Oatly, the world's largest oat milk company, raised $1.4 billion in an initial public offering Thursday on the Nasdaq stock exchange, capitalizing on a global surge in demand for its products.
Oatly priced its shares at $17 apiece ahead of the public offering, giving the company a valuation of nearly $10 billion. It's trading under the ticker symbol "OTLY."
Oatly's shares rose nearly 19% to close at $20.20 Thursday.
It's the latest milestone in the rapid rise of oat milk, which is winning consumers -- and famous investors like Oprah Winfrey -- with the message that it's healthier and more environmentally sustainable than cow's milk. Once a niche product designed for people who were lactose intolerant, Oatly oat milk is now on the menu at Starbucks, in the grocery aisle at Target and sold online by Alibaba in China.
Oatly, which is based in Malmo, Sweden, thinks oat milk has a lot more growth ahead. Global sales of plant-based dairy substitutes reached $18 billion in 2020, or just 3% of the $600 billion dairy industry, according to Euromonitor.
"The runway's massive," Oatly Chief Executive Officer Toni Petersson said Thursday during a conference call with media.
Like the "flexitarians" who have fueled the rise of plant-based meat alternatives -- and the successful 2019 public offering of Beyond Meat -- Oatly says more and more consumers are giving its oat-based drinks, yogurt and ice cream a try. In the last three months, between 35% to 40% of adults in the U.S., the United Kingdom, Germany, China and Sweden purchased plant-based milk alternatives, Oatly said.
Oat milk's growth is surpassing other plant-based drinks. U.S. sales of oat milk jumped 131% over the last year, to $304 million, according to Nielsen. U.S. sales of soy milk, rice milk and coconut milk fell over the last year, while almond milk sales rose 9%.
Overall U.S. sales for dairy alternatives grew 15% to nearly $2.2 billion in the 52 weeks ending May 1, according to Nielsen. Almond milk held the largest share of those sales, at 68%. Oat milk was second with a 14% share and soy milk held an 8% share. Coconut milk and rice milk each had less than a 4% share.
Competitors have been watching closely. Greek yogurt maker Chobani began selling oat-based yogurt, oat milk and other products last year. Silk, which started as a soy milk maker in 1977, introduced oat milk in 2018.
Companies are also experimenting with other varieties. Nestle recently launched a milk made from peas.
But Petersson said he's confident that oat milk has staying power.
"We're been scanning the world for crops for 30 years and there's nothing more premium out there. We know that oat delivers," Petersson said.
Cara Rasch, an analyst with the market research company Packaged Facts, said oat milk's flavor -- which blends well with coffee -- is one reason for its success.
Rasch said many consumers also see it as a healthier alternative to dairy milk. One cup of Oatly whole milk has fewer calories, less fat, lower sodium and lower cholesterol than a comparable serving of whole cow's milk. But cow's milk has higher protein, lower carbohydrates and more naturally occurring vitamins and minerals.
Oat milk takes less land and energy to produce than dairy milk, and emits fewer greenhouse gases. But it also beats other plant-based milk alternatives in its environmental impact, according to a 2018 Oxford University study. Rice milk leads to more fertilizer runoff than oat milk, for example, and almond milk requires more water because almond trees are primarily grown in drought-prone California.
"We're here to make the world better. I know it sounds stupid, but it's true," Petersson said.
Oatly's roots date to 1995, when a group of scientists at Lund University developed the world's first oat milk. The group began selling its milk under the Oatly name in 2001 and gradually added other products, like ice cream and yogurt.
