Oatly to transition to asset-light production model in the US

Oatly said the transaction will better support the company’s ‘growth, capacity needs and product innovation’ | Photo credit: Oatly

Oatly has announced a long-term partnership with Canadian packaging company Ya YA Foods to boost productivity and efficiency at its North American production facilities. 
 

As part of the agreement, Ya YA Foods will acquire the majority of assets used in Oatly’s oatmilk production process, including mixing and filling equipment.  

Additionally, Ya YA will assume the property lease at Oatly’s Utah facility and undertake responsibility for completing construction of the brand’s new Texas factory.  

Oatly announced plans to build the new production site in Fort Worth, Texas, in August 2021. The 280,000 square-foot facility is expected to produce 150m litres of oat milk annually. 

Malmö-based Oatly will retain full ownership and operation of proprietary oat base production lines at both facilities. 
 

Oatly said the transaction, which is expected to close in the first quarter of 2023, will better support the company’s ‘growth, capacity needs and product innovation’. 

Furthermore, Oatly expects the deal to ‘result in future capital expenditures savings and have a net positive effect on its cash flow outlook’. 

Under the terms of the partnership, Oatly will receive approximately $72m and additional credit regarding the future use of shared assets. 

“We believe an increased focus on our oat base technology, innovation, branding and commercial execution will better position Oatly to drive profitable growth, while reducing the capital intensity of our future facilities, and ultimately convert more consumers to plant-based and create more products that are healthy for people and the planet,” said Toni Petersson, CEO, Oatly. 

Production capacity has been a long-standing issue for Oatly. In October 2021, Petersson said the company was only fulfilling approximately 70% of its orders as it struggled to keep pace with surging demand. 

In November 2022 Oatly cited ongoing production challenges as adversely impacting sales during its third quarter and said it would be pursuing manufacturing partners to create more hybrid production operations. 

The company lowered its full-year revenue expectations to $720m, having reduced forecasts from $880m to $830m in August 2022. The company said the figure would still represent an increase of approximately 10% compared to full-year 2021.     

Founded in 2008, Ya YA Foods provides end-to-end packing solutions to blue-chip food and beverage companies. 

Ya YA Foods CEO Yahya Abbas said he expects the transaction to enhance Ya YA Foods ‘geographic profile and scale, allowing us to serve the vast majority of the US and Canada’.