Oatly, the maker of alternatives to dairy products from oats, has submitted plans for an initial public offering in the United States amid increasing demand for dairy substitutes.
The Sweden-based company is said to seek a valuation of as much as $10 billion in the offering. In the past year, the company was also able to raise around $200 million from from celebrities, including Oprah Winfrey, Jay-Z and Natalie Portman.
Founded in the 1990s by brothers Rickard and Björn Öste, Oatly, an early oat milk pioneer, is currently sold in more than 20 countries as consumers seek environmentally friendly products. Today, it boasts partnerships with Starbucks and other major retail giants.
A glass of dairy milk results in almost three times more greenhouse gas emissions than lant-based milk. It also consumes nine times more land than any milk alternatives, according to a 2018 study by the University of Oxford.
The green credentials of plant-based milk has attracted demand mainly from millennials and generation Z consumers, who are more willing to spend on sustainable products and healthy nutrition. Sales of plant-based milk have been growing at double-digit rates in both the U.S. and Europe during the past two years.
That said, dairy alternatives have a long way to go to catch up to regular dairy milk. Household penetration of plant-based drinks in key European markets ranges from 30-50 percent. By contrast, the penetration for animal-based milk is greater than 90 percent.
The market for dairy alternatives may double over the next five years, according to one research report. That would be good news for Oatly, which reported more than $200 million in sales in 2019.
Consumer behavior seems to be shifting in some demonstrable ways. Will plant-based milk gain traction with investors? The pandemic has highlighted the importance of sustainability in weathering global crises, and investors are increasingly funneling their money into environmentally conscious companies.
Oatly’s upcoming IPO could be a strong signal of just how seriously investors see shifting consumer behavior in the new cash cow – without the cow.