Talking Points

The immense promise of the Oatly IPO

Got (oat) milk?

That's the unexpected question weighing on Wall Street's mind this week, as Oatly, the trendy oat-based milk alternative, is set to make its initial public offering. But at a time when meat is being described as the next great "culture war" and conservatives are up in arms about the imagined possibility of Joe Biden stealing their hamburgers, Oatly could nevertheless reportedly value at $10 billion. One analyst firm even described the Swedish oat milk producer as potentially the next Chipotle or Lululemon.

That's partially because Oatly is unique among plant-based products as being a gateway — and nonthreatening — alternative to animal products.

Meat substitutes historically get a bad rap, in part because meat consumption is so core to American identity; hotdogs and hamburgers are about as close to a national food as we get. This wedding of meat consumption to a distorted idea of patriotism is part of why the GOP is so successful at inducing a panic whenever Democrats so much as mention climate policy. Even as "fake meat" becomes more and more mainstream, the backlash hasn't let up; vegetarians and vegans continue to be punchlines, while plant-based alternatives aren't taken seriously (though admittedly some of that is self-inflicted).

So how has Oatly avoided the association? For one thing, it's easier to swallow — metaphorically, anyway. Non-dairy milks are simply less threatening than meat alternatives, because there's no stigma against being lactose intolerant, as more than a third of Americans are. Already, one in three Americans uses non-dairy milks weekly — compared to the only 3 percent of Americans who are vegan — citing reasons ranging from "it's easier to digest" and "I'm lactose intolerant" to the simple preference of taste.

Oatly, also, has a cult following, helped by what The New York Times describes as its "anti-establishment image" (remember that really weird Super Bowl commercial?). In fact, Starbucks saw the use of milk alternatives in their beverages jump from 17 percent in 2019 to 25 percent in 2020 after the roll out of Oatly. The beverage has a certain cultural cachet; Oprah Winfrey, Natalie Portman, and Jay-Z's Roc Nation count among its investors.

What's exciting for plant-based proponents, though, is that from Oatly, the leap to other animal-alternatives isn't so far. If oat milk can earn a $10 billion valuation and be taken seriously by Wall Street, other food companies are going to want to cash in too (indeed, they already are; "Nestlé has begun selling a tuna substitute called Vuna and is working on scallops," the Times reports).

The biggest hurdle toward a more sustainable food culture in the U.S. is normalizing a shift away from meat. And Oatly might just help do the trick.