What to know about Oatly’s 2021 IPO

Can a long-standing company stay focused on healthy products and environmental responsibility while still seeking the financial benefits of a public stock market listing? Oatly says yes. Oatly, a health-beverage company that has been serving customers for nearly three decades, is moving toward a 2021 Oatly IPO. 

Celebrities and venture capitalists alike have jumped on Oatly’s plant-based drink bandwagon. The company makes oat milk using simple ingredients like gluten-free oats and water, plus a non-genetically-modified (non-GMO) canola oil. The company aims to make it easier for people to enjoy a plant-based alternative to dairy milk. 

A 2019 report by Grandview Research classified Oatly as one of the top players in the global oat milk market, alongside rivals such as Thrive Market, Danone, and Happy Planet Foods. The company forecasts a compound annual growth rate (CGR) of 9.8% from 2020–2027, and they plan to capitalize on that growth on the Oatly IPO date.

TL;DR 

  • Rickard and Bjorn Öste launched Oatly in 1994 in Sweden. 
  • The company operates out of southern Sweden. Their products are now available in 20 countries worldwide. 
  • Oatly’s milk products are made from oats and water and fortified with vitamins and minerals. 
  • Oatly’s first official fundraising round was in 2016, featuring venture capital funding from China Resources and Verlinvest.
  • In the summer of 2020, Oatly conducted a fundraising round that sold approximately a 10% stake in the company for $200 million, which would give them a $2 billion valuation. 
  • Havre Global AB, the parent company of Oatly, filed confidential paperwork with the Securities and Exchange Commission (SEC) in February of 2021. 
  • In March of 2021, mere days after their IPO announcement, Oatly publicized their new agreement to sell its oat-based milks in Starbucks
  • Oatly is even expanding to bring soft-serve machines in two major league baseball stadiums. 
  • Oat milk sales in the United States quadrupled last year to over $213 million. Oatly is the fastest growing company within that category. 

A brief company history of Oatly 

Oatly is a Swedish company that was founded by two brothers, Rickard and Bjorn Öste . Rickard Öste was conducting research at Sweden’s Lund University. He eventually patented his enzyme technology to process natural oats into “nutritional liquid food that is perfectly designed for humans,” according to the company

Here are some of the key attributes of Oatly milk:

  • It’s certified vegan by vegan.org. 
  • Oatly milk is fortified with vitamins B12, D2, A, calcium, and riboflavin. 
  • It’s kosher. 
  • Oatly is verified by the Non-GMO Project. 
  • High-quality gluten-free oats are the primary ingredient, along with water and a bit of rapeseed oil (called canola oil in the US).
  • Oatly includes soluble fiber called beta glucan, which can improve heart health by lowering cholesterol levels. 
  • For North American products, the oats are grown in the US and Canada. 
  • Some Oatly milks are shelf-stable while others must be chilled. The ingredients are the same; only the packaging is different.

The company states that their “milk” is good for all humans, humorously explaining, “You know, lactose intolerants, lactose lovers, vegans, non-vegans, carnivores, foodies, health nuts, and the people-with-tastebuds crowd.”

Oatly’s product listings continue to focus on oat milk, but they also makes “oatgurt” in a variety of flavors of original and Greek versions. Ingredient-conscious consumers can even satisfy their summer cravings with Oatly “ice cream” in salted caramel, hazelnut swirl, and other flavors.

In 2012, Oatly brought on John Schoolcraft as their new Creative Director. His efforts to rebrand Oatly through more creative package design helped the company stand out on supermarket shelves among other milk brands. According to Schoolcraft, some consumers complained about the new whimsical design, calling it “the worst, most childish packaging they had ever seen.” 

Whatever the case, the notoriety seemed to work. Revenues grew by 100% within just three years. 

Oatly’s now-infamous Super Bowl spot came in Q1 of 2021 as their first piece of advertising in the US. The ad featured the company CEO Toni Petersson singing in an oat field. Critics railed the company because the commercial was poorly done (which Oatly admitted to through a message on their website stating, “Our attempt…actually got you to visit an oatmilk company website on the big day”).

Oatly inked a deal with Starbucks in March 2021 to include Oatly products as a dairy-free alternative within its stores. Stocking Oatly drinks in the popular coffee-shop chain across the country could prove to be a genius move. After all, if you’re someone who has never tried a plant-based milk alternative, would you rather shell out the cost of an entire carton at the store, or pay a small upcharge to include it in your latte? The exposure could draw in new loyal customers. 

Oatly fundraising to know about 

Oatly has been around since 1990, but has only conducted four primary fundraising rounds overall, starting in 2016. Here’s the rundown on Oatly fundraising to date:

  • Series A Round: In 2016, China Resources and Verlinvest led the company’s first venture capital fundraising. 
  • Series B Round: Another round of venture capital fundraising took place in 2018. 
  • Series C Round: In 2019, Oatly held another round of VC fundraising, this time bringing in $41.4 million for growth. 
  • Private Equity Round: In 2020, Oatly conducted its largest fundraising round thus far. Blackstone Group led the $200 million round of funding, giving Oatly a $2 billion valuation. This round also included investments from celebrities: Oprah Winfrey, Natalie Portman, former Starbucks CEO Howard Schultz, and the entertainment company headed by Jay-Z. 

Besides the company’s co-founders, private individuals, and employees, Oatly investors and owners have included Verlinvest, China Resources, Industrifonden, Blackstone Growth, Östersjöstiftelsen, Orlika Capital, and Rabo Corporate Investments. 

The July 2020 fundraising round was led by Ann Chung of Blackstone, who praised Oatly at that time: 

“There are very few brands out there that have this level of scale globally and yet are still early in their consumer-brand life cycle.”

Path to the Oatly IPO 

Oatly’s fundraising amounts skyrocketed quickly. In 2019, they brought in $41.4 million, and the 2020 round led by Blackstone brought in a much higher $200 million. Benzinga noted that many analysts predict a $5 billion valuation for the Oatly IPO in 2021. 

In August of 2020, Forbes speculated that if the stock market on the whole faced continued downturns, Oatly might struggle to grow. In that case, the company might have been better off with an acquisition by another company such as French company Danone, or Swiss company Nestle. 

Oatly filed in late February with the SEC to make American Depositary Shares (ADS), available to represent their common shares in the US. As with any IPO, the company says they’re subject to SEC approval. The SEC is known for taking its time to complete the regulatory review process before moving forward (hence why some companies opt for a SPAC or direct listing). 

Related: Guide to special purpose acquisition companies

When is the Oatly IPO date? 

Oatly hasn’t announced their official IPO date yet, though the registration statement went through in February of 2021. The filing was confidential, leaving investors to speculate on the target price range of shares, the Oatly IPO date, and other fundamental details. That valuable information will likely come closer to the debut.

What investors should know about the Oatly IPO 

Oatly’s key product, natural oat milk, is riding the wave of the health-food movement. Consumers are demanding more plant-based food and beverage alternatives that look and taste like real meat and dairy. Oatly checks a lot of boxes for people striving to live healthier lifestyles: vegan, gluten-free, kosher, non-GMO, and dairy-free. That puts them in a solid position to succeed in the long term.

Oat milk sales rose 170% during the 52-week period ending February 13, 2020 when compared to the previous year’s sales. In another set of data, Nielson showed that oat milk sales grew almost 300% year-over-year for the 16-week period ending June 20, 2020. 

Another positive for Oatly is the Biden administration, which maintains an environmental agenda that may help promote brands like Oatly (of course, this also applies to their competitors). Other plant-based food brands like Beyond Meat and Impossible are doing well, and more companies with a lower environmental footprint are sure to get a strong foothold.

Despite the promising figures of rising revenues and a seeming shift in the public’s desire for healthier food and drinks, investors may want to be cautious about the Oatly IPO. Oatly’s consumer products maintain a higher price point that’s out of reach for some buyers, forcing them to snag cheaper plant-based alternatives like Blue Diamond. 

As Motley Fool reported after Oatly filed with the SEC, 

“Demand for meat and dairy alternatives and healthier foods has been rising, but investors should approach the upcoming IPO with the understanding that the business’s outlook remains somewhat speculative.” 

American Depositary Shares (ADSs) allow Americans to invest in stock shares of foreign companies without dealing with currency conversions. However, there is some currency risk involved for US investors in ADSs. Exchange rate fluctuations can occur, impacting share prices and income payments. 

Bottom line

With celebrity endorsements and investments from people like Natalie Portman and Oprah Winfrey—plus a rapidly growing market for health foods like plant-based milk—Oatly appears poised for continued growth. The Oatly 2021 IPO may show the public whether this particular dairy alternative brand will stand out above the rest with time.

Rachel Curry is Pennsylvania-based content writer and journalist talking all things finance. She likes to give meaning to numbers by humanizing them. You can connect with her on Twitter at @writingsofrach.

The above content is provided is paid for by Public and is for general informational purposes only. It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such. Before taking action based on any such information, we encourage you to consult with the appropriate professionals. We do not endorse any third parties referenced within the article. Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Past performance is no guarantee of future results. There is a possibility of loss. Historical or hypothetical performance results are presented for illustrative purposes only.

Tweet