Milk’s (Least) Favorite Cereal: Oatly’s Impact On Dairy

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Started by the Öste brothers in 1994, Oatly has become a household name in much of Europe and North America. Rickard Öste, then a researcher at Lund University, noticed that more and more people were reducing their consumption of traditional dairy products because of lactose intolerance or concern for animal welfare and sustainability. In this change, the brothers saw an opportunity: early dairy alternatives were largely soy- and rice-based and didn’t taste like cows’ milk. What’s more, other plant-based milks (such as almond and coconut) had their own animal welfare and sustainability concerns. 

By reducing CO₂ emissions and eliminating animal-based products, Oatly’s goal is to do more than merely mimic dairy. In this way, the company tries to address the four main challenges of the food industry: health issues, environmental concerns, food security, and animal welfare.

The claimed health benefits of milk are on shaky ground. For example, an estimated 68% of the world is lactose intolerant — and in China, lactose malabsorption affects almost 100% of the population. Despite the stereotype of milk being tied to strength and bone health, recent scientific studies fail to find a reliable correlation. Additionally, the nutrients frequently associated with milk, such as potassium, calcium, and Vitamin D, are added afterward during processing. Thus, there’s no reason that one couldn’t get these nutrients from plant-based alternatives. On the other hand, very few people are allergic to or unable to digest oats, and since Oatly fortifies its milk alternatives with potassium, calcium, and Vitamin D, it has a very similar nutritional profile to cows’ milk.

In addition to addressing human health issues, Oatly also tackles environmental sustainability. Dairy and beef operations alone account for nearly 9% of all greenhouse gas emissions, with most of those coming from methane. While other types of plant-based milk have substantially lower environmental costs than traditional dairy, they too have clear downsides. Coconuts, for example, are often harvested by monkeys forced to climb trees and collect them. Monoculture and deforestation are major issues tied to soybean production, although much of the deforestation is due to soybeans grown to feed beef cows. Almonds require tremendous amounts of water and are typically grown in drought-prone areas such as California. In comparison, oats require relatively little water and can be harvested more sustainably and humanely.

As mentioned, animal welfare is another issue where Oatly takes a stand. Cows are treated notoriously horribly, particularly in the United States. Compared to 50 years ago, milk production in the U.S. has nearly doubled, yet cows’ health and well-being have dramatically deteriorated. Oat milk avoids this problem entirely, emphasized by a popular Oatly illustration showing cows removed from the equation.

Food insecurity is the fourth component of Oatly’s mission. Over two billion people currently live in a state of food insecurity, almost all of them in developing countries. As these countries become richer, people living there will likely eat more animal products, as animal products are often viewed as status symbols. Yet, this will only worsen the health, environmental, and animal welfare problems discussed above. For animal advocates, this should be especially concerning.

Nevertheless, there is reason for hope. The authors discuss the rapid rise of Oatly and how the brand has captured consumers’ hearts (and wallets) since its launch in the 1990s. For example, it’s made effective business decisions such as partnering with high-end coffee shops when launching in new countries, coupled with clever advertising slogans and witty, approachable advertising campaigns. The brand was the first to add its climate impact figures on its packaging, and when attacked by the Swedish dairy industry for being “fake” milk, it embraced the criticism as a hook for future publicity campaigns. These tactics have piqued curiosity for oat milk among flexitarians and meat-eaters, two groups who typically aren’t targeted for dairy alternatives.

One memorable (and effective) campaign by Oatly has involved public lobbying and cause marketing. In 2020, the E.U. considered legislation that would require plant-based dairy products to use separate packaging and label themselves as products that do not contain milk. If passed, the legislation would also require dairy alternatives to be sold in distinct packaging without climate comparisons to milk or terms such as “creamy” that might be used to describe traditional milk products. In response, Oatly made a series of clever social media videos calling attention to the law and earned more than 450,000 signatures on a petition to ban the bill, successfully resulting in its withdrawal. Oatly also offers grants to environmental changemakers around the world, further solidifying its mission-driven approach.

Particularly in Western countries (although not exclusively), the demand for dairy alternatives has steadily increased. The global market value for plant-based dairy alternatives was nearly $23 billion in 2020 and will likely exceed $40 billion by 2026. As a major player in this area, Oatly can make a huge difference in moving the world toward a healthier, more sustainable, and less cruel place. Beyond merely offering an alternative to consumers, Oatly is changing the global market by making it the norm to take care of people, animals, and the planet. A lot can be learned from Oatly, especially for vegan entrepreneurs who want to replicate its “business with a mission” approach. For animal advocates, Oatly’s success is also important because it shows that global consumers are willing to support animal-friendly causes with the right approach and messaging.