Oatly’s growth plans disrupted
It is challenging to grow a business. Planning and prompt execution are required. The third quarter of the Oatly Group’s fiscal year provides an illustration of what might occur when a company’s expansion doesn’t go as expected.
The corporation had a long list of issues during the quarter that concluded on September 30. For instance, Oatly failed to meet its production targets in the United States due to processing problems at the company’s Odgen, Utah, factory.
In a Nov. 15 conference call with financial analysts, CEO Toni Petersson stated, “This was further exacerbated due to COVID-19-related supply chain disruptions, which led to a delay in our team’s ability to receive the required equipment to fix the issue in a timely manner.”
Foodservice establishments were forced to close as a result of the COVID-19 Delta variant’s proliferation throughout Asia. Roughly 75% of Oatly’s sales in Asia came from the foodservice industry during the third quarter. Lastly, the delivery of goods in the area was hampered by a truck driver shortage in the UK as a result of Brexit.
Oatly reported a loss of $41.2 million for the quarter as a result of the problems, which was more than the $10 million loss for the same time in the prior year.
Sales for the quarter increased to $171 million from $115 million the previous year.
Even though Mr. Petersson thinks the problems are short-term, they will persist until the end of the year and cause sales to fall short of expectations set by the company. Oatly predicted $690 million in sales for the fiscal year 2021, but the company now projects sales of roughly $635 million.
The management issued a warning, stating that more supply chain interruptions might happen in 2022 and could have an impact on Oatly’s ability to launch goods.
According to Peter Bergh, chief operating officer, “we expect to strategically prioritize our oat base for the production of oat milk versus other food products to drive growth and conversion based on the strong demand we continue to experience across our markets.” “We think this adds even more evidence to our potential for development and lengthens the tail of our growth trajectory. But if we sell fewer food goods and depend more on co-packers than anticipated in 2022, the revenue mix from these items may have a little effect on our revenue and gross margin.
The company will face further pressure from inflation associated with essential products such as rapeseed oil and oats.
Chief financial officer Christian Hanke stated, “8% to 9% of our total cost of goods sold is attributed to oats.” “We are well-positioned with an adequate supply of oats to meet our anticipated growth this year and for the financial year 2022, even with the conditions of the oat drought.”
“Compared to the second and third quarters of previous year, roseseed oil continued to constitute a larger percentage point (3–4%) of our overall cost of products sold. We anticipate that some of the inflationary pressures will be mitigated by the geographic localization of our manufacturing capacity, which includes moving more production in-house.
You may also like:
Food security in emerging nations: issues and remedies
Are drinks the secret to increasing cannabis use among consumers?
Managing the lack of labour for mushroom picking
According to Mr. Petersson, 2021 was the most revolutionary year in Oatly’s history.
“To meet the strong consumer demand for our market-leading brand, we’re adding new production capacity at an unprecedented pace for our company on three continents, and working to execute this during a global pandemic is no small feat,” he stated. “To best position Oatly to serve clients and consumers alike, we are continuing to prioritize growth investments over profitability. We will continue to focus on flavor, nutrition, sustainability, transparency, and trust with a strong emotional connection to our brand.
With a significant foodservice presence, a growing e-commerce possibility, and an estimated value of $600 billion in the retail channel alone, the global dairy industry is one that we feel must be prioritized in order to accelerate conversion.