Why The Price Of Oatly Milk Is About To Increase
The plant-based dairy industry is having a moment, so to speak, thanks to a dynamic growth that, as Euromonitor recently noted, resulted in worldwide sales of over $20 billion dollars in 2021, $18 billion of which was from plant-based milk alone. Oat milk, in particular, has emerged as a major force in the growth of alternative dairy, appealing to consumers who are both health-conscious and value environmental sustainability. Oat milk is now the second most popular plant-based milk, trailing only almond milk, reports Food Dive, with sales figures that spiked dramatically over the past year.
The Swedish-born Oatly is an industry leader in both the oat milk and plant-based dairy sectors. The company has been in business for 25 years, but just made its initial public offering (IPO) in February 2021, Market Watch confirms, with a valuation set at $12.6 billion dollars. But although the company continues to see significant growth, with revenues rising 46.3% from the fourth quarter of 2020 to the same period in 2021, chief financial officer Christian Hanke did note (via Seeking Alpha) that price increases are already taking effect in many international markets, and that those price increases are expected to hit the U.S. in late 2022.
Factors motivating the price increase of Oatly products
Why does a company seeing so much positive growth in sales and market share need to raise their prices? For the same reasons so many other companies are currently raising theirs: inflation, rising food and energy costs, plus logistical and supply chain issues exacerbated by the Russian invasion of Ukraine.
"We are strategically taking price increases in [Europe, the Middle East and Africa] and the Americas to help offset a portion of these higher costs," Hanke said (via Seeking Alpha). "Price increases are already in effect in certain markets in EMEA and we will begin to see the benefit of price increases in the Americas starting in the second half of 2022."
Hanke expects the company's supply issues to remain stable, and he projects a continued increase of revenues for Oatly in 2022, although he does admit that the uncertain situation in Ukraine — which like Russia, is a major grain exporter — could have further impacts on prices moving forward.