Oat milk has been all the rage in recent years and quickly became the second most popular plant-based milk in the US after almond milk.
One of the leaders in this category, oats (NASDAQ: OTLY) went public this week with a traditional IPO. Stocks rose immediately from the gates on Thursday evening after the offer was priced at $ 17 on Wednesday evening.
Here are four things food investors need to know about the Swedish company.
What is oats?
Oatly is the largest oat milk company in the world and offers a wide variety of products including milk, ice cream, yogurt and more. The company argues that its oat-based offerings can help fight climate change because plant-based dairy products have a lower carbon footprint than traditional animal-based alternatives. Oatly estimates that its products cause 80% less greenhouse gas emissions, 79% less land use and use 60% less energy.
In terms of distribution, Oatly sells its products in around 60,000 retail stores and over 32,000 coffee shops. The company entered the Chinese market in 2018 with coffee and tea specialties and now has around 9,500 sales outlets for gastronomy and retail.
Oatly is the clear market leader in the alternative dairy category and has a dominant market share of 53% in its home Swedish market. The company is also the top selling brand in the oat category in the US, UK and Germany.
Strong sales growth, but growing losses
Sales are booming. Oatly’s revenue more than doubled to $ 421.4 million in 2020. The company is investing heavily in the business, resulting in an operating loss of $ 47.1 million last year.
Losses have widened over the past year, and Oatly posted a net loss of $ 60.4 million in 2020 compared to $ 35.6 million in red ink in 2019. Adjusted EBITDA was minus $ 32.3 million, which was in Compared to minus $ 20.7 million in 2019, it was also worse.
Almost controlled by the majority
Oatly’s largest existing shareholder is Nativus, a subsidiary of China Resources Verlinvest Health. China Resources Verlinvest Health is expected to exercise 45.9% to 47.5% of the total voting rights (depending on whether the subscribers exercise the greenshoe option or not) through all affiliates, giving it an overwhelming influence on all matters gives the company management. This voting right is just below the majority control, which would require at least 50% voting right.
However, it’s worth noting that co-founders Rickard and Björn Oste control an additional 4.4% via an Oste Ventures unit owned by the brothers. Management often votes in concert with prominent shareholders, which could effectively mean public investors have little or nothing to say about how Oatly is run.
Europe, the Middle East and Africa (EMEA) are Oatly’s largest geographic segment, followed by the Americas. Asia is a little smaller but is growing fast.
|Geographic segment||2020 revenue||YOY growth|
|EMEA||$ 302.9 million||88%|
|America||$ 100.2 million||156%|
|Asia||$ 53.7 million||427%|
Further geographic expansion will be critical to future growth, according to Oatly.
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