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Sweden's Oatly set to expand plant-based milk retail in nation

2021-06-04


 [Photo/Agencies]

 

Oatly, the world's largest oat milk producer, said it will further expand its retail channels in China given the market's growing potential and strategic importance.


At present, Oatly products are available at over 6,000 brick-and-mortar stores and 11,000 cafes in China.


China now accounts for 13 percent of Oatly's total revenue since the company stepped into the market in 2018, with the compound annual growth rate of 45 percent.


On May 20, the Swedish company debuted on Nasdaq with IPO share price of $17, and when its intraday price surged to $22, its market value reached roughly $13 billion.


The plant-based dairy producer, which has been in the sector for 25 years, saw its global income for 2020 spike 106 percent year-on-year to exceed $420 million, according to the company's prospectus.


In late 2016, Chinese conglomerate China Resources Holding Co Ltd formed a joint venture with Belgium consumer-focused investment company Verlinvest and acquired a 30 percent stake in Oatly, which then helped Oatly enter over 2,000 boutique cafes in China in 18 months.


Verlinvest's network and experience in China have helped Oatly to establish its presence in the country and expand it later, said Raphael Thiolon, executive director of Verlinvest.


As Thiolon explained, oat milk takes up nearly 70 percent of the plant-based dairy market share in Sweden, while the corresponding figure is 40 percent throughout Europe and 14 percent in the United States. However, the number is less than 5 percent in China, which will point to more opportunities for Oatly.


Meanwhile, Chinese consumers now attach greater importance to healthier nutrition, cleaner products and natural functionality. These structural changes can all be translated into growth opportunities for innovative brands such as Oatly, said Thiolon.


"While most of the consumption of Oatly products happens in cafes, more efforts will be made to explore the retail channels in the next few years, to meet the needs of Chinese consumers in various scenarios," he said.


The company's prospectus stated that capacity is one possible factor dragging its development. Three new factories are now under construction, with one of them located in Maanshan of East China's Anhui province.


Thiolon admitted that supply in China is still insufficient although Oatly has entered the market early given its strategic importance. But it is Oatly's hope to set up plants extensively to meet consumer demand, which is also one of the major reasons for Oatly going public.


The global plant-based dairy sector posted a flat performance last year. According to market consultancy Euromonitor International, global milk market value reached $179 billion in 2020; and plant-based dairy brands accounted for only 9 percent of it.


However, the Chinese plant-based milk market burgeoned last year. A total of 15 financing deals with a combined value of over 1.56 billion yuan ($245 million) were reported in the sector in 2020, a record high.

 

Source: global.chinadaily.com.cn

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