Oatly Oat products: Revolutionizing Dairy-Free with Sustainable Innovations

Products

Oat Milk

• Oatly Barista Edition: Specifically designed for coffee and tea, this oat milk has a creamy texture that froths well, making it a favourite among baristas and coffee enthusiasts. Typically priced between $4.99 to $6.99 in the U.S. In European markets, it might be around €2.50 to €3.50 per litre.

• Oat Drink (Original): The standard oat milk, available in different fat levels (like full-fat and low-fat), is suitable for drinking straight, adding to cereals, or using in recipes. Usually priced between $3.99 to $5.99 in the U.S. In Europe, it's often around €2 to €3 per litre.

• Chocolate Oat Milk: A rich and creamy chocolate-flavoured oat milk that offers a dairy-free alternative for chocolate milk lovers. Priced around $4.99 to $6.99 in the U.S.

Oat-Based Creams and Cooking Products

• Oat Cream: A versatile cooking cream that can be used in both savoury and sweet dishes, as a substitute for dairy cream. Typically priced between $2.99 to $3.99 in the U.S., and around €1.50 to €2.50 in Europe.

• Whippable Creamy Oat: This product can be whipped just like dairy cream, ideal for desserts and baking. Priced similarly to oat cream, usually between $3.49 to $4.49 in the U.S.

• Oatgurt: An oat-based yoghurt alternative available in various flavours, including plain, vanilla, and fruit varieties. Generally priced around $1.99 to $2.49 per single serving in the U.S. In Europe, it's around €1 to €1.50 per serving.

Oat-Based Spreads

• Oat Spread: A spreadable product that mimics the texture and taste of cream cheese, available in plain and flavoured options. Generally priced between $3.99 to $4.99 in the U.S., and around €2.50 to €3.50 in Europe.

Oat Ice Cream

• Oatly Frozen Desserts: Dairy-free ice creams made from oats, available in a range of flavours such as vanilla, chocolate, strawberry, and more unique options like salted caramel and hazelnut swirl. Priced around $4.99 to $6.99 in the U.S., and approximately €4 to €5 in Europe.

Oat-Based Custards and Puddings

• Vanilla Custard: A smooth, oat-based custard that can be used as a dessert topping or enjoyed on its own.

• Chocolate Pudding: A creamy, dairy-free pudding made from oats, offering a plant-based twist on a classic dessert.

  Both are typically priced between $3.99 to $4.99 in the U.S., and around €2.50 to €3.50 in Europe.

Oat-Based Drinks and Smoothies

• Oat Drink: Variants like the calcium-fortified version offer added nutrients, catering to specific dietary needs. Priced similarly to the standard oat milk, usually between $3.99 to $5.99 in the U.S.

• Smoothies: Oatly has also ventured into ready-to-drink smoothies that combine oat milk with fruits and other healthy ingredients. Generally priced around $2.99 to $3.99 in the U.S.

Specialty and Seasonal Products

• Limited Editions: Occasionally, Oatly releases limited edition or seasonal products, such as special flavours of their oat milk or frozen desserts.

Factors Affecting Pricing

• Location: Prices can vary significantly depending on the country, local taxes, and import duties.

• Retailer: Premium grocery stores may price Oatly products higher compared to discount retailers or bulk-buy stores.

• Promotions: Prices can fluctuate due to sales, discounts, and promotions offered by retailers.

Sustainability Considerations

Oatly's production process is designed with sustainability in mind, from sourcing oats that require less water and produce fewer greenhouse gases than dairy milk, to minimizing waste by repurposing by-products. The company is committed to continuous improvement in reducing its environmental impact.

Oatly primarily uses Tetra Pak cartons for their liquid products, such as oat milk. These cartons are made from a combination of paperboard (which is sourced from responsibly managed forests), plastic, and a thin layer of aluminium for shelf-stable products.

Tetra Pak cartons are recyclable, and Oatly encourages consumers to recycle them where facilities are available. The company is also involved in initiatives to improve carton recycling rates globally.

The paperboard used in Tetra Pak cartons comes from FSC (Forest Stewardship Council) certified forests, ensuring that the materials are sourced from sustainably managed forests that protect biodiversity and respect the rights of workers and indigenous communities.

How are the products made?

1. Sourcing the Oats

• Oats Selection: Oatly sources high-quality, non-GMO oats, primarily from regions in Northern Europe and North America where the climate is ideal for growing this grain. The oats used are typically whole grain, providing a rich nutritional profile.

2. Enzymatic Process

• Oat Milling: The oats are cleaned and milled into fine flour.

• Enzymatic Breakdown: The milled oats undergo an enzymatic process where specific enzymes are added to break down the oat starches into simpler sugars, such as maltose. This process is crucial because it gives the oat milk its natural sweetness and smooth texture without the need for added sugars.

3. Blending and Fortification

• Mixing with Water: The resulting oat slurry is mixed with water to achieve the desired consistency. The ratio of oats to water can vary depending on the type of product being made (e.g., Barista Edition vs. regular oat milk).

• Fortification: Vitamins and minerals, such as calcium, vitamin D, vitamin B12, and riboflavin, are often added to the mixture to enhance the nutritional profile of the final product, especially since Oatly aims to offer a comparable alternative to dairy milk in terms of nutrients.

4. Filtering

• Separation: The mixture is then filtered to remove the insoluble fibres, leaving behind a smooth, creamy liquid that serves as the base for their oat milk and other products. The remaining oat fibre can be used in other applications, contributing to Oatly’s commitment to minimizing waste.

5. Heat Treatment

• Pasteurization: To ensure the product is safe for consumption and has a longer shelf life, the oat milk undergoes pasteurization. This heat treatment process kills harmful bacteria without compromising the taste or quality of the milk.

6. Product-Specific Processes

• Barista Edition: For products like the Barista Edition oat milk, additional steps are taken to adjust the fat content and texture, allowing the milk to froth and blend well with coffee.

• Flavoured Variants: If producing flavoured products like chocolate oat milk, natural flavourings and cocoa are added during this stage.

• Oatgurt and Ice Cream: For oat-based yoghurt (Oatgurt) and ice cream, additional ingredients such as live cultures (for yoghurt) and stabilizers are mixed in, followed by processes like fermentation (for yoghurt) or churning and freezing (for ice cream).

7. Packaging

• Eco-Friendly Packaging: Oatly uses Tetra Pak cartons for their liquid products, which are designed to be recyclable and have a lower environmental impact compared to other types of packaging. The company is also exploring more sustainable packaging options to further reduce their carbon footprint.

• Labelling: The products are then labelled with information about their ingredients, nutritional content, and climate impact, highlighting Oatly’s commitment to transparency.

8. Quality Control

• Testing: Throughout the production process, Oatly conducts rigorous quality control tests to ensure consistency in taste, texture, and nutritional content. This includes checking the product’s pH, fat content, and microbiological safety.

9. Distribution

• Once packaged, the products are distributed to retailers, coffee shops, and other outlets globally, where they are stored and sold in both refrigerated and shelf-stable forms, depending on the product.

Source: oatly.com

Case studies

Brand Repositioning and Growth

In 2012, Oatly underwent a significant brand repositioning to create a platform for international growth. At the time, Oatly was an undifferentiated Swedish oat milk producer with unclear messaging. The company worked with the Healthy Marketing Team (HMT) to redefine its brand positioning. The analysis revealed that Oatly's strength lay not in the science behind their products, but in their purpose. The new positioning focused on Oatly being "in the business of change," differentiating them from competitors. This repositioning helped Oatly become a global brand and a leader in the plant-based milk category.

Sustainability Communication

Oatly has made sustainability and transparency core elements of their brand and business model. Their mission is "to make it easy for people to eat better and live healthier lives without recklessly taxing the planet's resources in the process". Key aspects:

1. Radical transparency: Oatly shares both positive and negative aspects of its products, including information on ingredient origins, sugar content, and climate footprints.

2. Empowering consumer choices: The company aims to drive change by providing plant-based alternatives and supporting sustainable agricultural practices.

3. Creative messaging: In 2014, Oatly created an internal team called the "Oatly Department of Mind Control" to challenge norms in consumer communication and drive societal change.

Market Entry Challenges

When entering the Japanese market, Oatly faced several challenges:

1. Established alternative milk options already existed in Japan.

2. Most people were unfamiliar with oat milk.

3. Oatly's distinct storytelling needed adaptation for Japanese audiences.

To address these challenges, Oatly conducted research to understand the behaviours and beliefs of Japan's conscious consumers. This research helped shape their investment decisions and market entry strategy for Japan.

Marketing Campaigns

Oatly’s marketing strategy is characterized by its humorous, quirky, and sometimes provocative tone. Campaigns like "It’s like milk, but made for humans" directly challenge traditional dairy and have made Oatly's branding highly recognizable and memorable.

One case study highlighted a campaign where Oatly replaced dairy with their oat milk in quintessential American cultural moments. This approach aimed to challenge traditional perceptions of dairy and promote plant-based alternatives.