Oatly IPO comes after a massive 2020 for plant-based foods
Outside of a knack for entertainment, what do Jay-Z, Oprah, and Natalie Portman all have in common? They all had the foresight to become investors in Oatly.
On Monday, the sustainable oat milk company filed to go public – the Oatly IPO could value the company as high as $10b.
Oatly IPO: There are udder alternatives to cow’s milk
Before Oatly entered the U.S. market in 2017, the demand for oat milk – a sustainable alternative to dairy milk – was practically non-existent. Its popularity has since skyrocketed to become the second best-selling plant-based milk in the U.S. behind almond.
Since then, the plant-based dairy industry has seen tremendous growth:
- US plant-based dairy sales hit $2.5b in 2020 – up 20% from the previous year but still making up less than 5% of milk sales.
- US milk sales have consistently fallen in the past decade – losing market share to milk-based alternatives
But here’s how you really know you’ve made it – when Starbucks ($SBUX) adopts your product into 15,000+ stores.
Plant-based alternatives are taking over
The jump in demand for plant-based alternatives has been so big that Dean Foods, once the biggest U.S. milk company, filed for bankruptcy in 2019 – citing a growing trend towards milk alternatives.
But plant-based milk isn’t the only plant-based product catching the eyes of consumers and investors:
- Beyond Meat ($BYND), a plant-based meat company, has seen its shares increase over 400% since going public in 2019
- Impossible Foods, another plant-based meat company, is reportedly prepping for a $10b public offering
- Eat Just, an eggless egg and lab-grown chicken company (and is even testing plant-based Wagyu), raised $200m in private funding in Mar. 2021.
For investors… Fight plant with plant
Highlights from Oatly IPO’s numbers:
- Growing sales: $421m in 2020 – up 106% from $204m in 2019
- Widening net losses: $60m in 2020 – compared to $36m in 2019
Despite the fast-growing adoption of plant-based foods, Oatly has some potential problems ahead of it. In the plant-based meat space, Beyond Meat is under pressure from competitors launching similar products and undercutting prices (i.e. Impossible Foods lowering its prices by 20% in Feb.).
Similarly, Oatly is at risk of running into similar issues as established food giants like Quaker Oats, HP Food and Pacific Foods launch their own oat beverages.
At a potential $10b valuation, its stock is looking expensive for a company making all its sales from one product.