Latest / Building Brands with Fexingo: Identity, Reputation, and Long-Term Business Equity / How Oatly Turned a Milk Alternative Into a Brand Movement
Transcript
- Lucas: There's a moment in brand history that I think gets underappreciated, and it's when Oatly decided to run a Super Bowl ad in 2020 featuring its CEO literally standing in a field singing a jingle about how much milk he drinks. Luna: I remember that ad. It was bizarre. I think my exact reaction was, wait, is this a joke? Lucas: That was exactly the point. Oatly's whole brand thesis is that you can't win by playing the same game as the incumbents. When you're a tiny Swedish oat milk company trying to take on dairy and the established almond and soy players, you don't outspend them. You out-odd them. Luna: And it worked. I've got the numbers here somewhere — that ad drove a massive spike in website traffic and, within a year, U.S. household penetration for oat milk went from about 2 percent to 8 percent. Lucas: Right. But what's interesting to me is how Oatly built the permission structure to run an ad that weird. It didn't start with the Super Bowl. It started with a 2014 campaign in Sweden called "It's Like Milk but Made for Humans." That was the first time they publicly named the category tension — that plant-based milks were trying to imitate dairy instead of being honest about being different. Luna: So they leaned into the difference rather than hiding it. Lucas: Exactly. Their packaging until then had been fairly generic — carton with a cow, very conventional. The rebrand introduced this hand-drawn, almost childlike typography, a very candid tone of voice that sounded like a person explaining something, not a corporation selling something. They'd write things like "Wow, no cow!" on the side of the carton. Luna: That kind of self-aware humor is risky. If you get it wrong, you sound like you're trying too hard. Lucas: And they did get some pushback. In Sweden, the dairy industry sued them over the phrase "It's Like Milk but Made for Humans" — argued it implied dairy wasn't for humans. Oatly fought the case and lost initially, but they appealed and eventually won. And they used the entire legal battle as content. They published the lawsuit documents in a special edition carton. Luna: So they turned a legal defeat into brand theatre. That's a classic challenger brand move — make the enemy visible. Lucas: Now, fast forward to the U.S. launch in 2016. They partnered with a small network of specialty coffee shops in New York and Portland. They didn't go straight to retail. They got baristas to put oat milk in lattes, and consumers started asking for it by name. That's a very deliberate brand inoculation strategy. Luna: Because if you build a following in coffee shops, you get trial without having to win a shelf placement war against Silk and Blue Diamond. Lucas: Precisely. By the time Oatly hit grocery stores in a big way, there was already demand pull. But then came 2018 — the supply chain crunch. Luna: Oh, I remember that. They couldn't make enough oat milk to meet demand, and stores were running out. Lucas: Most companies would have gone silent, hoping nobody noticed. Oatly did the opposite. They issued a public letter saying, basically, "We messed up, we didn't anticipate this level of demand, and we are allocating supply to retailers based on fairness." They even put a tracker on their website showing where new production capacity was coming online. Luna: That transparency probably built more trust than a smooth rollout would have. It made people feel like they were part of a movement that was growing faster than expected. Lucas: It also reinforced the brand's core promise — that Oatly is made by people who care about the product, not by a faceless corporation. That honesty became a differentiator. And it's worth noting that this only works if the product is genuinely good. Oat milk has a functional advantage in coffee — it froths better than almond milk, doesn't curdle like soy. The brand story sits on top of a real product truth. Luna: So the brand is not just a marketing overlay. It's an amplification of something real. Lucas: Right. Now, let's talk about the IPO, because that's where the brand thesis gets stress-tested. Oatly went public in May 2021 at a valuation north of 10 billion dollars. That's a huge number for a company that, at the time, had revenue of about 420 million. Luna: The market was buying the growth story — and the brand premium. But public markets are unforgiving. As soon as growth started to decelerate, the stock got hammered. Lucas: Which raises the question: can a brand like Oatly maintain its premium positioning when it's no longer the only oat milk on the shelf? You've got store brands now selling oat milk for half the price. And Oatly's own strategy has shifted — they've cut prices and expanded distribution into big-box retailers like Walmart. Luna: There's a tension there. The brand was built on being artisanal, almost anti-establishment. But now it's in every supermarket, and the founder stepped down in 2023. The new CEO, Jean-Christophe Flatin, came from Mars and then from a packaging company. That's a very different background. Lucas: The brand story is having to evolve from "rebel challenger" to "incumbent category leader." That's a hard transition — you can't keep playing the outsider when you're the biggest oat milk company in the world. Oatly's recent advertising has moved toward a more educational, sustainability-focused message. Less weird, more responsible. Luna: But the weirdness was the magic. Without it, are they just another plant milk? Lucas: That's the million-dollar question. And it connects to something broader. A lot of the listeners of this show work in or around brand building, and Oatly's arc is a really instructive case study in how a brand's equity can be both a competitive advantage and a liability at different stages. Luna: Yeah, it does make you think about your own brand's lifecycle. Lucas: And this is actually a good moment to mention something that keeps this show going. Building Brands with Fexingo is entirely listener-supported — no ads, no sponsors. A small group of listeners already chips in every month through buy me a coffee dot com slash fexingo, and that's literally what makes these episodes possible. Luna: It's a simple model, but it means we can focus entirely on the story without worrying about pleasing advertisers. Lucas: Exactly. So if these conversations have moved your work forward in some small way, that's the link. And now back to Oatly — because I think the next phase is the most interesting. Luna: What's the next phase? Lucas: Oatly is investing heavily in production capacity in Asia, particularly in Singapore and China. The brand play there is very different. In China, dairy consumption is growing, but lactose intolerance is widespread. Oat milk is positioned as a modern, aspirational alternative. But the tone has to shift — the cheeky Swedish irreverence doesn't necessarily translate. Luna: So they have to find a brand voice that works in Mandarin while staying true to the core identity. That's a challenge for any global brand. Lucas: And it's a challenge they're navigating right now. The brand is no longer a startup — it's a mature company trying to manage a portfolio of brand expressions across different markets, price tiers, and distribution channels. The question is whether the original brand ethos can survive that complexity. Luna: Or whether Oatly becomes just another CPG brand with a nice origin story. Lucas: I think that's the central tension in brand building today. The same authenticity that gets you started can become a straitjacket as you scale. And Oatly is a perfect lens to watch that play out in real time.