Why Oatly IPO is big news for valuations of plant-based food companies such as Wide Open Agriculture
Updated: Jul 16, 2021
If any further evidence is needed of the changing dynamics away from global fast-food companies to businesses that seek to make a difference to the planet and to our lives, then look no further than the recent IPO of Oatly that hit the NASDAQ boards in late May 2021 with a US 13 billion valuation. As of 9 June 2021, Oatly shares were riding high at USD 27.00 (€ 21) leading to a valuation of USD $ 16 billion (€ 19.48 billion).
According to Manuel Gonzalez, partner at Agfunder, the valuation indicated investors’ expectations about Oatly’s potential to take market share from traditional dairy. Plant based milk already accounts for about 15% of the dollar sales of all retail milk sold globally. With oatmilk closing the gap on almond milk.
The plant-based milk industry is worth over USD 2.8 billion and set for exponential growth over the next 10 years.
The increasing popularity amongst consumers of oat milk is due to the nutritional value provided by the product as compared to dairy milk. Consumers are also increasingly interested in the environmental impact of their food choices. Oatly recently estimated its oat milk production results in 80% lower Green House Gas emission and 60% less energy use than cow’s milk and requires 80% less land use.
All of which provides substantial tailwinds for global oatmilk produces such as Australian company, Wide Open Agriculture (ASX: WOA; FSE: 2WO), which launched their regenerative oat-based product OatUP in December 2020 from their branded food division “Dirty Clean Food”.
Wide Open Agriculture is an ASX-listed company (dual listed in Europe) that is reinventing the way the world grows, thinks about, and buys food to create a better future for people and the planet. The company is a member of the 4 Returns network established and managed by its major shareholder Commonland Foundation.
WOA's constitution recognises the importance of delivering 4 Returns across financial, natural, social, and inspirational returns. Together with Commonland the Australian company works alongside other global organisations committed to 4 Returns and delivering large-scale landscape regeneration in Western Australia, Spain, South Africa, the Netherlands, and many other landscapes throughout the world.
Wide Open Agriculture is tapping into the growing consumer desire to find out more about the food they consume – who grows it? how is it processed? what is the provenance? what is the impact on the environment? On the company’s branded food website dirtycleanfood.com.au/pages/our-food-journey#oat_tabs2 consumers and stakeholders can trace the journey of the oats from farmer to processor to warehouse to sales/distribution.
Since launching OatUP has accelerated traction within the Australian market with over 150 cafes and retail locations secured by early June 2021. Initial sales have commenced in Singapore and preliminary discussions have begun with a high-profile distribution group that will potentially enable national retail distribution across Australia.
Could Wide Open Agriculture's OatUP be the next Oatly? Quite possibly. The market is deep and broad enough to support several global oatmilk brands.
Oatly is already a mature brand, having been created in Sweden in 1994. Its popularity soared when new packaging was developed, and almond milk lost its shine as it became known that its production (80% of which is in California) has significant water usage and farmers are moving from biodiverse citrus crops to almonds creating a monoculture fed by increasingly deep wells. creating major subsidence and water shortage problems.
Here in Germany, the oatmilk demand is growing in line with plant based food sales which recorded a 49% increase over 2 years to 2020. German private dairy producer, Naarmann, has responded to demand by the restaurant and catering industry to create an oat-based range called "we love plants" and is made from sustainably produced oats.
How does this increase the value proposition of Wide Open Agriculture? The Oatly IPO and subsequent value increase clearly restates the value drivers for all global plant-based food and drink businesses. OatUP is the world’s first regeneratively grown, certified carbon-neutral oat milk and is made using oats from local Western Australian farmers. Wide Open Agriculture Limited has global first mover advantage in these categories and with the right strategy and distribution partners could certainly be a globally recognised brand in the next 10 years.