Oatly will emerge victorious in the battle of herbal peers in 2022


By Praveen Paramasivam

(Reuters) – Oatly Group AB is expected to forecast strong sales growth for 2022 when it reports results on Wednesday, as health-conscious consumers consistently turn to the company’s plant-based milk in contrast to the slowdown of demand observed by Beyond Meat.

Many restaurants and retailers have partnered with Oatly in recent months to offer vegan options to customers. One of the biggest boosts, however, came from a U.S. oat milk supply deal with Starbucks Corp.

As a result, Wall Street sentiment on Oatly has turned more supportive than that on alternative meat maker Beyond Meat Inc, which has seen sales growth slump during the pandemic for a number of reasons.

“Beyond Meat has not significantly expanded its distribution in the United States over the past year…Oatly’s sales growth is currently being driven by expanded distribution,” said CFRA Research analyst Arun Sundaram. .


Oatly expects to supply 85% to 90% of Starbucks’ oat milk needs in 2022. Chief executive Toni Petersson said late last year that Oatly’s oat milk performance in the chain of coffee exceeded expectations.

About 30 million American adults have some degree of lactose intolerance by age 20, according to the US National Library of Medicine’s MedlinePlus, making milk alternative a go-to product for many of them.

Oatly said in November it opened its first production plant in Ma’anshan, China, just months after opening its first Asian plant in Singapore, signaling that its margins would improve by bringing more production in-house.


Analysts expect Oatly to see a nearly 58% increase in revenue for 2022, with the loss also tapering from 2021 levels. In contrast, Beyond Meat’s revenue is only expected to increase by 27%.

Chart: Oatly spoofs Beyond Meat as Wall Street’s alternative food darling: https://graphics.Reuters.com/OATLY-RESULTS/xmvjoeqlbpr/chart.png

Oatly has the second-highest projected revenue growth among its food and beverage growth peers, only behind energy drink maker Celsius Holdings Inc, according to brokerage Piper Sandler.

Still, Oatly will need to overcome potential mechanical and automation issues as it ramps up its production as well as broader supply chain disruptions to ensure demand for its milk, ice cream and yogurt turns into sales.

Fourth-quarter revenue is expected to increase 2% sequentially, despite the recall of a few products and the disposal of less than one million liters of inventory due to a quality issue in November.


** About 68% of analysts rate Oatly “buy” or higher, compared to just 10% for Beyond Meat.

** Oatly’s current average price target implies a 136% upside at Monday’s close, versus 25% for Beyond Meat.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Shinjini Ganguli)


Comments are closed.