REUTERS — Oatly Group forecast at least a 64 percent surge in its annual revenue as the newly public Swedish company expects to benefit from rising demand for vegan milk alternatives at restaurants and coffee chains.
U.S.-listed shares of the company rose 6.5 per cent Aug. 16, trading about US$1 above its May initial public offering price of $17 as it also floated plans to ramp up production to meet “100 percent” of oat milk demand by fall.
Founded in 1990, Oatly has ridden a wave of interest in plant-based food in recent years, led by millennials and Gen Z consumers who are willing to spend on sustainable products that are also healthy.
Like plant-based food company Beyond Meat Inc., Oatly said sales of its dairy-alternative products at restaurants rose in the second quarter, recovering from last year’s pandemic-driven fall as consumers started to dine out again.
Oatly, whose backers included celebrities Oprah Winfrey and Jay Z, said it was especially benefiting from its exclusive U.S. oat milk supply agreement with Starbucks Corp., with the coffee chain accounting for 27 percent of sales in the second quarter.
The company said it expects annual revenue to rise to at least $690 million, above earlier estimates of $681.4 million.
“I don’t think anybody expected this magnitude of success at Starbucks. But it’s really important for us,” said chief executive officer Toni Petersson during an analyst call.
To catch up with demand, Oatly spent heavily to ramp up production capacity and floated plans to boost capacity at its Utah manufacturing facility by 50 percent.
Oatly’s expansion, as well as higher shipping expenses, led to its second-quarter losses widening to $59.1 million from $4.8 million a year earlier.