Oatly sees US as potential market for growth and expansion, pulls back in Europe

US – Swedish alt-dairy company Oatly is prioritizing the US production expansion project at its Millville, New Jersey, facility as it finds it harder to convert new consumers from dairy to plant-based milk in Europe.

In a Securities and Exchange Commission (SEC) filing, the company said it has adjusted the timing of its investments to prioritize the projects in the regions where the need for additional capacity is most pressing.

Although Oatly moved to slow expansion from December 2021, it plans to work to build out its global production capacity “at an unprecedented pace” to address shortages and meet growing demand.

Oatly noted that its larger initiative to expand in-house manufacturing is still on track, and plans to add necessary production capacity in the long-term as demand for oat-milk experiences dramatic growth in the US.

Expansion in Landskrona, Sweden, is now targeted for 2023, while a Peterborough, U.K., facility is slated to open in 2024 “to align in timing and production for when we need the volumes.”

Overall, Petersson highlighted the company expects to add volume up to 1.2 billion liters exiting 2023, up from its current run rate of 900 million liters by the end of this year.

With this addition, the Sweden-based company will have enough liquidity to support the global growth and expansion of its business for at least the next 12 months.

However, the company is now pulling back in Europe, where “the pace at which Oatly has been able to convert new consumers from dairy to plant-based milk is taking longer than it had hoped for,” according to the SEC filing.

The capacity move will lower net capital expenditures in 2022 to US$220 million to US$240 million from the US$400 million to US$500 million range, “without compromising future expansion,” Petersson revealed.

In the same measure, Chief Strategy Officer Peter Bergh expounded that the company’s updated plan is not due to weakening demand, but rather the current pace of growth in Europe, which is largely driven by the macroeconomic environment including the war in Ukraine.

Oatly recalls more product brands

Meanwhile, the oat-based dairy processor has continued to face a blow in its marketing side after expanding a voluntary recall of oat milk after previously announcing the recall on July 28 due to concerns over microbial contamination.

Its distributor, California-based Lyons Magnus LLC, has added three more items to the recall: 18-count/11-fluid-ounce cartons of regular Oatly oat milk, 18-count/11-fluid-ounce cartons of Oatly chocolate oat milk, and 18-count/11-fluid-ounce cartons of Oatly Barista Edition oat milk.

The concerns over contamination include potential exposure to organisms Cronobacter sakazakii and Clostridium botulinum in the 53-product which included Oatly oat milk and other brands like Aloha, Kate Farms, Lyons Ready Care, and Barista Edition Oatmilk in the slim package format.

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro-industry. SUBSCRIBE HERE.

More News Articles

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.