- [Narrator] These are the three top-selling oat milk brands
in the US.
But this is probably the one you're most familiar with.
That's because a few years ago,
Oatly overhauled its marketing strategy,
taking its products from Sweden
to grocery stores around the world,
including the US.
- Before Oatly expanded in the US,
oat milk was relatively unknown to the US consumer.
It was really Oatly that started the oat milk category
in the US.
- [Narrator] But the company has a problem.
Just look at their stock price.
It dropped in part because Oatly can't keep up
with the demand for oat milk,
demand that it largely created.
Here's why Oatly, a one-time Wall Street darling
that brought oat milk to the American stage
has lost market share to rivals.
(dramatic music)
Let's rewind to 2019
when demand for Oatly was rising thanks
to quirky advertisement
and placement in independent coffee shops.
CEO Toni Petersson
had brought his long-time friend John Schoolcraft
to Oatly to build a creative department.
- And we came up with this line.
It's like milk, but made for humans.
Very simple.
- [Narrator] He created a team,
which jokingly calls itself the Oatly Department
of Mind Control.
And rebranded with slogans like.
♪ Wow no cow ♪
- [Narrator] But that wasn't the only tactic Oatly used.
- Oatly developed relationships
with baristas in independent and third-wave coffee shops
and it really became interesting, cool
and alternative amongst this niche market.
And then the baristas started talking about it
on social media.
- [Narrator] And as one of the only oat milk producers
on the market, they helped create a craze.
Since 2019, the oat milk market in the US
has grown by roughly 330%.
To maintain their buzzy status,
Oatly needed to be able to produce enough oat milk
to actually meet that demand,
and that was becoming a problem.
At first, Oatly had relied on contractors,
which was expensive compared
to making it themselves.
So Oatly built its first US factory
in Millville, New Jersey
but it didn't go as planned.
- Production at the Millville plant started
about six months behind target
and it was hampered by poor planning.
There was wastewater issues,
as well as equipment malfunctioning.
- [Narrator] An Oatly spokeswoman said
there was no wastewater treatment system
initially planned for Millville,
and that one was added in August 2021.
All wastewater from the new facility
has been within permit range, she said.
She added that it is best practice
to scale production quickly
to resolve technical issues
and the approach didn't cause delays,
affect output or increase cost.
She said that "By any metric,
our Millville facility is best-in-class in construction,
execution, safety and quality."
In late 2018, Oatly had purchased a second factory
in Ogden, Utah but it didn't solve their problems.
And in fact, it created more.
- At the Ogden, Utah plant,
there was two major problems.
One, they spent more than they intended.
They had hoped to spend 50 million
and they spent over 100 million,
and then second, they didn't finish on time.
They had hoped to finish by early 2020
and took way longer than that.
- [Narrator] An Oatly spokeswoman
said the executives frequently updated the board
on changes to the budget,
adding that the budget was in line
with other modern facilities.
She also said that many
of the challenges at the Ogden facility
have been compounded by the pandemic.
But the company has made continuous improvements.
In 2021, Oatly's market share in the US was 26%
of retail sales.
That's a decrease of 6% from 2019.
And stock prices have followed suit.
Meanwhile, competitors saw demand for oat milk grow
and shortages of Oatly allowed them
to swoop in and snag market share.
Dairy giant HP Hood launched Planet Oat,
which Hood says sells for 1 to $2 less
than competing brands.
Planet Oat overtook Oatly in 2021
and now leads the US retail market.
Another dairy company, Chobani,
made their first venture into plant-based products
with oat milk in late 2019.
Chobani said they constructed a plant within a plant
and that the construction took them less than 12 months
and allowed for far more capacity
than there was demand at the time.
Now Chobani holds third place in US retail sales
after Planet Oat and Oatly.
- Competitors such as Hood and Chobani
really raced to jump in this market
when Oatly was having troubles
and they capitalized on Oatly's struggles.
- [Narrator] Plus, Oatly's stock has fallen about 80%
since its IPO in May 2021.
That summer, the board was considering
a successor to Petersson.
They specifically wanted a candidate
with more operational experience,
so Petersson could devote his time to business development,
people familiar with the matter said.
In April, Oatly hired a former senior executive
at candy giant Mars, Inc as president.
Oatly's chairman said in a statement
that the hire was part of the board's succession planning
and that the company
is not considering a transition right now.
- Operational experience is very important
because Oatly is trying to expand its manufacturing capacity
and it's having production issues,
and a lot of that stems from operational issues.
- [Narrator] Whoever leads Oatly going forward
will face challenges.
In May, global production output decreased
in the fourth quarter of 2021
with the company citing pandemic-related factors.
Oatly's stock hit a low of under $3 in May,
reflecting difficulties it has had with production.
- The primary challenge that a new CEO will face
has to do with the manufacturing
and ensuring that supply meets demand.
- [Narrator] In the meantime,
the oat milk market will continue to be contested.
(lively music)