How Oatly Disrupted the Plant-Based Milk Industry: The unbelievable turnaround story

In 1994, Oatly, a Swedish company created by two brothers, introduced oat milk as a lactose-free alternative but struggled to gain any significant market share. Even after 20 years, they remained a local brand in Sweden and barely reached $30M in sales. One major obstacle was that people didn't even know that oats could be turned into milk, and it was competing with other plant-based options, such as soy, in a small market that only made up 15% of the dairy industry. However, things were about to change for Oatly.

In 2012, Toni Peterson became the new CEO of Oatly and, along with his team, completely overhauled the company's strategy and revolutionized the plant-based milk industry in a few short years through a 3-part plan. They crafted a new, quirky and humorous brand voice that was more relatable and approachable to their target audience.

Their first move was to change the packaging. They gave their old, bland packaging a makeover by using bold, block, and bubble letters and spelling out "OAT-LY!" in the center. They also changed the copy on the packaging from Swedish to English to make it more accessible to a global audience. The new packaging was eye-catching and fresh, giving consumers a great first experience and helping to differentiate Oatly from other dairy products on the shelves.

Their second move was to position the brand as sustainable and environmentally friendly, targeting people for whom a plant-based diet is a lifestyle rather than just a habit for health benefits, specifically vegans. Instead of just selling milk, they decided to sell a "sustainable lifestyle." They even commissioned a report that showed Oatly was a better choice for the environment than traditional dairy products, with the potential to reduce greenhouse gas emissions and land use by 80%, and energy consumption by 60% compared to cow's milk.

They used this information to make bold claims about the superiority of oat milk, even printing it on every milk carton. They also launched campaigns against dairy players, using slogans like "WOW NO COW" to visually compare the "Oatly way vs the Cow’s way" and demonstrate that oat milk was better suited for human nutrition than cow's milk, which is designed to grow a calf. This provocative stance led to a lawsuit from the Swedish dairy lobby, but Oatly's CEO Toni Peterson actually used the attack to their advantage, publishing the lawsuit online and positioning Oatly as an "activist brand" being "bullied" by big dairy companies. This generated loads of free PR and their sales in Sweden increased by 45%.

Their third move was to penetrate the US market through a backdoor approach. They realized that their potential customers in the US were willing to pay more to avoid dairy, but they didn't know how much they would prefer oat milk over soy or almond milk. So, they focused on convincing local baristas to promote oat milk to their customers. They created a "Barista Blend" that was thicker than other plant-based milk alternatives, allowing baristas to make cool designs on their cappuccinos and giving the same foaming experience as whole milk. The baristas agreed to promote it to their customers, and Oatly's sales in the US skyrocketed.

Key learnings

• Utilizing a creative brand voice can make a product more relatable and approachable to its target audience.
• Positioning the brand as sustainable and environmentally friendly can help to differentiate it from other products and create an emotional connection with consumers.
• Participating in controversial dialogue, such as suing big dairy companies and partnering with baristas, can generate free PR and increase sales.

Conclusion

Oatly is an outstanding example of a successful turnaround story. In less than a decade, the company revolutionized the plant-based product market, becoming one of the leading brands in the industry. By utilizing creative branding strategies, positioning its product as sustainable, and taking part in the controversial dialogue, Oatly was able to increase its sales, reach a global audience and make a big splash in the industry.

P.S: This case study was inspired by a Twitter thread: https://twitter.com/MarketingMax/status/1600861584984887298