Programme Name: MBA

Course Code: MGMT 5711

Course Name: MANAGING CREATIVITY & INNOVATION

Assignment / Lab Sheet / Project / Case Study No. 1

Date of Submission: 6th June 2020

Submitted By: Submitted To:

Student Name: Priyanka Dhungana, Rashmi Shrestha, Faculty Name:

Sanjay Sah, Saurav Lunia Department:

Semester: 2nd Sem

Contents
1. Introduction: ......................................................................................................................................... 3
2. Oatly Products & Packaging: ................................................................................................................. 3
3. Challenges: ............................................................................................................................................ 4
a. Lawsuit .............................................................................................................................................. 4
b. “No added sugar” claims controversy .............................................................................................. 4
c. Product shortage............................................................................................................................... 4
d. Competitors ...................................................................................................................................... 5
4. Change in Leadership: ........................................................................................................................... 6
5. Structural Change.................................................................................................................................. 7
a. Marketing strategy ............................................................................................................................ 7
b. Sustainability ..................................................................................................................................... 7
c. Packaging .......................................................................................................................................... 8
d. New outlet ........................................................................................................................................ 8
6. Teams .................................................................................................................................................... 9
a. Evergreen Packaging: ........................................................................................................................ 9
b. Starbucks: .......................................................................................................................................... 9
c. Opening in China: .............................................................................................................................. 9
7. Others .................................................................................................... Error! Bookmark not defined.
 1. Introduction:
Oatly was founded back in the 1990s and is based on Swedish research from Lund University. The
company’s patented enzyme technology copies natural process and turns fiber rich oats into
nutritional liquid food that is perfectly designed for humans. Today, the Swedish company remains
independent and dedicated to upgrading the lives of individuals and the general well-being of the
planet through a lineup of original oat drinks. The company operates out of the southern region
of Sweden with Headquarters in Malmö and our Production & Development Center situated in
Landskrona. The Oatly brand is available in more than 20 countries throughout Europe and Asia.
So, about 30 year ago, they were researching to turn oats into milk and making a production
process to keep the beta-gluten and make oats drinks, oat creams, oat spreads, and barista
edition oat drinks.

2. Oatly Products & Packaging:

Oatly have a lot of product range. They have a whole, semi & skinny drink. Semi organic and
chocolate deluxe with high texture. They a have Barista Edition drink specific for coffee and mango
orange drink as well. The packing is also getting innovated with day. The can and tetra packing for
on the go drinks are getting changed with Evergreen packaging. To meet its focus on
environmental responsibility and sustainability, Oatly has switched to Evergreen Packaging’s
Sentinel Fully Renewable Ice Cream Board through its packaging converting partner Stanpac
Packaging. Evergreen’s packaging has been used for Oatly Frozen, its dairy-free dessert range
made from oats. The company states that its packaging requires no change to existing converting
equipment. Sentinel’s products can be used for a variety of food service and retail food grade
packaging applications, including ice-cream with its specific controlled environment requirements.
 3. Challenges:
a. Lawsuit
Oatly has been an expert in controversial marketing campaign. Back in 2015, Oatly was taken to
court by Sweden’s milk lobby, arguing that the brand’s marketing disparaged cow’s milk as
unhealthy. According to The Future Center, startup came up with slogans like:
“It’s like milk but made for humans” and “No milk No soy no badass”
These slogans were found to be offensive and hence diary lobby file a law suit against Oatly.
Apparently, the company lost the case against milk lobby.
Oatly was founded by Swedish food scientist Rickard Öste in 1994, but his patented milk-like
formula remained obscure until 2014, when the company’s feisty, new CEO, Toni Peterson,
redesigned its packaging to call attention to wastefulness and environmental impact of cow milk
production. Humans can get most of the nutrients they need directly from plants, Oatly argued on
its packaging and in a series of quirky YouTube ads, while getting actual cow milk is an unnecessary,
pollutive alternative for the same calories and nutrients. LRF MJÖLK, The Swedish dairy lobby, sued
Oatly for disparaging cow milk.
Oatly responded by publishing the text of the lawsuit, making LRF Mjölk look like it was bullying
the tiny oat company. Oatly’s sales soared, giving it all the encouragement it needed to expand
overseas. Today, Oatly has a factory in New Jersey, another one planned for Utah, and distribution
across China. Its sales revenue topped $100 million in 2018 and are planning to double it by the
end of 2019, making it the indisputable world champion of dairy substitutes.
b. “No added sugar” claims controversy
The company claimed of ‘no added sugar’ in their unsweetened oat milk during their ad campaign.
However, Campbell soup (which sells oat milk via its pacific foods subsidiary) raise issue with
Oatly’s no sugar added claim. They draw an attention to company’s oat milk production process,
which breaks down oat starch into simple sugar hence, complaint to stop marketing this ad
campaign. Campbell soup also claim that the company was misleading their customer through
false taglines. This controversy had a harsh effect on customer as confusion was created within
the oat milk users leading the company towards a great challenge.
c. Product shortage
The year 2018 was slightly a worse and challenging year for Oatly as the main product of company,
baristas edition, showed a great shortage across the US. As Oatly was in a huge success and
company even increased their production from year 2017-2018, still couldn’t keep up with the
demand. After Oatly started noticing the enormous appeal of their product in the States, they
started shipping product from their European factory to US supermarkets to meet demand. But
they couldn’t ship them fast enough, and stores couldn’t keep them on the shelves for more than
a few hours. In result, various cafes in America were slowly replacing Oatly’s oat milk with pacific
food oat milk. This was not good news for the company. This feverish desire for the limited supply
product snowballed into a shortage that nearly wrecked the reputation of the brand.
 d. Competitors
Oatly, being a breakout star, created and rule the oat market. But one consequence of that was it
also created its competition. Hence many other companies joined the oat market like Quaker oats
announced a line of oat milk and launched in January. Similarly, Califia Farms also announced their
first special barista version in February. Another Company called HP Hood also launched Planet
oat, company’s first branded nondairy offerings. The biggest threat was not just the competition
but rather other companies producing bad and low-quality oat milk in lesser price. Hence this low
quality oat milk not only pissed of their customers but Oatly as well.
 4. Change in Leadership:
In 2012, new CEO Toni Peterson joined the company at made exceptional changes in marketing
and packing. Before him Rickard Öste was the owner. When he first drank Oatly’s oat milk, he was
impressed by the sustainability of its production and lack of sugar content. He said, however, that
he found drinking oats “awkward”, and that Oatly’s accompanying marketing didn’t inspire him
much. Having witnessed a rise in popularity of soy and almond milk in recent years, Toni wanted
to reorient Oatly’s marketing towards younger, trendier milk drinkers. Consequently, Toni went
about redesigning Oatly’s milk cartons with self-deprecating slogans and a minimalistic typeset. In
a series of commercials, he leaned into oat milk’s polarizing taste and general obscurity, producing
a series of unusual televised advertisements which took some wrong turns ultimately.
Same year, John Schoolcraft joint the company as a creative director. He had been tasked with
forming the company’s message in line with its strong values. He previously worked as a
copywriter before moving into creative director roles at agencies such as Adtomic and DDB
Denmark. Under John’s creative direction Oatly has fearlessly pursued building a company that
endeavors to be honest, human, consistently inconsistent, interesting and world class without
being evil.
 5. Structural Change
Oatly’s mission is to deliver products that have maximum nutritional values and minimal
environmental impact. Since the new CEO Toni Peterson and new creative director John
Schoolcraft join the company there has been a great change in company’s structure. Oatly as a
brand has changed from life science Company to Lifestyle Company which runs under ethic, values
and doing best for society. The company now is based on credibility and transparency. And their
main purpose and goal is to save the world rather than just earning money.
As Oatly strives to create a lifestyle brand, they focus on satisfying needs rather than promoting
wants. This way they believe in keeping healthy and long-term relationship with the customers
and earn their loyalty.

a. Marketing strategy
Oatly is a product focused, clean and provocative brand. In terms of marketing structural change,
the target audience were now young urban hipster who are more into nature and food culture.
They apply the principle of disruptive communication strategy i.e. Oatly started in lower end rather
than high end marketing tools like TV broadcasting. They distributed their product in various coffee
shop to get connected with their customer instead of courting grocery chains or big box retailers.
This worked amazingly as people were addicted to their barista’s edition oat milk. Their ads and
taglines were full of fun and even weren’t afraid of making jokes about themselves and other
brands in their ads. This made them stand out of the box. This actually grab the attention of their
target audience. Not only that they even used street culture art as their part of campaign. This
street art made ads look better than just another ad.

b. Sustainability
Sustainability is actually at the heart of Oatly. When it was introduce its vision was only to offer
nutrient rich, oat based product to the whole world. Twenty year later after globalization company
vision which means demand of the product has totally blown up with nature market. The ways to
have a sustainable growth are explained.

 Resource efficiency
Being a sustainable company, Oatly has make sure that the large part of the work has to
do with ensuring raw materials and resources like energy and water and using them in
smartest and most efficient way. They have target themselves a 25% total greenhouse gas
emission reduction by 2020 and are still working on it.
 Super suppliers
Oatly tries to surround themselves with people and business that are passionate about
sustainability. They are focused on setting up workflow and developing framework
 including risk assessment models, evaluation forms and sustainability criteria for their
ingredients.
 Committed coworkers
Company ensure that all of their coworkers feel committed to sustainability. They foster a
corporate culture where everyone is allowed to be themselves and contribute their unique
perspective.

c. Packaging
Every brand always tries to make slight changes regarding their product so that they won’t confuse
their customer. But Oatly approached differently, they threw the old packaging and came up with
new one.
Oatly's focus on environmental responsibility and sustainability and has switched to Evergreen
Packaging. It is an eco-friendly paper-based packaging made with an innovative renewable coating
derived from sugarcane. About the packaging, the illustrative typefaces used for the product, gave
the design a personal feel. Its palette is very restrained, employing only three colors which,
ironically, is what makes it pop off the shelf in a retail environment. Also, the art style is quite naive
as this lends a dense, jam-packed aesthetic to the branding, giving it lots of energy and fun whilst
reinforcing the simplistic.

d. New outlet
Oatly has transformed from a dull food processing company into fearless challenger brand.
However, in 2018 company had faced huge product shortage in USA. It was because there was no
other processing plant outside Europe. Hence, in April 2019 new factory of Oatly was introduced
in New Jersey, USA.
 6. Teams
For all the changes and commitment you need some kind of collaboration or form alliance. Oatly
was adaptive and were ready for any kind of change, collaboration and alliance. Some of the
alliance that made them innovative are.
a. Evergreen Packaging:
To meet its focus on environmental responsibility and sustainability, Oatly has switched to Evergreen
Packaging’s Sentinel Fully Renewable Ice Cream Board through its packaging converting partner Stanpac
Packaging. According to the plant-based packaging company, Sentinel is eco-friendly paper-based
packaging made with renewable coating that has been derived from sugarcane. Both paper and coating
come from sources that can be regenerated. “We were so glad to learn that Evergreen and Stanpac are
committed to furthering their own sustainable offerings and that they came to Oatly as a partner to get
those options into the world,” said Oatly US general manager Mike Messersmith. Messersmith added: “As
a company committed to developing new food options for sustainably-minded consumers, it’s great to
have packaging partners equally committed to lowering their footprints.”

b. Starbucks:
Coffee chain conglomerate Starbucks has announced a new range of plant milks for the new decade. The
chain will add Oatly’s vegan oat milk to its permanent menu at around 1,300 locations across the US and
Canada. The Starbucks website states, “The first new Starbucks beverages of the decade feature these
plant-based milk alternatives with the arrival of the Almond milk Honey Flat White and Coconut milk Latte.
The beverages join the permanent menu in stores in the United States and Canada starting today (7th
January).”

c. Opening in China:
Launching a product in China is a difficult task. Many F&B brands find distributors in China, which get the
products in different grocery and supermarkets, but there is no ownership in China. Oatly took a different
route, in November 2016, it received investment from Verlinvest and formed a JV with China Resources
Corporation (CRC). In early 2018, Oatly started its operations in China led by CEO David Zhang. And its
APAC HQ is in Shanghai, which will be responsible for its APAC operations beyond China. China Resources
also plays an important role as it owns Pacific Coffee across China, and this chain started to offer coffee
drinks with Oatly. In addition, Ole, a premium supermarket by CRC, also carries Oatly products in all its
locations.

Cross collaboration between 2 brands has become quite popular and effective in China. Oatly x HEYTEA
was launched in summer 2019. Many coffee shops feature Oatly in their storefront with posters and stacks
of products — this is because the popularity of Oatly in China has made it a marketing element for coffee
shops. Oatly encourages coffee shops to invent their own drinks with Coffee Tea. In 2020, we will see
more cross collaboration between Oatly and healthy lifestyle brands in China.

In Sept 2019, Oatly’s CEO Toni Peterson visited China. Among media events and meetings, he hosted a
dinner for the “Post Milk Generations”, 6 ambassadors from yoga instructor, travel writer, vegan chef,
and cafe owner to marathon runner. Oatly has taken a non-conventional approach to enter China with its
dedicated entity and team, as well as creative marketing to activate through 3rd wave coffee shops in
China, and making it an internet celebrity brand in China.
 7. What made Oatly unique?

Social responsibility of business

Oat milk is widely considered to be the most sustainable and environmental friendly of all the
mainstream plant based milks.

 Switching from cow’s milk to oat milk can save up to 73% in carbon dioxide. Company
claims that their plant based product use less land and energy. Like, it takes 4-5 liters of
water to grow a single almond and soybean industry also causes extensive deforestation.
While oat is regarded as one valuable part of crop rotation systems and can be grown
locally in many region.
 Oatly company creates a healthy and nutritious product. Their product consist of more
fiber, vitamin and proteins than dairy product. This shows the company are concerned
about their consumer’s health as well.
 The company is also actively working towards several UN’s sustainable development
growth.
Other than that.

 Sweden is actually the 7th biggest climate contributor per capita with 3.8 planets needed
to sustain the level of consumption of a typical Swede. According to the latest research,
one of the four most important behavioral changes an individual can make is to eat a plant
based diet due to the intensive environmental impacts we know now come as a result of
animal agriculture. Oatly recognizes this. This has become the core of their company. They
see climate change as the imperative of our time. So much is at stake.
 Oat milk is less resource intensive than cow milk as only 0.20 kg of harvested oats and
0.035 kg of rapeseed oil are needed to produce 1 kg of oat drink. Hence oat products are
a perfect solution to feed the growing world population, which is expected to increase by
2.3 billion people by 2050. Producing higher amounts of food rich in nutritional value but
which requires lower inputs is what the company focuses on. Oatly constantly works to
reduce the company’s carbon emissions, choosing trustable suppliers, working on
innovation and using renewable energy in the production center.
 Oatly claims that the publicity gained from being sued by the milk lobby and not backing
down directly influenced their ability to jump from $20 million to $200 million in sales.
 They started posting cute videos to YouTube, commissioning an environmental impact
report to investigate the impact of milk on the environment, and plastering their message
everywhere.
 The Creative Department of Oatly is named as Oatly Department of Distraction Services as
they are focused on creating unique packing and ads for the entertainment of consumers.
Changing the name of “Nutritional Facts” to “The Boring Section” is a different way of
marketing and branding their products.
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