The Oatly Repositioning Case Study
Oatly’s repositioning story:
the 3 secrets behind the brand success
Welcome to the Oatly Repositioning Case Study!
This Case Study is a part of our FourFactors® Master Course here in the FourFactors® Academy. The FourFactors® Academy is our online individual training with pay as you go video tutorials loaded with hands on advice and global examples.
To access the rest of the course you need to enrol in the end (Course description in the bottom), but this Course Content is free of charge. We hope you will enjoy reading it and that it opens up your mind to the POWER of positioning your brand!
“We had world class science but we didn’t know how to tell the story that could unleash the potential we saw in the company.”
-- Björn Öste, co-founder Oatly
In 2012 The HMT aka HealthyMarketingTeam was hired by Oatly’s owner and board to lead the repositioning of Oatly with the purpose to create a platform for international growth.
At the time Oatly was an undifferentiated Swedish oat milk producer. Today a global brand.
When we look back at the project we can conclude that there are a number of fundamental factors that paved the way for the success we can see today. And to summarise these means that there are learnings for you who want to create a global platform for growth for your company whether you are a start-up entrepreneur or a CEO of a larger company looking for the next growth phase.
So what are the learnings?
The first is that change starts by not accepting status quo, and these were the factors that triggered the need for the repositioning project:
- Oatly’s owners refused to accept a valuation as a food company – Oatly was rich on science based ip related to oat and beta glucans.
- The company had a weak brand that couldn’t command a premium price and could be at risk of being replaced by retail brands or replaced by a line extension into oats by a leading plant milk player like Alpro.
- Organisation behaving and thinking like a mass market company with focus on volume and price negotiations with retail.
- As a consequence the acting ceo, who was competent and experienced in running a food company, was layed off as a way to open up for a change of mindset.
“The real challenge was that we started to behave like a generic brand and compete on price without being able to leverage our uniqueness”, says Björn Öste, Co-founder and co-owner of Oatly.
This means that vital factors for a successful outcome of the project were already in place when HMT started the project:
1. Repositioning Process initiated by the owners
2. Chairman and leading board member were formal project owners
3. Board and management were involved from the start
A focus on oat science and beta glucan claims
Oatly at the time was very inward focused. The understanding was that the “milk free” position would remain a niche, especially since the dairy industry made advances with lactose free milk.
The discussion when we entered was circling around how the company should leverage the science and claims related to Betaglucans. Heart health or gut health? There were health claims available for both…
This mix of messages was also reflected on Oatly’s packaging at the time (see image above) where milk free was one message, heart health a second and added vitamins and minerals a third additional benefit for traditional vegetarians who needed calcium fortification to supplement their dairy free diet. The brand didn't give any direction to these three messages apart from its Oatly name. So who was the target consumer that could be the basis for Oatly’s future?
The health claims trap:
A similar inward focus on science and claims can be seen as an explanation to Quaker Oats failed launch of an Oat Beverage in to the growing plant milk category in 2020. Click to see our success failure case study in the master course, where we compare the positioning of Oatly vs Quaker Oats.
Early detection of the Vegan trend
So to understand who should be the future consumer of Oatly we had to start by identifying who were the current. We already had those who had found the product for its milk free benefits ie those who couldn’t tolerate milk and those who chose Oatly as a vegetarian product.
It was clear that the emerging plant-based trend was in favour of Oatly and helped to grow sales and the popularity of oat milk as an alternative to the dominant soymilk where also almond milk was winning shares. But the market leader Alpro was responding by including almond and oat milk to its range, so how should Oatly win against soy and almond? The initial idea from Oatly was to leverage its oat nutrition and functional Betaglucan claims. But the trend and consumer analysis made it clear that the plant based trend was about both health and sustainability and by playing the health card only Oatly would dig itself deeper into a small functional niche where the focus would be the infighting between plant based alternatives. It became clear at this stage that the sustainability trend was resonating with the founders purpose and that his views were in line with a growing tribe of activist consumers the so called Vegans..
Secret #1: Oatly’s founder.
Build the brand on the purpose behind the science: The Oatly Way.
The founder’s purpose was to replace Cow’s milk and in a simple drawing he visualized the Oatly way vs the Cow’s way and how much more energy and environmentally efficient it is to produce milk straight from the fields instead of taking the long route via cows and dairy(See image below). And what’s more, he could also demonstrate that the nutritional profile of oat milk was better suited for humans than cow’s milk who’s nutrients are naturally designed to grow a calf. “Made for humans…”
With the founder’s purpose as the foundation of the brand it now became obvious that the main “source of business” was to take share from dairy, not from other plant sources. To attack dairy had been discussed but it had earlier been avoided, initially since Oatly was distributed by a regional dairy, and later from lack of internal commitment to go up against the dairy industry.
Secret #2: Oatly’s board.
“We’re not in the business of oat milk. We’re in the business of change. Wow No Cow!
To turn a purpose of change into a marketing strategy it means that you need total alignment between founder, board and management. The first step was to ensure that everyone understood that Oatly was not a functional food brand and not a mass market food brand but a Lifestyle Brand (we defined what is a Lifestyle brand in the FourFactors® Academy) and as such needed to bond with the early adopter consumers – in this case the new generation of Vegans.
The first rule of a Lifestyle Brand is to disrupt the category by challenging the status quo. In the case of Oatly the owners and board stood the test when the dairy industry sued Oatly for its attack on cow’s milk. “Wow no Cow” / The Oatly Way vs the Cow Way. The internal alignment on the Brand Foundation was what enabled the very strong creative expressions and activities of the brand and the uncompromising bonding with The No Milk Generation executed by Oatly’s new management.
Secret #3: Oatly’s management.
Brand management starts with brand leadership. “Toni says..”
Food company CEOs are not normally seen on pack, they are normally seen in factories and board rooms but to create a disruptive brand you need a disruptive leader. The recruitment of Toni Peterson was based on a briefing where the recruitment agency was tasked to “not bring a traditional food company CEO” but a Lifestyle Brand leader (see image below). With Toni came his partner in crime John Schoolcraft, as Creative director, who together with Toni and the Swedish ad agency Forsman & Bodenfors, created the new brand execution based on the Brand Positioning Blueprint – “The Oatly Way” - we had developed together with owners and board. And since day one of the launch of the rebranded Oatly, Toni and John is the Oatly brand.
The Approach: FourFactors® Analysis Helped to Find The Direction
Oatly’s board and management team was guided by our FourFactors® approach in the 4C analysis of its brand position. The 4C analysis looks into a brands’ Competence, it’s Competition, relevant Consumer trends and the internal Culture of the corporation. This analysis led to key insights and was followed by a Brand Definition process, using HMTs Brand Positioning Blueprint, to develop the “Brand Torch”.
“Together with HMT we at OATLY have chartered, analyzed, defined and successfully implemented an excellent and value creating brand positioning.
— Mats Hallkvist, Chairman 2012, Oatly
Are you curious to learn how you can reposition your brands as succesfully as Oatly? Contact Peter Wennström: [email protected]