Dive Brief:
- Oatly will pivot some of its facilities from owned operations to a hybrid manufacturing approach, less than a year after announcing it would build three new facilities in 2023.
- At the plant-based milk producer’s upcoming sites in Fort Worth, Texas, and Peterborough, U.K., Oatly will focus on its oat-based proprietary technology and pass responsibility of other manufacturing processes to partners, CEO Toni Petersson said on a Q3 earnings call.
- The shift to working with strategic co-packers will offer the company more flexibility to add capacity quickly and prioritize product innovation and sales, while also reducing costs, Petersson said.
Dive Insight:
Oatly's shift in control of its production is one of multiple moves the company is making as it looks to cut costs amid lower than expected revenues this quarter.
In the same call with investors, Petersson announced that the company was passing leadership of its supply chain to Global President Jean-Christophe Flatin. Chief Supply Chain Officer Johan Rabe had stepped down after two years in the role.
With a leaner manufacturing model, Oatly is hoping to create more "balanced" growth and improve profits, the company said in a press release.
"We are looking at what we call our hybrid model, where we really take ownership and put responsibility for proprietary oat-based process," Flatin said on the call. "And then we partner with other strategic partners for the filling parts."
Amid plans to cut costs and increase efficiency, Oatly's operations at its existing facility in Ogden, Utah suffered last quarter.
The company has been working to scale production at the plant, but the ramp-up has been slow, Flatin acknowledged on the call. The Ogden-based site was also slowed because of a broken fire safety system, which the executive noted took "a lot of time" to replace.
The plant-based milk producer is currently seeking partners for the planned sites in Texas and Peterborough. The planned partnerships are the result of a greater availability of co-packers, which Petersson said will mean that Oatly has "more qualified partners to work with in terms of food safety, quality and security of supply."
Executives did not say on the call whether the new manufacturing model would affect the timeline of the facility openings.
