Milk it
$10 billion Swedish oat milk brand Oatly takes a stance on ESG
By AnsaradaWed Oct 20 2021IPO, Advisors, Industry news and trends
Interviewer: “So, tell me what your biggest weakness is.”
Oatly: “There are constant shortages because my oat milk is in such high demand.”
Earlier this year, the company that made milking oats sexy secured a valuation of nearly $10B. The Swedish food and beverage company founded before most WallStreetBets’ users were born (read: the 90’s) has struggled after its initial IPO pop - but in the words of RoaringKitty, analysts ‘like the stock’.
And for good reason. There’s a lot to like. Especially if you could secure a stake at the IPO price.
We can all agree that this was probably one deal toy every banker wished they had earned. Shares of the stock sold out more quickly than buy one, get one at Whole Foods… even if the roadshow was lactose-free.
The underwriters hawking Oatly shares had more than a few angles to lean into, like…
ESG
ESG (read: Environmental, Social and Governance) is the only three-letter investing theme hotter than ‘NFT’ right now. And Oatly’s vision for a more sustainable future of food stands at the forefront of the trend.
Here’s what Oatly had to say in its sustainability report: “At Oatly, our vision is to meet the climate emergency head on by driving a plant-based revolution and shifting toward a sustainable food system.” Although, for the record, it does not ask readers to ‘please consider the environment before printing the PDF’.
For a second, just think about the juicy PowerPoint headings JP Morgan and Morgan Stanley were able to share with investors (over Zoom, of course)...
- ESG fund inclusion - the number of dollars managed by ESG funds jumped more than 20% in 2020
- Progressive management - not only does management have a soul, but they have a long term vision
Name drop
You can’t read an article about Oatly without hearing about the who’s who that have poured money into the company. Oprah, Natalie Portman, and Jay-Z have all written Oatly Publisher’s Clearing House sized checks.
But it’s the big swingin’ backers that had the underwriters assigned to OTLY’s roadshow name-dropping. Blackstone (perhaps you’ve heard of them?) invested $200M into the company pre-IPO.
Of course, if we’re playing the name game, you can’t mention Oatly without discussing Starbucks. In early 2021, $SBUX announced a collab with Oatly to bring oat milk to the masses.
The numbers don’t lie…
Sure, Oprah gets the people going (“you get a box of Oatly, and you get a box of Oatly!”), but the smart money that was set to hoover up shares cares about one thing: growth.
And Oatly is a grower and a show-er. In 2020 alone it doubled revenue, topping $420M. Keep in mind that’s prior to every basic guy and girl mainlining the oat drink via their Starbucks order.
If investors were betting on growth, they were right…
During its first ever earnings report, Oatly reported even more impressive top line growth (53%)... despite crippling plant closures due to ‘rona boi. Looking forward, OTLY expects ~66% annual growth.
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Some might say sex sells, but investment bankers would argue that it’s actually a growth story that sells...
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