OATLY Lost Nearly $400 Million Last Year: Are Plant-Based Milk Coffees Losing Their Appeal?

Recently, OATLY, the "pioneer" brand of oat milk, released its financial report for the full year and fourth quarter of 2022, posting a net loss of nearly $400 million.

According to the report, OATLY generated revenue of $722.2 million in 2022, a year-on-year increase of 12.3%. Compared with a total loss of $212 million in the same period of 2021, the loss widened to $396 million last year. Affected by the pandemic, revenue in the Asian market declined by $800,000 in the fourth quarter of 2022.

Contrary to the decline in OATLY's Asian market revenue, the market size of the oat milk industry in China is trending upward. Asia is OATLY's third-largest revenue source, and China's business accounts for 93% of the Asian market, giving it a significant impact on Asian revenue.

Financial report data shows that OATLY's sales volume in the Asian market increased throughout 2022, with year-on-year growth of 32%, reaching revenue of $152.8 million. At its earnings conference, OATLY stated that this year the Asian market, primarily China, will continue to be a key area for expansion. On the same day it released the report, OATLY also announced it had secured $425 million in financing commitments and would continue to expand the domestic oat milk market.

OATLY's Market Position in Asia

OATLY's fourth-quarter report shows that approximately 69% of its major revenue in Asia comes from foodservice channels, with the remainder from e-commerce retail. Foodservice channels, mainly coffee shops, were OATLY's primary entry point into China, leveraging major coffee and restaurant brands to shape public perception of oat milk.

Success Factors and Market Challenges

Since 2018, OATLY quickly "went viral" through the oat milk latte created in partnership with Starbucks, positioning itself as a "new coffee companion." Its signature Barista Edition pioneered a fresh combination of oat milk and coffee and successfully made its way onto the permanent menus of many coffee shops. With the first-mover advantage in oat milk coffee, OATLY became the exclusive supplier for well-known chains such as Starbucks, COSTA, Tim Hortons, and Manner, soaring to an IPO in just a few years.

OATLY's success stemmed mainly from filling a gap in the domestic plant-based milk market, while also riding the concept of healthy eating. When the hype around the concept began to fade, therefore, consumer power weakened significantly. As for the development of the domestic oat milk market, it currently remains at the stage of following new concept trends, with innovative combinations not making much impact.

Market Competition and OATLY's Response

While supplying coffee channels is certainly important, many emerging oat milk brands such as Xiaomai Ouye, Plant Label, and Wild Plants have appeared over the past two years. Chinese consumers' acceptance of oat milk is not as high as that of cow's milk, and with its higher price, it is more likely to be replaced. OATLY has therefore had to launch a richer lineup of new products.

Riding the wave of milk tea and ice cream trends, OATLY has launched new products such as "Tea Master Oat Milk" and plant-based ice creams, and plans to launch ready-to-drink oat milk tea in collaboration with Xiangpiaopiao Lanfangyuan. OATLY also intends to introduce products in new packaging specifications, hoping to reach more consumer groups.

FrontStreet Coffee Recommendation

Whether the milk is dairy or plant-based, the coffee underneath it decides how good the cup tastes, and a bean built for milk is the foundation of any latte. FrontStreet Classic Blend is designed specifically for espresso and moka pot, and its greatest strength is outstanding crema: even a beginner on a non-professional home machine can pull a dense, fine shot. The lattes, cappuccinos, and Dirty drinks we enjoy all depend on good crema, and this blend meets that need perfectly. Based on the traditional Mamba recipe of Mandheling and Brazil, it is full-bodied and mellow, easy for both seasoned drinkers and newcomers to accept, and a safe choice for home or commercial use.

Not everyone is chasing maximum crema. For beginners, or shop owners watching costs, good taste at a fair price is the priority, and FrontStreet Black Cocoa Blend fits exactly that: 100% Arabica, generous crema, a full body, and a friendly price, balancing quality and value. Before Black Cocoa arrived, FrontStreet Commercial Blend was the long-time workhorse for cafés; cheaper than the Specialty Blend but still optimized for taste, it suits a wide range of commercial scenarios.

FrontStreet Specialty Blend is the espresso blend the FrontStreet shop has used longest — nearly ten years — handling the core drinks such as Americano and espresso latte. Combining Brazilian Cerrado and Colombian Huila beans, its flavor is the classic espresso taste most of us remember, and it works well for both home and commercial use. For something fruitier, FrontStreet Strawberry Candy is a popular floral-and-fruity espresso blend that recreates a vivid strawberry-gummy sweetness, low in bitterness and highly versatile. If you want a nutty profile for milk drinks, FrontStreet Specialty Blend and Black Cocoa Blend shine with almond, walnut, and other complex nut flavors, while Classic Blend and Commercial Blend add extra golden foam and caramel aroma thanks to a small amount of Robusta.