Oatly inks production deal to overcome supply issues

04 Jan 2023 --- Oat milk producer Oatly has entered into a long-term strategic hybrid partnership with Ya YA Foods Corporation, an aseptic food and beverage product manufacturer. The partnership will see Ya YA Foods acquiring most of the assets used in and assuming operation of Oatly’s Ogden, UT facility, as well as taking production responsibility and lease of a similar facility in Fort Worth, Texas. 

Under the terms of the agreement, Oatly will receive approximately US$72 million, plus an additional credit amount toward future use of shared assets in the Ogden facility. Oatly will also receive additional credit toward ongoing construction at the Fort Worth location.

Sweden-headquartered Oatly will retain full ownership and operation of proprietary oat base production lines in each facility.

Oatly is moving to an asset-light model via a new partnership with Ya YA Foods. Shifting tactics
After going public in May 2021, the oat milk brand reported Q3 2022 revenue losses. Staffing cuts and reorganization were planned to achieve annual savings of up to US$25 million.

Toni Petersson, Oatly’s CEO, has previously stated that Oatly would “simplify its organizational structures and the execution of its supply chain network expansion”.

“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,” says Petersson.

The company expects this hybrid partnership to result in future capital expenditures savings and have a net positive effect on its cash flow outlook.

Petersson stresses that this move allows Oatly to return focus to its technological base.

“We expect this transaction to enhance our growth and further strengthen our capabilities: the two properties we are acquiring will increase our geographic profile and scale, allowing us to serve the vast majority of the US and Canada,” adds Yahya Abbas, CEO of Ya YA Foods. 

Ya YA Foods is a key co-packers in North America and an industry leader in aseptic food and beverage production, including plant-based and high protein beverages, fruit juices, sports drinks, and broths. Utilizing aseptic and hot-fill processing capabilities for carton and PET bottle packaging solutions, Ya YA Foods provides end-to-end packing solutions to blue-chip food and beverage companies.

By James Davies

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