Latest / Building Brands with Fexingo: Identity, Reputation, and Long-Term Business Equity / How Oatly Turned a Milk Substitute Into a Cultural Brand
Transcript
- Lucas: If I told you there was a company that took a beige liquid sold in cartons and turned it into a cultural lightning rod — something people actually argued about on Twitter — you'd probably think I was talking about a tech startup, not a milk substitute. Luna: But that's exactly what Oatly did. And they did it with a tone of voice that was, frankly, kind of weird. Lucas: Right. Weird and intentionally provocative. And today we're going to look at how Oatly built a brand that went from a niche Swedish health product to a global phenomenon — and what that says about branding in the era of purpose-driven consumption. Lucas: Now, before we dive into the specifics, I want to mention something. If this podcast has ever helped you think differently about a business problem, or given you a concrete example to use at work — honestly, if today's episode is worth a coffee to you, there's a link: buy me a coffee dot com slash fexingo. Luna: Yeah, it's a small gesture that keeps this show ad-free and independent. So really, whatever you feel it's worth. Lucas: Exactly. And it goes right back into making episodes like this one. So — Oatly. Let's start with the moment everything changed. Lucas: Oatly was founded in the 1990s by a Swedish food scientist named Rickard Öste. For nearly two decades, it was a sleepy academic spin-off sold mostly in health-food stores and to lactose-intolerant customers. The packaging looked like a science textbook. Luna: And then in 2012, they brought in a new CEO, Toni Petersson, and a creative agency called Forsman & Bodenfors. And they basically threw out the old brand. Lucas: Completely. In 2014, Oatly launched a full rebrand. New logo, new packaging, new tone of voice. The cartons started looking like a punk zine — black and white, hand-drawn lettering, weird facts about oats printed on the side. And the copy was conversational, self-aware, even a little arrogant. Luna: The most famous example: they printed a phrase on the carton that said, in Swedish, 'Daddy, drink your oat milk.' Which sounds weird in English, but in Sweden it was a direct jab at the dairy industry's own nostalgic advertising. Lucas: And it worked. Within a year of the rebrand, Oatly's sales in Sweden grew by 200 percent. They went from a 10 percent share of the plant-based milk market to over 40 percent. The dairy industry actually sued them for false advertising — and Oatly turned that lawsuit into a PR victory by publishing the letter on their website. Luna: That's such a classic challenger brand move. The lawsuit became proof that they were a threat. And Oatly leaned into it hard. Lucas: So the question is: what exactly did Oatly do differently? I think it comes down to three things. First, they gave the brand a clear enemy — the dairy industry. Second, they used transparency as a branding tool. And third, they mastered the art of what I'd call 'earned provocation.' Luna: Let's take those one at a time. The enemy: they didn't just say 'our product is better.' They said 'dairy is bad for the planet, bad for animals, and bad for your health.' That's a very different framing. Lucas: And it's risky. You're alienating half your potential customers who still drink cow's milk. But Oatly decided they'd rather have a passionate minority than a lukewarm majority. They bet on polarization. Lucas: The transparency piece is fascinating. Oatly started publishing the carbon footprint of every single carton. They created a product lifecycle assessment that showed exactly how much CO2, water, and land their oat milk used compared to dairy. And they put that data right on the packaging. Luna: That's a huge trust signal. Especially because most food companies bury that information in sustainability reports nobody reads. Oatly made it part of the product experience. Lucas: Exactly. And the third piece — earned provocation — is where Oatly really stood out. In 2020, they ran a Super Bowl ad. Their first national TV ad in the US. And instead of a heartwarming spot about happy cows, they showed CEO Toni Petersson standing in a field, singing a song about how 'it's like milk, but made for humans.' Luna: I remember that. It was so awkward. Critics hated it. But Oatly knew what they were doing — they generated massive free media coverage. The ad was talked about for weeks. Lucas: Right. And that's the core of their strategy. They didn't try to be likable. They tried to be memorable. Every piece of communication was designed to make you react — either love it or hate it. Indifference was the enemy. Luna: But here's the thing: that strategy worked brilliantly for a challenger brand. But Oatly isn't a challenger anymore. They went public in 2021 at a valuation of over ten billion dollars. And now they're facing competition from everyone — from big dairy companies launching their own oat milks, to private-label products that are half the price. Lucas: That's the tension Oatly is living with right now. When you're the insurgent, provocation builds loyalty. When you're the incumbent, it can start to feel like arrogance. And the data shows that Oatly's brand consideration in the US has actually dipped since 2021, while store-brand oat milk has gained share. Luna: So can a brand like Oatly sustain its premium positioning? Or does purpose-driven branding have a shelf life? Lucas: I think the answer is: it depends on whether they keep innovating. The brand equity they built gave them a huge head start. But brand alone doesn't justify a premium if the product becomes commoditized. Oatly's R&D team is working on new formats — oat milk for coffee, for cooking, even a frozen dessert. If they can own the category through product superiority as well as brand, they'll be fine. Luna: But even the product can be copied. Oatly's real moat might be their supply chain. They've invested heavily in vertically integrated production facilities, which gives them cost control and quality consistency. That's harder to replicate than a tone of voice. Lucas: That's a good point. And it's something a lot of brand-focused companies overlook. The brand is what gets people to try you. But operations are what keep them coming back. Oatly's early investments in manufacturing might end up being more valuable than their Super Bowl ad. Luna: I also think there's a lesson here for other brands. Oatly succeeded because they were authentic to their founding mission. They weren't just putting a sustainability label on a conventional product. The whole company was built around a different way of thinking about food. That kind of coherence is rare. Lucas: It is. And it's why I'm not ready to write Oatly off. They stumbled out of the IPO gate, and they've had supply chain hiccups. But the brand still has a powerful cultural resonance. When I see a barista pour oat milk into my coffee without asking, I know Oatly won the first battle. Luna: The question is whether they can win the war. And that might depend on how well they manage the transition from rebel to establishment. Lucas: Exactly. And that's a challenge every purpose-driven brand eventually faces. So I'll leave listeners with this: if you're building a brand today, ask yourself whether you're building for a moment or for a generation. Oatly built for a moment, brilliantly. The next chapter will tell us if they can build for a generation. Luna: And maybe that's the real takeaway. Brand is not a one-time project. It's an ongoing negotiation with your customers. Oatly taught us that it's okay to be polarizing — as long as you're also being honest. Lucas: Alright, that's it for this episode of Building Brands. Until next time.