The plant-based milk company Oatly has listed on the public markets, with a valuation of around $10 billion and raising $1.4 billion for the business. This is the second large IPO in the alternative protein space, following Beyond Meat’s listing in May 2019, whose share rose a whopping 163% on the first day, making it the most successful IPO of any company listed on US stock markets since 2008. Today, Beyond Meat is valued at around $8.5 billion, $1.5 billion shy of the valuation given to Oatly.
Oatly’s successes don’t stop there. Oatly led the charge in raising awareness of the now rejected Amendment 171, a proposed regulation aiming to ban terms for plant-based dairy products such as ‘creamy’, ‘alternative to milk’, or listing environmental statistics on its packaging, such as ‘75% less carbon emissions compared to dairy’. The proposal claimed that consumers often get confused by these terms and may wrongly purchase plant-based alternative products when trying to buy animal-derived products, such as milk, butter, yoghurt or cheese. It even went as far as challenging the packaging in which plant-based alternative products come in, as they are too similar to dairy product packaging. Oatly launched several humorous, yet controversial, videos refuting these arguments as nonsensical, as part of its Are You Stupid? campaign. This tactic appears to have paid off after the European Parliament rejected the proposal. Some of our favourites are linked below:
At first glance, a $10 billion Oatly seems very overvalued. But it should be noted that the plant-based milk market is far larger than the plant-based meat market. Plant-based milk sales are expanding rapidly in the US, growing 20% in the past year alone, and representing 15% of the total milk market. This translated to annual sales of $2.5 billion, with expectations this figure will reach $6 billion by 2026. Internationally, plant-based milk sales are projected to hit around $21 billion by 2026. In the EU, plant-based milks represent 10% of the total milk retail market, worth around €1.9 billion in 2019. In the UK, oat milk sales alone grew a huge 70% in 2018.
The plant-based meat market is also rapidly expanding, growing 45% in the US alone between 2019 and 2020. However, the US plant-based meat represented just 1.4% of the total meat market.
US plant-based milk market by type
Source:Watson, E. (2020) ‘Oatmilk edges past soymilk for #2 spot in US plant-based retail market (Accessed: 5th May 2021)
Oatly’s IPO will bring new investors and customers into the plant-based milk market, sparking record levels of consumer demand and innovation in the industry. With rumours of Beyond Meat’s competitor, Impossible Foods, also going public in 2021, and their plans to launch a plant-based milk that tastes the same as regular cow’s milk, it looks like Oatly won’t be alone in the publicly listed plant-based milk space!
Do you think Oatly’s is overvalued at $10 billion? Let us know in the comments below!
The information presented is of the author’s personal opinion and is not financial or investment advice.
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