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Oatly’s chief executive said greenwashing and “doom and gloom” talk around climate change had put US consumers off sustainability, as sales of plant-based dairy alternatives go into reverse after years of growth.
“In the past, when people were talking about climate change or sustainability, it was in a doom and gloom, in a punitive, in a very negative . . . way. And people got fed up with that,” said Jean-Christophe Flatin, chief executive of the oat drink maker.
Sales of plant-based milk in the US declined by 5 per cent to $2.8bn in 2024, while dairy milk sales rose by 1 per cent, according to trade group the Good Food Institute. Plant-based milk makes up about 14 per cent of total milk sales in the country.
Like much of the plant-based food and drink industry, New York-listed Oatly has struggled to sustain its rapid growth as inflation squeezes disposable incomes.
Its problems have been exacerbated by consumers prioritising food and drink that’s high in protein, such as cow’s milk, over products that boast a lower environmental impact. There has also been a broad shift away from ultra-processed products, such as oat milk.
Oatly shot to popularity in the 2010s, boosted by provocative ad campaigns and slogans, such as “it’s like milk but made for humans”.
The Swedish company attracted celebrity investors including Oprah Winfrey, Jay-Z and Natalie Portman, before a surge in sales during the Covid-19 pandemic propelled it to a much hyped, $10bn New York IPO in 2021.
But Oatly quickly ran into difficulty. A string of production problems left key customers such as Starbucks short of oat milk. Meanwhile, competitors sprung up and took advantage of its mis-steps to win market share.
In its four years as a public company Oatly has racked up cumulative pre-tax losses of more than $1.2bn. The company’s shares have lost 97 per cent of their value, giving Oatly a market capitalisation of just $411mn.
At its last trading update Oatly cut its revenue expectations for the year — from growth of between 2 per cent and 4 per cent to growth of no more than 1 per cent — and announced a strategic review of its China business.
However, the company stuck to guidance that it will deliver its first full year of positive ebitda this year, off the back of cost savings. Last year it more than halved its pre-tax losses to $198.6mn.
Flatin, who was appointed in 2023, said Oatly remained committed to its mission. “We exist to make it easy for people to eat better and live healthier without recklessly taxing the planet’s resources,” he said.
In 2024 Oatly paid $9.3mn to settle a lawsuit filed by its own investors alleging it had overstated demand for its products and overplayed its sustainability credentials.
Flatin said generally “there has been too much greenwashing”, which had contributed to a rise in consumer indifference on environmental issues.
Daniel Ordonez, Oatly’s chief operating officer and global president, said that while growth was “not abundant” today, the company was still outgrowing the market in the US.
He said Oatly is contending with the repositioning of cows milk as a higher-end product by dairy companies, with “grass-fed” and organic options.
“If you just follow the trends in the US right now, you would be discussing ‘how much protein can we chuck into our oat milk?’ [But] there is a total surplus of protein in the world’s population, especially in the developed population,” said Ordonez.
“What the world has . . . is a big, big deficit for fibre,” he said, adding that Oatly’s products can help solve that.
Oatly’s revenues grew by 3 per cent to €208mn in the second quarter, driven by a 12 per cent increase in Europe. However, performance was weighed down by its North America and China businesses, where revenues dropped by 6.8 and 6.4 per cent respectively.
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