Once hailed as a disruptor in the dairy sector, Oatly rode the wave of sustainability and lactose-free living to global recognition. But the Swedish oat drink maker is now in a new phase: proving its long-term relevance.
Founded in 1994 by food scientist Rickard Öste, Oatly began as a niche response to lactose intolerance, which affects nearly 68% of the global population. The brand’s minimalist oat-and-water formula, quirky branding, and mission-led narrative helped it evolve from a Malmö lab experiment into a $2 billion brand by 2020.
By 2021, during the plant-based milk frenzy, Oatly made its Nasdaq debut with a 20% stock surge. But that excitement has since waned—its stock has plunged 97%, and today, Oatly must navigate a crowded alt-dairy market and increasingly skeptical consumers.
“Being born with a mission is very different from adding one later. Oatly was built to challenge conventional dairy—and that fight continues,” says Jean-Christophe Flatin, CEO of Oatly.
Dairy’s Comeback and Oatly’s New Challenge
Ironically, just as plant-based beverages gained mainstream appeal, traditional dairy is mounting a comeback, especially among younger European and American consumers. The resurgence coincides with growing doubts about whether plant-based drinks—often priced at a premium—offer real nutritional or environmental advantages.
Competitors like Danone’s Alpro, Rude Health, and Califia Farms are also gaining market share, leaving Oatly fighting on multiple fronts.
“Larger dairy brands waited on the sidelines, entering the space only once alternatives had proven commercial viability,” says Tom Booijink, Dairy Specialist at Rabobank.
Meanwhile, regulatory hurdles have continued to hamper Oatly’s growth. In Europe and the UK, restrictions prevent the use of the word “milk” for plant-based drinks. Oatly lost a UK court battle in December 2024, forcing it to drop its popular slogan, “Post Milk Generation.”
The Cult Brand with a Corporate Problem
Oatly’s success has always rested on storytelling and rebellious branding. Under ex-CEO Toni Petersson, the company adopted sarcastic, self-aware advertising that resonated with millennial and Gen Z consumers. Baristas loved its foamy texture, and influencers loved its planet-first messaging.
But as the market matured, so did scrutiny.
The brand has been reprimanded for overstating environmental claims, and investors now demand more than feel-good slogans. As of 2024, Oatly reported $824 million in revenue, up just 5% year-over-year. While it expanded to nine new countries, it also shut down a manufacturing plant in Singapore and initiated a reverse stock split to shore up investor confidence.
“It’s very different being a publicly listed company on Nasdaq than being a niche disruptor,” says COO Daniel Ordoñez. “We’re recalibrating—not collapsing.”
Parallel with Beyond Meat: The Valuation Trap
Oatly isn’t alone. High-profile plant-based players like Beyond Meat have seen their valuations plummet by over 90% since peak pandemic interest. Once celebrated as climate saviors, these brands are now grappling with overcapacity, slowing demand, and investor fatigue.
Much like Oatly, Beyond Meat’s initial success came from carving a new niche. But novelty fades. What remains is execution—and profitability.
“The challenge now is less about capturing imagination and more about proving sustainable value—nutritionally, environmentally, and financially,” says Helen Breewood of the Good Food Institute Europe.
India’s Plant-Based Future: Lessons from Oatly
While Oatly’s challenges seem far removed from India’s dairy-dominated market, the lessons are relevant. India is still in the early stages of the plant-based transition, with rising awareness around lactose intolerance, sustainability, and flexitarian diets.
Brands entering the Indian market should learn from Oatly: mission-led marketing matters, but robust regulation-readiness and pricing strategy are critical for longevity.
