Did Oatly Sell Out? Does It Matter?

“I used to like them, until they sold out.”

Such was the gist of endless conversations about music in my teenage years.

My friends and I would “discover” an obscure band, enthuse about them to anyone who would listen and hang upon their every release. 

And then, when the rest of the world caught up with us and the band became popular, we would turn on them - almost always for “selling out”. 

This is the situation Swedish oat milk titan Oatly finds itself in today. 

After 20 years on the brand equivalent of the provincial pub and club circuit, Oatly has exploded recently on the plant-based dairy alternative bandwagon - establishing oat milk as a real contender and achieving a valuation of $2 billion. 

They’ve done this with clever branding and marketing that has explicitly emphasised the environmental and ethical benefits of plant-based diets. 

They’ve also been vocal about opposing the dairy lobby, casting themselves in stark contrast to a greedy, exploitative industry. 

This purpose-driven perception has been a key part of Oatly’s exponential growth since 2017. 

And herein lies their problem today. 

Because Oatly has just done a $200 million deal to sell 10% of their stock to investment giant Blackstone. 

Blackstone is a private equity juggernaut, managing $4 trillion in funds. 

And inevitably, some of this is invested in businesses that are not quite as scrupulous as Oatly. 

In particular, it is claimed that some Blackstone businesses are involved in Amazonian deforestation. 

And now, the original fans of the brand are screaming “sell out!” and leading a social media campaign aimed at “cancelling Oatly”. 

Anyway, that’s the background. 

Oatly’s belated defence will be familiar to anyone who has ever called anybody else a sell-out: Nothing has changed, we’re still the same - in fact, we’re only taking the money to change the system from the inside. 

I made the effort to stop my eyes from rolling and to think about this like a brand strategist, rather than a teenage goth. 

Yes, Oatly is a purpose-driven brand but it’s also a capitalist business in a capitalist system. 

There are many ways to change the world, but if you have insurmountable objections to capitalism, setting up a business is not an ideal one to opt for. 

In fact, Oatly claims that by showing Blackstone that sustainable brands can be profitable, they are actually helping to reform big bad finance capital. Finance, of course, doesn’t actively want to destroy the world - it just wants to get rich. 

That Environmental, Social and Corporate Governance (ESG) is such a big trend in investment right now suggests that this is not an insoluble paradox (or that if it is, ironically, fund managers are much less cynical than they are assumed to be). 

Can the Oatly tail wag the Blackstone dog?

Or will they be swallowed up and spat out in their naivety?

At this point, nobody knows. 

Will Oatly sell more oat milk as a result of the tie up?

Yes. 

Does more oat milk consumption mean comparatively less land and water use and lower emissions than if that money went into dairy?

Yes. 

So the environmental cause that fuelled Oatly’s growth is likely to be furthered by this deal?

Yes. 

So why are people getting angry?

I think there are two aspects to the answer, both of which have interesting dimensions for brand strategy. 

1. We Have Something in Common, But We’re Not the Same

Firstly, the people now calling for Oatly to be cancelled feel betrayed by the deal with Blackstone. 

Undoubtedly, Oatly made a mistake in failing to explain this to their fans and customers before the decision was made. 

But that was a tactical error, not a strategic one - if we accept that Oatly and Blackstone have both acted in good faith and that their announced intentions are true. 

Blackstone will allow Oatly to do more good in the world by turning oat milk into a mainstream commodity than it could ever have achieved with a small audience of dedicated and engaged hipsters. 

Oatly had to sell out to take the next step forwards. 

The angry mob has over-identified with Oatly’s brand - assuming that all of their values are also the values of the company. Now they’re upset because they’ve seen that there are significant differences. 

Should purpose-driven brands take more care to separate themselves from the total worldviews of their early adopter audiences so that misunderstandings like this don’t happen? 

2. Is Social Media Real Life?

The second point concerns social media. 

Social media creates bubbles. 

That’s a feature, not a bug - because it drives advertising revenue (for some of the biggest corporations in the world ironically). 

Does a Twitterstorm translate into lost revenue? 

My research and experience show that the overwhelming majority of milk and milk-substitute buyers select brands on price first, and availability second. 

Purpose is way down the list, except for a vocal minority that social media amplifies out of all proportion to their actual buying power. 

Will the customers Oatly loses as a result of the cancellation outweigh the customers it gains from expanding its production, distribution and media profile? 

Almost certainly not. 

Having said that, there is a question to be asked about whether the loss of brand advocates and their word of mouth power makes this a case of apples and oranges. 

My own view on all this is as follows: Yes, Oatly has sold out, but no, Oatly hasn’t changed. 

From a brand purpose point of view, the company remains a valuable vehicle to raise awareness of unseen iniquities that those with common sense and sufficient disposable income wish to see changed. 

They have a great way of communicating their view of the world in a way that resonates with many people, and it would be a good thing if more people heard that message. 

But does it leave a bad taste in the mouth?