The oatmilk manufacturer is seeking to replicate the success of its European and North American reinvention strategies in China, where it has reported a fifth successive quarter of falling sales as it pursues lucrative partnership opportunities in the country’s vast coffee shop market
Oatly achieved 3.2% year-on-year group sales growth in the three months ended 30 June 2024 | Photo credit: Oatly
Oatly has credited robust volume growth in Europe and wider distribution in North America as driving its second quarter sales growth and is banking on potentially lucrative coffee chain partnerships in China, where sales continue to fall.
The Swedish oatmilk manufacturer achieved 3.2% year-on-year group sales growth in the three months ended 30 June 2024 to reach $202m and narrowed its quarterly loss from $52.5m in the second quarter of 2023 to $11m.
Oatly’s Europe and International segment, which generates 52% of group turnover, achieved a 7% year-on-year sales increase to $105m. The brand’s established markets, including the UK and Germany, achieved 6% volume growth in the quarter, while recently entered markets such as Spain, Belgium and France drove 24% volume rises.
Revenues in North America grew 10% to $68m, with the company also posting its first full quarter of profitable growth in the region during the quarter at $1.2m.
Oatly said its operations in both markets have benefited from supply chain restructuring over the last 18 months, including simplified product portfolios and reduced selling, general and administrative (SG&A) expenses alongside marketing campaigns to grow brand awareness.
The Malmö-based business applied the framework to its underperforming Greater China segment in July 2023 and said it is ‘executing well’ on its improvement plan despite sales in China falling 18.5% during the quarter to $28.8m – a fifth consecutive double-digit quarterly sales decline.
On an earnings call with investors, Oatly CEO Jean-Christophe Flatin said he remained optimistic of a turnaround in China after the market generated positive adjusted EBITDA for one month during the quarter.
“I recognise that one month is just one month, but this is a clear sign that segment is moving in the right direction. And as we move forward, this segment will be balancing growth and profitability as we continue to execute on the improvement plan,” he said.
Oatly is also seeking to tap into the vast potential of China’s coffee shop market with brand partnerships.
In June 2023, the oatmilk manufacturer partnered with Tims China on a new ready-to-drink (RTD) coffee range in June 2023 and has launched oat-based ice creams with fast-food chain KFC and an oat milkshake with fast-growing coffee chain Cotti Coffee within the last six months.
April 2024 saw Oatly commence a limited-time partnership with Chinese branded coffee shop market leader Luckin Coffee in April 2024 to build brand awareness and develop greater visibility in the country. Flatin said the collaboration is yielding positive results and enabling the business to expand its reach ‘in a disciplined manner’ and a second ‘broader’ offering with Luckin will be launched later in the year.
World Coffee Portal’s Project Café East Asia 2024 report found that oatmilk is the second most favoured dairy alternative among Chinese consumers behind coconut milk, with 21.5% of those surveyed typically pairing it with their coffee beverages compared to 23.7% opting for coconut.
However, both dairy alternatives trail skimmed, organic and whole milk as the preferred coffee pairing among Chinese coffee consumers.
Source link : https://www.worldcoffeeportal.com/Latest/News/2024/July/Europe-and-North-America-drive-Oatly-s-second-quar
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Publish date : 2024-07-26 04:40:52
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