested in plant-based products. This is an opportunity for Oatly to diversify its products by introducing new product lines or more flavors. Furthermore, Oatly can expand its distribution channels and partnerships with retailers to reach a broader audience of consumers seeking healthier food options.

Increasing interest in sustainable brands

With consumers becoming more conscious of environmental issues and actively seeking out products that align with their values, Oatly’s commitment to sustainability can serve as a significant differentiator in the market. Oatly emphasizes using oats for sustainability, implementing eco-friendly packaging, and reducing carbon emissions in its production processes (Sustainability Report: Oatly). Oatly can appeal to environmentally conscious consumers and attract a new loyal customer base. 

Threats

Competition in the plant-based market

The popularity of plant-based diets continues to rise, causing an increase in the number of companies entering the market. This results in a crowded landscape with intense competition. One of the main challenges posed by an increase in competition is the risk of market saturation. Currently, Oatly has a market share of 20% in the oat milk market (Mellentin, 2023). But with an abundance of options available to consumers, Oatly must compete not only with other oat-based products but also with a wide range of plant-based alternatives. This includes almond milk, soy milk, coconut milk, and various nut and seed-based options. To mitigate this threat, Oatly must differentiate its products and continuously innovate to meet evolving consumer preferences.

Negative publicity and controversies

The negative publicity and controversies surrounding Oatly’s business practices pose a significant threat to the company’s reputation and consumer trust. Oatly has had several incidents such as its association with a local pig farm in 2018 and the sale of a stake to investors with questionable environmental records in 2020 (Bitter, 2023). These incidents have raised concerns among consumers about Oatly’s commitment to ethical sourcing and sustainability. Additionally, legal disputes over trademark infringement and allegations of financial mismanagement have further damaged Oatly’s brand image and investor confidence (PA Media, 2021). To be transparent and honest, Oatly has created a website – fckoatly.com – where it details its scandals and crises (Fck Oatly).

Shifting consumer preferences

As consumer preferences evolve, there is a risk that demand for oat-based products may plateau or decline. This could happen if competing alternatives gain traction or new dietary trends emerge. Changes in consumer preferences will require Oatly to adapt its product offerings to remain relevant and competitive in the market. 

Additionally, changing consumer preferences may also impact brand loyalty and customer retention for Oatly. As consumers explore new options and alternatives in the plant-based food market, there is a risk that they may switch to competing brands or products that better meet their evolving needs and preferences. This highlights the importance for Oatly to continuously innovate to maintain its customers’ loyalty and trust over time.

*Disclaimer: All content is for academic purposes and has no affiliation with Oatly.*