Oct 28, 2024
Oatly Oatgurt – moving into the yoghurt category
Oatly has become a household name in the UK – founded more than 25 years ago by professors at Lund University in Sweden and remained a niche business until the last 5 years when it has become mainstream.
Plant-based dairy alternatives account for around 56.5% of all dairy sales and after shaking up the UHT shelf in the Plant-Based Milk Brands, Oatly now sits beside dairy products in UK grocery chilled sections.
One of the ways Oatly worked towards increase its share across the plant-based market share was by diversifying its product range. In 2020 Oatly launched its dairy-free yoghurt alternative, Oatgurt, to offer people a product that tastes like ‘normal yogurt’, with a similarly creamy consistency in four flavour variants: plain, greek style, blueberry and strawberry.
Oatly has had more new product successes than failures but since launch, some products have been removed from UK shelves including their vegan ice-cream and Plain Oatgurt.
We are sure there are some commentators who would see the ‘un-branding’ of a category – cheap commodity prices, simplified choice architecture etc. as of benefit to consumers. Low prices – what’s not to like? In the UK it happened to milk, bananas, cheese, to some extent bread, with Supermarkets selling products at break even or even a loss to maintain a competitive basket price versus competitors i.e. any consumer satisfaction was a side-effect!
**The problem? It is not economically productive. The main impact of the growth in plant-based milk – a change entirely created and driven by brands like Oatly – is a vibrant, innovative category, that is vastly better at meeting a range of consumer needs. The same rejuvenation process has happened in bread and cheese as BRANDS have built a more dynamic category. It works because the branded business model must create value and innovate to attract shoppers and consumers – who want to be attracted. Own label always has an important role in the category as part of shoppers’ choice architecture, or as a value anchor, but it is reactive and downstream of the true growth drivers – brand investment and new ways to meet needs. Safe to say, without brands, 56.5% of ‘milk’ consumption would not be plant based. History demonstrates how rarely retailers ever deliver this kind of disruptive, innovative change. It is #what brands do.
**That is without even referencing the impact on farmers and supply chains from the brutal commodification of a category. Someone always ‘pays’ to maintain artificially cheap prices. **
So, what about Oatly going into yogurt. Brand stretch is always difficult, often risky and frequently misguided. It can play havoc with existing and established mental availability. The hard work of building a simple position in the consumers’ minds is easily disrupted or undermined. Luckily this a no brainer. The dairy category has already laid the foundations for the stretch, so consumers would hardly struggle to understand the rationale. Oatly’s branded-ness is a huge facilitator of the stretch. For this same reason, not all stretches work, sometimes the brand – its salience, for example – can get in the way of consumers’ understanding why brand x has launched into category y. All this is more proof of why our economy needs brands.
#WhatBrandsDo
