OATLY - to cancel or not to cancel?

2 July, 2021
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Have you heard about the Oatly/Blackstone controversy? You probably have if you have any type of social media account. For a while, Oatly has been seen as the “cool and popular” kid on the block of dairy-alternative milks. It looked like nothing was going to stop them, with more and more cafes and stores stocking up on the hyped oat drink. But one day in July of this year – there it was: #CancelOatly. Oatly was next in line to fall victim to the “Cancel Culture” which has become ever prevalent in today’s society. The question is, in the case of Oatly, is “cancel culture” the key to exposing a dishonest company, or is it actually hindering sustainable progress in a world that desperately needs it?

Oatly: A Leader in the Market
First of all, let’s get to know Oatly a little bit better. Oatly is a Swedish oat-based food and beverage company founded in the mid 1990’s. Starting from research conducted at Lund University, the brand was formed on the premise of finding a better alternative to dairy milk (Wertheim, 2018). Nowadays, the company offers a large range of products, however at the core of the company stands their oat-milk which has been the driver of their success in the dairy-milk alternative sector (Sugar, 2019).
After its first couple of years on the market, focusing on the more niche markets of slimming and lactose intolerance, the brand saw a clear shift in 2009 after a rebranding towards a product promoting ethical shopping, sustainability and saving the planet (Ledin and Machin, 2019). This was the start of the New Oatly, which was taken to the next level after the current CEO, Toni Petersson, took over in 2012. The brand shifted towards a strictly “value based” marketing strategy which focuses on solely promoting the values behind the brand instead of specific products (ibid). This demonstrates how Oatly is trying to differentiate itself from other food production companies by aiming to have a greater impact on society than just the product itself; instead starting a movement and including the consumer on the journey. Oatly was one of multiple brands during this time to adopt their public strategy towards one focused on “saving the planet”. In recent years, this has also been reflected in consumer spending with 66% of global consumers being willing to pay more for sustainable goods in today’s market; showing the rise and power of Ethical Consumerism (Jarvis, 2020).
This rebranding and change in strategy showed to be very beneficial to the popularity of Oatly as a brand. From 2014 to 2019, Oatly saw an increase in net sales of an astonishing 240% (Statista, 2019). In addition to this, they are forecasting further growth with predictions of doubling their overall revenue from $200 in 2019 to $400 million by 2021 (Houck, 2019).
Oatly is clearly a big player in the market having enjoyed exceptional growth over the past few years. However, what makes Oatly stand out is their connection with their customers. Through the guidance of the Creative Director, John Schoolcraft, the brand has gone an unconventional and very informal route to connect with and gain new customers (Miashkova, 2020). Through its guerilla style advertising and its sarcastic and sometimes “clumsy” brand tone, they are able to stand out from other multi nationals, by creating a more personal, trusted and friendly brand tone (Fuentes and Fuentes, 2017). This tone paired with their strong focus on changing the industry and planet for the better creates a very strong marketing incentive which has appealed to many.

The Oatly/Blackstone Deal
As a growing company, with increasing popularity and market share, Oatly had a round of fundraising ending in the summer of 2020. This fundraising was done in order to facilitate the construction of new factories in China, Europe and the US (Fields and Pianese, 2020). The round of funding resulted in a total of USD$400 million being raised. $200 of these came from a “green-deal” bank load, where the terms stated that all of the money had to be spent in a sustainable way. The second $200, resulting in a total approximate 10% stake in the company, was gained through an investment from Blackstone; a private equity investment firm (Oatly A, 2020). This is where the controversy came in, as there was a big public reaction to the fact that Oatly would accept money from an organization like Blackstone. Blackstone Growth, as one of the largest private equity funds in the world, have ties with a lot of different companies with some of these being controversial. The firm has been accused with having direct ties with projects that are linked to the deforestation of the Amazon. In addition to this, the CEO of Blackstone is very close to President Trump, with reports of him donating millions of dollars to Trump and his campaign – something seen as controversial to some (Grim, 2019).
The information about this deal spread very quickly on social media. Especially through the medium of Twitter, the decision to accept the investment from Blackstone got many people very upset and resulted in a movement to get Oatly “cancelled”. When comparing the praise that the company has been getting for so long, the stark and sudden change in online attitude was apparent. As the incident happened so recently, it is still too early to tell if there have been any significant decreases in sales figures. However, the negative public reaction could have more than just a direct monetary impact on the company, but instead also a more long-term reputational bearing.
Was this investment deal a step too far for Oatly, revealing the crooked intentions of the company? Or was this another example of how cancel culture created an excessively polarized view of a more complex problem?

Blackstone’s investment delegitimizing the values of Oatly
One of the main reasons why Oatly has become so successful and popular from the start is their strong branding, with their mission for a more sustainable future at their core (Ledin and Machin, 2019). This is what makes the company more susceptible to criticism, whenever their sustainability of their actions come to question. Their company’s strong sense of environmental ethics is reliant on all of their actions actually supporting that, and this is also what makes it more fragile. Having any sort of connection to the deforestation of the Amazon, whether it be though direct partnerships or loose ties, is counterintuitive for a company like Oatly. Oatly’s biggest mission is to tackle the dairy industry and shed light on how little of an environmental impact oat milk has compared to the dairy alternative. One of the biggest culprits of the deforestation within the Amazon is to make room for soya plantations, which is directly tied to many European dairy farms as feed for their cattle (Yousefi et al., 2018). Thus, the money that is gained through destroying the Amazon and supporting the pollutive dairy industry, is the same money that is used to support Oatly’s mission to move away from the dairy industry; a cyclical counterintuitive loop!
Another reason as to why the backlash against Oatly has been so great is because the nature of Blackstone as a private equity investment firm. As explained by Farha and Gertten (2020), Blackstone is an ultra-profit driven company with the mission to extract profit from companies without a real backbone of morality if their investments bring about social or environmental sustainability. Not only does Blackstone have ties to the deforestation in the Amazon, but they have been heavily criticized for entering the residential market after the 2007 financial crash and taking advantage of vulnerable and desperate households trying to stay afloat. This once again demonstrates the profit centered approach Blackstone seems to be taking in regards to their investments (Farha and Gertten, 2020). Oatly having sold a 10% share of their company to such a controversial investment group, who stands for the opposite values that Oatly has tried to establish, expresses a sense of misalignment and mistrust.
Lastly, this deal from Blackstone is seen as a new chapter for the investment group. However, it can also be seen as a way to “greenwash” the company, and distract from what the majority of their money goes towards (Davies, 2020). From this perspective, it can be assumed that Oatly does not care if they are used as a cover up, but instead are just looking for the money.
Customers or potential customers of a product are able to “vote with their wallet” in the way that they are the ones who at the end of the day decide the fate of a company’s success. “Cancel culture” is our generations way of putting pressure on companies to stick with the messages they are marketing themselves to pursue. Without this pressure, companies will not have the same obligation to constantly preserve and renew their underlying mission. In this way, cancel culture, or the threat of cancel culture, has the ability to promote or stimulate modern day companies to constantly stay true to their word.

Is “Cancel Culture” hindering sustainable progress?
The phenomenon of “Cancel Culture” nowadays has the tendency to grow and escalate on the social media network Twitter (Brown, 2020). The problem with twitter is that there is not enough room for further explanation and the space to fully articulate yourself. There is a character limit on all tweets for a reason; to keep things concise. For more complex stories with multiple layers, twitter is simply not the platform for it. Views get oversimplified and therefore lead to a “black or white” forced scenario which amplifies even more people to join in with the movement. It is easy to start following a movement blindly without checking up on the facts yourself, if you feel like everyone else is on the same page (Chiaratti, 2020).
In the case of the Oatly scandal, it was initially mentioned that Blackstone is directly linked to the deforestation of the Amazon. This was one of the main arguments that drove people to #CancelOatly. When digging further, it is clear that the connection is not as simple as that. Blackstone, being the world’s largest private equity firms, has invested in a lot of companies. One of these being a 10% stake in Hidrovias do Brasil, a transport logistics company who have been accused to developing a pre-existing road that goes through a part Amazon that leads to a new port (Grim, 2019). Even though developing improved infrastructure on this route could potentially promote further cultivation in the surrounding areas, this involvement is not as clear cut as actually deforesting the Amazon. This shows how these accusations are not always as black and white as they might seem, and once again the medium of twitter might not always be able to give the full picture of the situation.
When taking a look at the response of Oatly to their decision they are steadfast in their decision of partnering with Blackstone. From their perspective, this deal is historic in the sense that this is showing private equity funds around the world that there is a shift into sustainable industries, which has previously not been seen on this scale. In addition, this is shifting massive capital into sustainable approaches which can be viewed as money that could have gone into something else which would hinder the progress of saving the planet (Oatly A, 2020). In order for there to be any real long-term change in regard to the adoption of sustainable practices, there needs to be a re-evaluation of big private equity and other investment firms to focus more on sustainable initiatives for the future. This is especially true when the world of sustainable plant-based food and drinks is looking so bright, with estimates of the industry reaching USD$74.2 billion by 2027 (Fields and Pianese, 2020).
Lastly, it is important to consider who the real antagonist is in this scenario. When taking a look at the numbers, oat milk produces 80% les green-house gas emissions and 60% less land use than cow’s milk (Held, 2020). When looking at progress, alternative milks currently only make up approximately 13% of the entire “milk market” with the rest taken up by dairy milk (Kateman, 2019). This means that there is still a while to go before we can make any real sustainable impact on the world we live in. Is this really the time to be shutting down and cancelling initiatives that actually have a chance to make a change? And without the funding, how can we see an actual structural change in consumer behavior?

The Final Verdict
In today’s society, it is more important than ever to preserve your public reputation and image. With social media having the power to make or break an organization nowadays, it adjusts the priorities that companies have to make in terms of their approach to online customer engagement. “Cancel culture”, whether or not it comes from a legitimate backing or not, increases the pressure on companies to stay even closer to their values and missions.
In the case of Oatly, their biggest strength can also be what makes them most vulnerable. Due to the fact that Oatly has created such a strong and convincing mission and brand tone, they are also held to a higher level of responsibility to uphold that stringent level of commitment. When the customer base believes that they are deviating from their mission to create a more sustainable future, they lose the trust that they have built up through their once perceived genuine and authentic sense of purpose. In this way, the “cancel culture” can be seen as a push for companies to manage their customers’ expectations and stay true to who they are. On the other hand, it is important to gain perspective of the overall progress that needs to be made. It is counterintuitive to dig down and completely cancel companies like Oatly who are pioneering the path of convincing big private equity firms are to invest “green” and making actual change happen. The trajectory of how Oatly is growing and gaining traction shows a promising sign of how behavioral change can actually happen in today’s society and with the new generations. If ventures like Oatly get cancelled due to uninformed social media accounts “following the crowd” without knowing the full story, it will take us too long to ever reach sustainable change. It is therefore important to always keep looking critically at trends going around on social media and make sure you know the whole picture before forming quick decisions.
Even through “cancel culture” can facilitate the commitment to company ethics, it has the ability to weaken sustainable movements through unsupported opinions and therefore slow down our progress of creating a sustainable future.

- Jonathan Spjut

About the author

Hotelschool The Hague

Hotelschool The Hague was founded and funded in 1929 by the hospitality industry to create a central place where industry partners could gain and share new insight, skills and knowledge. Since its foundation, Hotelschool The Hague has become an international hospitality business school specialised in hospitality management, offering a 4-year Bachelor in Hospitality Management. This degree course is also available as the accelerated International Fast Track programme. Our 13-month MBA in Hospitality Management is designed to deliver the next generation of hospitality innovators.

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