Case study can you help

Oatly: Oat your future

QUESTION

Based on the information in the case and additional information you may find through your own research, describe Oatlys segmentation, targeting and positioning in China?

Founded by brothers Bjorn and Rickard ste in 1994 in Sweden, Oatly Group AB (hereafter Oatly) focuses on producing alternatives to dairy products from oats. The co-founder Rickard was a researcher at Lund University, who had several patents approved for the oat extraction process. Although Oatly's products have been launched in the market for about 30 years, it wasn't until 2012, started to be known at a global level after radical reforms and re-positioning on the brand. According to Oatly (2018), selling consumers a value proposition is the foundation for their success: rather than highlighting the function of the product itself, customers pay more attention to the brand value and a healthy attitude towards life. The plant-based milk is continuously growing strong worldwide, the growing customers include vegetarians, animal protectionists, and people who are intolerant to lactose. However, there are still a noticeable risks and uncertainties to impact its operations and financial position. For example, the changing situation of COVID-19 pandemic and different measures taken in different countries, international conflicts, interrupted supply chains and so on. Even with the global disruption, at the end of 2020 , its products were available in 60,000 retail stores and 32,200 coffee shops around the world. Oatly-operated factories were expanded from three to six in 2021 and both firm revenue and gross profit continued to increase (shown in Figure 1). rigure 1 . Lonsollaatea statement or uperations Resource: Oatly Group AB 2021 Annual Report From the traditional plant milk manufacturer to the creative modern lifestyle leader, Oatly focuses on "sustainable development". Sustainability is at the core of Oatly's brand and business model to attain economic profits, social benefits, and environmental sustainability (Bocken et al., 2020). Specifically, Oatly held internal workshops to further prioritize the sustainability areas, conducted the stakeholder survey to relate their influence on human and labour rights, resource efficiency, working conditions, and social ethics. In terms of packaging, from 2020 to 2021, they maintained the share of 87% renewable or recycled packaging materials. Even though there is no regulation requires the declaration of the climate footprint of a food product, Oatly has provided great transparency into climate impact of the product. In terms of employee training, various programs were conducted to ensure integrity in an ethical and socially responsible way, programs included business conduct and ethics guidelines, anti-bribery and corruption policy, whistleblower policy, code of conduct and environmental policy. The balanced gender representation has also been committed across the company. At the end of 2021, there were 13 directors in the parent company board, and among them 4 were identified as female, and the proportion of women to all employees was 49% (Oatly, 2021). While lots of food \& beverage brands locate distributors in China through different groceries and supermarkets, it seemed not work effectively for Oatly at the beginning. Shanghai, where people have fallen into the habit of drinking coffee since 1990 s or even earlier, could be regarded as the best choice for Oatly to enter the Chinese market. Given the surge in Chinese growing coffee drinkers, in 2018 , it rode the coffee wave by creating the barista edition, this flagship product with strong demand from coffee shops across China. The partnership with Starbucks made Oatly's products appeared at some Starbucks 4,300 locations in China. Collaboration with restaurants and healthy food cafes was another expansion of its products. Chinese social channels such as WeChat, Weibo, Xiaohongshu, and others were widely used to promote its products (MarketingtoChina, 2020). To better adapt to local market, Oatly launched the collaboration with Chinese tea beverage chain Heytea in 2019 and now launched the tea master collection since China is historically a teadrinking nation. At the end of 2021, China became the world third biggest market of Oatly. Because of the huge number of Chinese consumer's lactose intolerance and growing health concerns, the demand for plant-based milk has increased in the past decades. Driven mainly by food safety and health and environmental concerns, Chinese customers have been gradually opening up to alternative proteins and the idea of sustainability. One report predicted that China would be one of the biggest growth drivers of the alternative protein in the coming years, with rapid demand growth by 200% within five years (Ho, 2021). In November 2021, Oatly opened its first production facilities in Maanshan, China. The new factory is part of a wider initiative from Oatly to build production facilities fit for its global market layout. Besides the oat drinks production line, there is also a research and development center to improve the existing products and innovate new oat-based products. David Zhang, Oatly's Asia president said that "the opening of the first factory in China provides more capacity for Oatly in Asia, supporting the global expansion and meeting the increasing market demand." Toni Petersson, Oatly's CEO said, "the Chinese market is an important part of the Nasdaq-listed company's global expansion, and the Chinese people play a big part in shifting toward a more sustainable and mainstream plant-based consumption (Zhong, 2021)