Oatly - a strategy masterclass gone too far...

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INTRODUCTION
Think you know everything about Oatly? Think again. Most write-ups rush to creative work or tactics and ignore the great strategy behind it. That’s why this week I am going teach you the strategy behind one of the greatest challenger brands of modern times. But hang on…”Hasn’t Oatly’s share price crashed from $28 to $1”? I hear you ask. Well, want to know one of the main reasons for this? Oatly’s brand was so strong & overhyped that it led to a valuation of almost 10x the entire category. So how did they do it? What was the brand strategy that led to this insane evaluation? Let’s break it down…

#1 BETTER PROBLEMS
This week on Linkedin I wrote about how if you want to get to better strategy, you must define better problems. You must look past the obvious and get to problems that open up new paths for growth. And when it comes to defining better problems, Oatly is a master.

Whilst Oatly can feel like a new brand in reality it was founded almost thirty years ago, in 1994. In truth, the first two decades of the brand’s life looked very different from today. First, the brand targeted a far narrower audience of vegans & those with lactose intolerance. Second, the brand focused mainly on communicating product features (calcium & vitamin enriched) and benefits (lowers cholesterol). Third, it embraced a rather terrible brand identity (see below).

However, after twenty years of relatively stable yet low revenues, the brand pivoted its brand strategy. They realised that if they wanted to grow, they needed to look beyond the small and limiting vegan market. They realised they had to find a way to appeal to the far bigger and more lucrative market of milk drinkers. The billions around the world who pour milk in their coffee and on their cereal, every single day. This a smart objective from Oatly because, as long-time readers of the newsletter will know, going after the broadest market is the most effective path to scale and growth.

Now Oatly could have stopped here and simply defined their marketing problem as “we need to appeal to a broader milk drinker audience”, but this is neither inspiring nor that helpful. Thankfully Oatly dug deeper and uncovered a better and more useful problem. They realised if they wanted to get people to switch from milk to Oatly, they needed to be more combative. They needed to undermine milk. They need to show how milk was in fact an inferior alternative to Oatly.

#2 CULTURE FIRST
Oatly’s more powerful problem helped set the brand up for greater success when it came to writing its brand positioning. It gave them greater clarity & focus when choosing what (and what not) to aim for. It helped them to realise that they had to move beyond features & benefits and find Milk’s biggest & best weakness to go attack. And when it came to picking a weakness, they did what all the best brands do. They found a weakness that would both hurt the competition & resonate with culture.

What they do go after? Well, they found not one but two weaknesses to attack. First, the ever-growing concern surrounding the climate crisis. Second, people’s growing concerns about the links between unnatural products and bad health.

Using these cultural tensions they were able to craft their brand positioning

Oatly’s brand positioning did what all great strategies should do. It gives the brand a clear direction. It guides them on what they should do (attack milk, talk about the planet & people) and shouldn’t do (talk about boring features). It was also a positioning that led to one of the best brand lines in recent memory “It’s like milk, but made for humans”.

And was this pivot from vegan brand to milk challenger brand a success? Hugely. We can see around the time of the pivot, new positioning & creative work a huge growth in revenue for the Oatly brand.

#3 FIGHTING FOR FAME

As regular readers of this newsletter will know, fame is the single biggest driver of growth. It is the art of getting your brand talked about & shared. Talking of sharing…if you recommend this newsletter I am giving away a prize ( see the bottom of this email for more details).

When it comes to fame Oatly offers us a masterclass. First, as discussed, it established a positioning that resonates with culture. By tapping into what people are already talking about Oatly can fast-track getting people to talk about their brand. Second, it dragged the milk industry into a fight. You see Oatly did what so many brands say they will do, but so few actually have the balls to actually do. They went head to head with a far bigger enemy. They were in their own words ‘f**king fearless”.

It is the second aspect of this approach I want to delve into today. This fearless approach is incredibly smart. You see one of the biggest challenges Oatly faced is that it is massively outspent in terms of media budgets, by the Milk category. One of the best ways to counteract this? Drag them into a fight, get them talking about you and in turn steal their fame. It’s the same approach brands that Burger King does with McDonald’s & Newcastle Brown Ale did with Stella.

Did this approach work for Oatly? It sure did. Almost immediately upon the launch of the “It’s like milk, but made for humans” campaign launched, the Swedish Diary board took the bait and tried to sue them. And how did Oatly respond? They called them out in the Swedish press accusing them of being a big old bully. This cleverly extended the conversation & fame.

The result of the mini-milk war created huge traction for the brand, generating huge amounts of press coverage and fame.

Before I get to this week’s conclusion id love to know what you’d like to see more of in this newsletter. Just take one second to choose one of the options below to help me build the best god damn marketing newsletter around.

CONCLUSION
Want to grow your brand and get an IPO x10 the category? Well, before your rush to creative tactics (like every other Oatly write-up suggests) take the time to really consider your strategy. First, start by really digging deeper and uncovering better problems. Second look at culture and ask what are the bigger trends can you tap into. Third, if you are massively outspent pick a fight with the competition and try to steal their fame.

As always, thanks for reading.

Will Poskett,
Founder of Defiant