Oatly’s IPO plans underline the market opportunity for plant-based products

3 March 2021

Just one month following PepsiCo and Beyond Meat’s announcement of a joint venture to develop, produce and market plant-based snack and beverage products, rumours surrounding the Initial Public Offering (IPO) of one of Europe’s plant-based up-starts, Oatly, further emphasises the opportunities in this category.

Oatly has a clear, fun and almost anti-establishment brand proposition that plays to both the purpose and sustainability drivers of its consumers. It was one of the first, and remains one of the few, to provide CO2 equivalent statistics on its packaging. These values resonated initially with a niche millennial audience, but they have become more mainstream and increasingly important to the financial services and investor community in recent years.

Communicating dairy alternatives to consumers

Oatly and other dairy-alternative brands have disrupted the status quo, resonating with consumers. In 2020, US retail sales of non-dairy ‘milks’ were $2.2bn; approximately 14% of all US ‘milk’ sales. Despite this, there is uncertainty as to how these products can be positioned in the market. In the EU for example, regulation already prohibits them being referred to as non-dairy versions of the dairy product e.g. ‘vegan cheese’.

Amendment 171 and the continuing evolution of regulation

There remains a live discussion referred to as ‘Amendment 171’, which may further prohibit any form of communication that associates these products to dairy, including imagery or describing them as ‘alternatives to’ dairy products. 

This raises many questions, not least regarding how to appropriately communicate the product to consumers (which is key to the Amendment 171 debate).  It also creates a misalignment with a similar EU amendment for meat-related terms such as 'sausage' and 'steak' that did not pass.

In short, across most of Europe (noting some Member States deviate), you can have a vegan burger, but not a vegan cheese or potentially even a ‘cheese-like slice’ (pending the 2022 outcome of Amendment 171). There are also ongoing developments regarding pesticide residues and even consistency in defining the term ‘plant-based’ across the EU.

The end of dairy?

In our opinion its far from the end of the dairy sector. Despite falling consumption in major markets like the US, the degree to which dairy products are culturally embedded around the world and the functionality they offer vs plant-based alternatives, we believe global demand will hold up. 

That being said, the real and politicised challenges regarding water scarcity, carbon intensity and improving animal welfare standards are likely to increase production costs of animal-linked commodities. These increased costs, coupled with the rise in consumers seeking healthier, more ethical and sustainable products should be favourable to the commercial feasibility of plant-based alternatives.  

Markets to watch

The innovation challenge to find alternatives to animal products is being tackled around the world. Not just in plant-based alternatives but also in cultured meats (‘cell-based’ or ‘lab-based’). We’re expecting to see the most innovation from markets with mature financial services, scientific industries and consultative regulatory environments: particularly the US and Singapore but also markets like Israel, Japan, EU and the UK.


  • Mark Butcher – Commercial Director, Leatherhead Food Research



PEPSICO (2021). ‘PepsiCo and Beyond Meat® Establish The PLANeT Partnership, LLC, a Joint Venture to Introduce New Plant-Based Protein Offerings’, PEPSICO, 26 January 2021. Available at: https://www.pepsico.com/news/press-release/pepsico-and-beyond-meat-establish-the-planet-partnership-llc-a-joint-venture-to-01262021 (Accessed 3 March 2021).

European Alliance For Plant-Based Foods (2020). ‘What is Amendment 171 and how could it affect plant-based foods?’, POLITICO, 5 October 2020. Available at: https://www.politico.eu/sponsored-content/what-is-amendment-171-and-how-could-it-affect-plant-based-foods/ (Accessed 3 March 2021).

Judith Evans and Emiko Terazono (2021). ‘Vegan milk maker Oatly targets $10bn IPO’, Financial Times, 23 February 2021. Available at: https://www.ft.com/content/b214af48-5f6c-42de-b092-090354eae8fe (Accessed 3 March 2021).

Amelia Lucas (2019). ‘5 charts that show how milk sales changed and made it tough for Dean Foods to avert bankruptcy’, CNBC, 13 November 2019. Available at: https://www.cnbc.com/2019/11/13/5-charts-that-show-how-milk-sales-have-changed.html (Accessed 3 March 2021).

Anna Starostinetskaya (2020). ‘Singapore Becomes First Country in the World to Allow Sale of Cell-Based Meat’, VegNews, 2 December 2020. Available at: https://vegnews.com/2020/12/singapore-becomes-first-country-in-the-world-to-allow-sale-of-cell-based-meat (Accessed 3 March 2021).

Oliver Morrison (2020). ‘A major milestone for lab-grown meat’: Could Eat Just's approval in Asia hurry the market in Europe?’, Food Navigator, 4 December 2020. Available at: https://www.foodnavigator.com/Article/2020/12/04/A-major-milestone-for-lab-grown-meat-Could-Eat-Just-s-approval-in-Asia-hurry-the-market-in-Europe (Accessed 3 March 2021).


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