Oatly takes a Float-ly…

Oatly takes a Float-ly…​

The Story

Off the back of ‘Veganuary’, Swedish vegan milk maker Oatly has purportedly filed initial documentation for a US stock market float which would value the company at approximately $10 billion (Financial Times). The company already has a number of A-list investors such as Jay-Z, Natalie Portman, and Oprah, but an IPO could provide the capital to continue the company’s admirable growth journey.

Aside from purely oat milk, Oatly has diversified into new revenue streams in the vegan market, such as plant-based ice cream and yoghurt. Further, in a lesson in strategic product placement, the company’s ‘barista edition’ of signature oat milk has made the café experience replicable from home as global lockdowns extend.

On a less positive note, Oatly faced a spate of criticism from activists last year, after a $200 million investment (equating to a 10% stake) from private equity giant, Blackstone. Much of the backlash stems from Oatly’s mission statement on sustainability and Blackstone’s less than stellar record on climate change. However, if other Blackstone-backed companies such as Bumble’s IPO are anything to go by, Oatly is unlikely to be biting the hand that feeds it any time soon.

What It Means For Businesses and Law Firms

For competitors, after Beyond Meat’s show-stopping IPO in 2019, the market for plant-based alternatives has only grown more confident. This week Beyond Meat signed supply contracts with corporate giant McDonald’s, and is reported to be developing new plant-based menu items for US fast food chains such as KFC, Pizza Hut, and Taco Bell (Wall Street Journal). Competitor Chobani LLC, is also purportedly considering a listing this year, to allow the company to expand into faster growing segments.

The growth of plant-based companies is interesting for law firms in a number of ways. Firstly, it may bring about opportunities for greater ‘plant-based’ specialisms within sectors. For example, Burges Salmon market their ‘expert knowledge of food and drink law’, while CMS have a dedicated webpage to ‘food and drink’ within their ‘Consumer Products’ expertise. Also, aside from corporate opportunities raising capital for expanding companies, the law around food labelling for vegan products is in its youth - which means law firms may be able to advise companies on compliance with developing legislation. Furthermore, companies may need advice on evolving risks particularly related to plant-based food contracts. For example, last year Burger King faced class-action over alleged grilling of meat-free burgers on the same equipment as beef products.

While the Oatly IPO is still speculative, with no law firm reported to be confirmed as of yet, Orrick advised Beyond Meat on its $240.6 million IPO in 2019, while Kirkland & Ellis, Latham & Watkins and Simpson Thacher & Bartlett are known to have repeatedly advised Blackstone in various transactions.

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