Oatly IPO: 5 things to know about the plant-based dairy company before its IPO

After confidentially filing for its IPO in February, plant-based food company Oatly Group AB filed an application to go public with the United States Securities and Exchange Commission.

Oatly Group changed its name from Havre Global AB on March 1, 2021.

Oatly OTLY,

has set itself the goal of raising $ 100 million, usually a reserved amount that will be changed later.

There are nine main underwriters for the deposit: Morgan Stanley, JPMorgan, Credit Suisse, Barclays, Jeffries, BNP Paribas, BofA Securities, Piper Sandler and RBC Capital Markets.

Oatly is backed by private equity group Blackstone Group, as well as celebrity names like Oprah Winfrey and Jay Z who invested $ 200 million in the company last summer. The investment valued the company at $ 2 billion at the time, according to The Wall Street Journal.

Based in Malmö, Sweden, Oatly has been in the oat milk business for 25 years. The company’s product line now also includes frozen desserts and “oatmeal”, an alternative yogurt.

Toni Petersson has been Managing Director of Oatly since 2012 and will join the Board of Directors once the company goes public.

Christian Hanke, former head of Nasdaq Stockholm, has been Oatly’s CFO since March 2020.

The company goes public at a time when issues of climate change and sustainability are at the heart of the concerns of many consumers, especially younger ones.

“Generation Z and Generation Y will become the dominant global generations in the years to come, bringing to the market a new set of values ​​and expectations,” the company said in its prospectus.

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“These factors combined are leading to rapid and accelerated growth and an influx of new consumers into the plant-based dairy market.”

According to the Plant Based Foods Association and the Good Foods Institute, sales of plant-based foods reached $ 7 billion in 2020.

Consumer Insights data cited in the prospectus indicates that the plant-based milk category will increase by 20% to 25% over the next three years.

Oatly is focused on its role of helping transform the food industry to be better for the environment and meet the health needs of its customers. The company points out that replacing a cup of Oatly with a cup of cow’s milk reduces greenhouse gas emissions, land use and energy consumption.

Tastewise, which provides food and drink data and intelligence, said in a December 2020 report that “everything plant-based” will be one of the top 10 US trends for this year.

“The main reason consumers turn to plant-based foods and drinks? Health, ”the report says.

“Vegetables are no longer just an ‘alternative’ to meat, but rather a
category in itself. “

Oatly’s main markets are Sweden, Germany and the United Kingdom, although its products are available in 60,000 retail stores and 32,200 cafes around the world as of December 31, 2020. Among the places where customers can find Oatly sits Starbucks SBUX,
+ 0.40%,
where demand was so high, there was a shortage soon after the coffee chain introduced the drinks made with the item.

COVID-19 has impacted Oatly’s business as lockdowns around the world limit access to restaurants, bars, and other dining establishments.

See: Starbucks oat milk shortage comes as plant-based food sales skyrocket

In 2020, Oatly had revenue of $ 421.4 million, up from $ 204.0 million the year before. However, the company reported a loss of $ 60.4 million “reflecting our continued investment in production, brand awareness, new markets and product development,” the prospectus states.

Oatly is classified as an “emerging growth company,” which means it does not have to make the same disclosures required by large state-owned companies. A company remains an emerging, growing business until it reaches a number of milestones, including annual revenue of over $ 1.07 billion.

Oatly warns that she has reported losses over the “past” years and expects operating and capital expenses to increase “substantially”.

“Our expansion efforts may take longer or prove to be more costly than we anticipate, particularly in light of the COVID-19 pandemic, and we may not be successful in increasing our revenues and margins enough to offset the higher planned spending, ”the company said in its statement. prospectus.

“We incur significant expenses in the research and development of our innovative products, the construction of our production and manufacturing facilities, the procurement and storage of ingredients and other products and the marketing of the products we offer. . “

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Here are five other things to know about Oatly ahead of its public debut:

Oatly will not pay a dividend for the “foreseeable future”. The company plans to use the proceeds of the offering as working capital, for gradual growth, including expansion, and for other general purposes.

The cafe opened the door to Oatly in the United States Oatly arrived in the United States in 2017. The company says it “focused on targeting coffee taste makers, professional independent coffee baristas” as a way to enter the market. “

As of December 31, 2020, Oatly has a presence in more than 7,500 retail stores and 10,000 cafes in the United States, with 2020 revenue of $ 100 million in the United States.

Oatly can also be found in 11,000 coffee shops and tea rooms in China and more than 6,000 retail and specialty stores across the country, including thousands of Starbucks locations.

A limited supply of oats could have a financial impact. Oatly relies on five suppliers for the oats it uses and buys this ingredient through millers in Sweden, Denmark, the United States and Belgium.

“In the past, we have experienced interruptions in a supplier’s oat supply that have resulted in delivery delays to us,” the company said, noting that its oat supply is also vulnerable to natural disasters such as drought or flooding.

“We could experience similar delays in the future from any of these suppliers.”

The company is also dependent on certain enzyme suppliers, including a supplier that supplies an enzyme for some of the Oatly products, including Barista Edition oat milk.

The main components of the company’s products are being manufactured at four main factories as of March 2021, which could also be a problem if something important happens at a facility.

The dairy product market is very competitive. Oatly identifies conventional dairy companies including Dean Foods Inc. DFODQ,
and Lactalis as competitors, as well as the growing number of plant-based dairy alternative companies entering the market, including soy, almond, hemp and cashew milk brands.

All of these businesses compete for a limited number of retail stores, coffee shops, restaurant customers and consumers.

“In order for us to not only maintain our position in the market, but also continue to grow and acquire more consumers, some of whom could switch from traditional dairy products to plant-based alternatives, we must continue to provide delicious and delicious products. High quality. , and consumers must believe in our vision for a food system that is better for people and the planet, ”the company said.

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Oatly’s marketing and COVID-19 could be a hindrance to growth. Oatly says his story of “provocative and unconventional marketing and advertising campaigns” put them in hot water, including a 2014 lawsuit filed by the Swedish dairy lobby in which courts found Oatly to be ” derogatory dairy products ”.

“The decision resulted in a ban on continuing to use a number of expressions marketing our products in Sweden, under penalty of damages of SEK 2 million per expression,” the prospectus states.

The company warns that future marketing could lead to further lawsuits.

More recently, Oatly’s Super Bowl commercial has been securities, but above all to provoke laughter.

About William W.

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