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Oatly is about to go public in an increasingly crowded milk aisle

(Bloomberg) – Consumers don’t seem to have enough plant-based alternatives, and Oatly Group AB, the vegan food and drink maker, is looking to capitalize on this week as a Swedish producer of milk and oat dairy The Alternatives will finally make its much-anticipated initial public offering in the United States, investors will need to assess not only the popularity of its products, but also how well they can reach a market that is both bigger – and more crowded – than ever. “There are a lot of competing products in the alternative dairy market. There are oats and soy, almond milk, nut milks. There are a lot of choices out there, ”said Mark Lynch, partner at Oghma Partners, a corporate finance consultancy specializing in the food and beverage industry. However, Oatly’s IPO “reflects the maturity and sustainability of plant activity. He also points out that it’s not just a fad. Oatly, one of the top 10 public offerings initially slated this week in the United States, is seeking to raise up to $ 1.65 billion. It is offering 64.7 million US custodian shares for $ 15 to $ 17 each. The company declined to comment ahead of the offer; its market value would be $ 10.1 billion at the top of its IPO price target, according to Bloomberg calculations, and that would be 7.1 times its market value. expected revenue for 2022, according to a person familiar with the matter who asked not to be identified discussing private information. While many companies focus on healthier alternatives to traditional food products, few operate as stand-alone state-owned companies, making comparisons inaccurate.Beyond Meat, by comparison, is valued at 15.5 its turnover for for the 12 months ended April 3. ., another publicly traded company that claims its products like protein bars are healthier, currently has a market value of about 3.4 times its sales from last year. encourage consumers to seek alternatives to traditional meat and dairy products. Investors are looking for ways to replicate the public market success of Beyond Meat, whose shares have jumped more than 300% since its IPO in May 2019. Oatly, with its multicontinental expansion plans, offers institutional investors a way to harness growing interest in a food tech space often dominated by venture capital and private finance.Oatly is the second-largest milk alternatives brand in Western Europe, accounting for around 9.2% market, according to an RBC Capital Markets report, citing researcher Euromonitor International. But it doesn’t even appear on the North American list of the best plant-based milks, dominated by Almond Breeze from Danone’s Silk and Blue Diamond Growers. Global milk substitutes generated $ 16.9 billion in sales in 2020, or about 12% of total milk sales, according to data from Euromonitor. With the demand for plants, more and more companies make their way through space. Nestle SA, a laggard in the industry, is rolling out a new pea-based milk in Europe to compete with Oatly. A set of newcomers with a range of technologies are also arriving for the dairy alternatives space. For example, Halsa Foods and Yofix Probiotics Ltd. promise to offer “clean label” herbal products made from simple ingredients, according to Maria Mascaraque, industry manager for food and nutrition at Euromonitor. PitchBook estimates that 30 new plant-based dairy companies have received their first round of funding since 2004. “The competition has been incredibly intense in recent years. We hear that every month a new brand is launched, ”said Emma Letheren, analyst at RBC, noting that those who are already entrenched are already in the best position. “We wonder if it has generally become more difficult to compete because now the main players have carved out the market; it might become more difficult for new entrants to gain market share. Cow’s milk should not be reduced either. It’s cheaper and it’s the incumbent. “With rare exceptions, a substitute never replaces the original,” said Nicholas Fereday, consumer food analyst at Rabobank. At a May 12 conference hosted by the Wall Street Journal, Starbucks Corp. CEO Kevin Johnson said alternative milks like soy and almond made up 17% of U.S. drinks last year. Then Oatly was rolled out and around 25% of them are now using alternative milks. The biggest obstacle to Oatly might be himself. Since entering the U.S. market in 2017 – first aimed at professional baristas, then mass consumers – finding Oatly in cafes and supermarkets has become a sort of scavenger hunt for shoppers looking for their solution. The company opened a $ 15 million factory in Millville, New Jersey, in 2019 to help meet growing demand, but even now shortages are common as Covid-related delays have prevented the launch. line of a second American production planned. the country – and even its booming new customer Starbucks – has reported difficulty getting orders. To meet demand and fuel the expanding market, Oatly is also developing factories in the UK, China and Singapore. Other leaders in plant-based food, including Beyond Meat and Impossible Foods, have also experienced shortages when they started. “This indicates that demand is exceeding supply,” said Rachel Dreskin, CEO of the Plant Based Foods Association, of recurring issues in the category. “It’s a more exciting signal than the opposite.” More articles like this are available at bloomberg.com Subscribe now to stay ahead with the most trusted source of business information. © 2021 Bloomberg LP


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