A year ago, at the end of the interview, Fat Whale asked Zhang Chun David Zhang, president of OATLY's Asia region, a question about "scale" -
For most businesses with clear and unwavering values, scale is the only way to deliver value. Only when the scale reaches a certain level can the "impact" that brands talk about make sense. In the face of the huge differences between China's vast markets, how can OATLY grow smoothly? How important is the pursuit of scale for OATLY to achieve its corporate mission?
At the time, David's answer was, "It's a great question, almost into the realm of brand philosophy, and OATLY is certainly ambitious about scale, but I can't reveal more now." (Laughs)
A year later, OATLY woke up China's long-dormant plant-based beverage track and was ready to return to the retail channel where it had returned to its own, intending to answer the question about scale. Compared with 2018, the biggest change in OATLY is that it is no longer just a bottle of plant-based drinks, in the minds of consumers, it represents a healthy, stylish, sustainable lifestyle, it is trending in the present, winning in the future.
When Fat Whale talks to David again after a year, there are two questions that we are most curious about: 1. In addition to the well-known reasons such as enzymatic technology, creativity, and unexpected channel play, what other qualities that we have not seen have made OATLY a key brand that has changed the entire category? 2. As a category promoter, after returning to the retail channel, what kind of growth strategy has OATLY developed to continue to promote the healthy growth of the entire category?
Mr. David Zhang, President of OATLY Oh Maili Asia
interlocutor:
Chun Zhang, President of OATLY' Asia Region
Jing Wang, Founder and Chief Knowledge Officer of Fat Whale
Daisy Qi, Senior Research Analyst at Fat Whale
Written by: Strange Disturbance, Wang Jing
<h1 class="pgc-h-arrow-right" data-track="12" > from category to brand, the secret of OATLY's success is the management of consensus</h1>
Over the past three years, OATLY has not only established the perception that oat milk plant-based drink = OATLY, but also revitalized a track that was once rarely visited and become a representative of the future.
When fat whales want to quickly judge whether a track has a "future", they usually look at it from the following two dimensions: one is the market performance, and the other is the height of the track players.
Behind the market performance is the choice vote cast by consumers with real money. OATLY, which was snubbed by the market in 2018, has now become a representative of the new way of life. Elements such as Douyin and Xiaohongshu, OATLY and freeze-dried coffee powder, convenience stores, fitness, breakfast, and pop Up often appear together on social platforms for young users who love life, pursue health, and care about the environment.
*This picture is a screenshot of The Little Red Book consumer
The sales data of the e-commerce platform is equally eye-catching. According to the "2020 Plant Protein Beverage Innovation Trend" released by Tmall, the growth rate of China's plant protein beverage market in 2020 will be as high as 800%, the number of buyers will increase by 900%, and the sales growth rate will reach 1810%.
Tmall "2020 Plant Protein Beverage Innovation Trend"
The participation of players in a track and the height of the track leader determine how much space it has to imagine. In the past year, we have seen the entry of a number of new consumer brands, as well as the addition of traditional food and beverage giants such as Coca-Cola, PepsiCo, Mengniu and Yili.
Looking back at business history, we can see many cases of promoting brands to become bigger and stronger through the construction of categories, such as Band-Aids and Bondi. As a promoter of the new plant-based beverage track, OATLY is special in finding a resonance between the brand's own mission and the common mission of mankind – sustainable development. Based on this, through management consensus, OATLY redefined this category that Chinese consumers are already familiar with.
China is a plant-based country, and plant protein drinks such as soy milk, soy milk, almond dew, and coconut milk have long been deeply integrated into the daily lives of consumers. Because of this, OATLY often encountered a question in the past: Will OATLY oat "milk" be treated as foreign soy milk?
After entering China, re-establishing the market's understanding of plant-based beverages is the biggest challenge facing OATLY. If OATLY is discussed from the raw material level, it is obviously not fair enough. Because OATLY does not consider itself to be just a beverage company, its purpose is not only to sell plant drinks, but to contribute to the sustainable development of the world.
OATLY not only speaks well, but also puts its actions into practice. At OATLY, sustainability is at the heart of the company's structure, and all business decisions are based on it.
OATLY's division, which sells products, is named Sustainablization, "Every drink renewed with oat milk reduces greenhouse gas emissions by about 64 percent, and even more if the product comes from Asia." So our consumers unknowingly contribute to sustainable development. "OATLY Marketing, known as Mind Control, manages the market's perception of OATLY and sustainability.
Based on this, it's not hard to see why David chose to start with boutique cafes in Shanghai, as this group of consumers is the group most likely to reach a consensus with OATLY in a short period of time, and it is also a group of people who can lead the trend. In the interview, David mentioned, "We go to boutique cafes because there we can connect with consumers who pursue an OATLY lifestyle. ”
OATLY has opened up a path to market for the oat milk category. Growing up from a boutique café, OATLY has always maintained a good relationship with the coffee channel. In September this year, OATLY launched the "Autumn Cool Special Drink" series in conjunction with boutique cafes around the world, once again leading the trend of specially formulated oat coffee.
In David's view, boutique cafes are the soil for OATLY's growth, "boosting the development of coffee channels is OATLY's unchanged original intention and commitment, we will continue to pay attention to the needs of the coffee market, the needs of coffee shop partners, to provide them with high-quality, stable products, creative special drinks, and work with them to create a new way of playing oat coffee." ”
OATLY not only agrees with the Sustainable Development Goals in terms of the company's mission, products and operations, but also reflects its emphasis on "consensus" in the construction of the company. When building asian teams, OATLY focuses on a bottom-up approach, also because of the need to manage consensus. Before you can reach an agreement with the outside world, you must first ensure that the internal team is in agreement.
"There are a lot of teams in the industry that are built from top to bottom, first there are directors, and the directors form the team below. OATLY pays more attention to the bottom up, and where to start depends on finding the right person. In the past three years, many of our departments have built from the bottom up, laid the foundation, and then recruited directors. At this time, even if we recruit a person who is more accustomed to traditional playing style, the whole team is not easy to be biased, and he will be assimilated by the team.
Why? Because OATLY is a new brand leading a new way of life, if it is completely homogeneous with the market, our brand story is difficult to land. ”
The deep integration with sustainable development and the integration of knowledge and practice have helped OATLY win the trust of consumers, and also allow OATLY to get help from the industry, non-profit organizations, social organizations and even the government. Because the pursuit of truth, goodness and beauty, and the protection of the ecological environment are the consensus of all mankind, no one will challenge this consensus, and will naturally form a cooperative relationship after reaching a consensus.
I believe that there are seeds of truth, goodness and beauty in everyone's heart. We let the seeds in everyone's hearts sprout. Consumers who support OATLY are not actually loving OATLY, but themselves.
<h1 class="pgc-h-arrow-right" data-track="137" > return to the retail channel with a brand moat of culture and lifestyle, making sustainability the choice of more people</h1>
One of the biggest changes that can be observed externally this year is that OATLY is back in the retail channel.
Consumers can now see it not only in boutique supermarkets like City' Super and Ole', but also at FamilyMart, which is closer to home and office space, and at new retail ends such as JD.com, Ele.me, and Hema. Not only that, but in September this year, OATLY hosted Oat Month with the whole family, bringing sustainable lifestyles to the retail end.
Image from the brand
The change has also occurred in the catering channel, starting from an independent boutique café OATLY to entering a chain coffee channel with more stores and more coffee consumers. In addition to coffee chains, OATLY can also be seen in the stores of various chain restaurants. For OATLY, they have a younger and more popular audience. At KFC, OATLY offers consumers a wider range of oat-based dietary options such as oat lattes and oat ice cream.
Combining these practices with OATLY's recently announced "1+2+1" future plan (1 Asian factory, 2 Production bases in China, and 1 Asia-Pacific Innovation R&D Center), it is not difficult to find that OATLY is revealing two obvious signals to the market: OATLY will quickly increase its production capacity to meet the market's demand for oatmeal, and will develop a wider range of products that are more in line with the needs of Asian consumers.
In an interview, David told Fat Whale that a niche brand can't build a track. OATLY wants to build a new plant-based beverage track, must stand on the shoulders of giants, let more industry leaders participate, achieve "everything can OATLY", and create more possibilities with creativity. The many business partners OATLY now works with are such giants in their respective tracks. In the future, OATLY will continue to cooperate with Giants, using their power to reach a wide variety of consumers. No matter how many tier cities consumers are in, as long as they aspire to beauty and sustainable development, they are our consumers.
When communicating with consumers, OATLY will still adhere to the consistent strategy: using products to drive lifestyle, using lifestyle to drive people, and using crowds to drive the times. Guided by this strategy, we continue to expand the scene.
OATLY's scene expansion has three main directions. First, observe where consumers are and follow the scenes of consumers, such as from the coffee scene to the breakfast, afternoon tea, travel and other scenes. Just like OATLY's direct drink packaging enters the retail channel of FamilyMart, it can also be combined with FamilyMart's products to create more use scenarios. Second, consciously choose a scene that can highlight OATLY's brand power and values. For example, together with Starbucks, we launched the "GOODGOOD Star Food ™ Doctrine" to promote "good for yourself, good for the earth, let the good change be good!" Lifestyle. In its first year, OATLY's values were highlighted by a regeneration of 62 million oatmeal drinks, reducing the planet's greenhouse gas emissions by approximately 21,457 tons. Third, the extension based on the existing scene. OATLY started as a specialty coffee shop and attracted many coffee lovers. They also drink coffee at home, on the go, or in the office, and OATLY can get into that scenario.
No matter how the scale of the business expands, OATLY will never forget that it is a company with a mission. Although OATLY started as a small company with a bottle of oatmeal, OATLY has a big dream. This dream is to solve the pain points of human beings and society, including environmental protection problems, lactose intolerance, overnutrition and so on. These universal social issues are OATLY's mission, which has both provided OATLY with an endless stream of momentum for development and a brand moat for protecting OATLY.
<h1 class="pgc-h-arrow-right" data-track="138" > Conversation Transcript:</h1>
Fat whale
It's been a year since our last conversation, and the "plant protein" market has undergone a lot of changes in the past year, consumer awareness of this category has greatly improved, and many competitors have appeared in the market. How do you see how the plant protein market has changed over the past year?
David
President of OATLY Oh Myri Asia
I think there are basically three changes.
The first is that consumer perceptions of plant-based beverages have changed. Traditionally, China is a big plant-based consumer, soy milk, soy milk, walnut milk, etc. are actually very popular. Over the past two years, we've redefined the plant protein category and given it a new dimension. OATLY's three core philosophies for sustainable development.
We use OATLY's "sustainability" concept to create a relaxed, happy, healthy and sustainable lifestyle from the following three dimensions. The first dimension is healthy and sustainable development, advocating that consumers develop good living habits and build a reasonable dietary structure.
The second dimension is the sustainable development of the mind. We encourage consumers to appreciate the beauty of life, but also to find the best side of themselves to develop it and keep the mood happy. When communicating with consumers, we also pay attention to providing a good experience, fun, creative, and good looks are three very important elements.
The last dimension is the sustainable development of the earth and the ecological environment. We practice the concept of sustainable development at all levels of agricultural planting, raw material procurement, supply chain, packaging, transportation, personnel, etc., and guide our consumers to practice environmental protection in their daily lives and reduce carbon emissions.
These three sustainabilitys are at the heart of the new plant-based lifestyles we advocate. It takes into account the individual, community and social environment, as well as the human, animal, plant and nature, while also aligning with national policy directions. It not only integrates the goals of "carbon peaking" and "carbon neutrality" at the national and social levels, but also meets the deep pursuit of beauty, health and harmonious life in everyone's heart, which has become more intense under the continuation of the epidemic.
At the same time, we also require ourselves to fulfill the promise of "we promise to be a good company", focusing on consistency in all aspects including products, design, consumer communication, brand philosophy, corporate culture and so on.
Through these efforts, we have reawakened the plant-based category as a way of life that can represent the future, and have attracted more and more companies to join the track, which is the second change in the plant protein market.
Entering 2021, the plant-based beverage track still maintains a strong growth momentum. The market includes both the world's top beverage companies and domestic consumer goods leading enterprises. As a trailblazer in the category, we believe that plant protein drinks, like animal protein drinks, are different choices on people's tables. Consumers who are lactose intolerant, light/vegetarian, or want to practice carbon reduction may prefer plant-based beverages. There are also a considerable number of consumers who are in the growth stage or prefer to "eat well and drink well" or still choose milk.
Therefore, in the China Plant Protein Alliance initiated by Tmall, OATLY and the milk company jointly discussed the future of the industry. In fact, many dairy companies have now launched plant-based drinks, such as oat milk or soy milk. The common goal is to give consumers more choices, so that lactose intolerant people can also enjoy "milk". At the same time, we are actively promoting the establishment of industry standards. In June this year, OATLY helped food and nutrition experts release the industry's first "2021 China Oat "Milk" Industry White Paper. We believe that a good brand should not only lead the industry to create an outlet, but also have the responsibility to extend the outlet period and lead the orderly development of the industry.
The last change is the change in consumer groups. The consumer group of plant-based drinks has expanded to all levels, from first-tier cities to fifth- and sixth-tier cities, all of which have our consumers. Judging from consumer feedback, OATLY has indeed made some contributions to the development of the category, especially in the promotion of sustainable lifestyles. In the past, the gameplay of plant-based categories was relatively simple, and the playful, interesting and vivid content and form we adopted have been recognized by consumers.
In the face of these changes, what are the main challenges facing OATLY today? How is OATLY meeting the challenge?
There are also three challenges. The first challenge is the change in the channel scenario. We started from a specialty coffee shop and established a brand by playing the B-end market, which is actually relatively rare. In 2021, the small package products, ice cream, tea products we use to test have gradually entered the catering and retail channels. At present, the response is still quite good. This also gives us a lot of confidence that OATLY can do a good job in the retail market.
However, we are also very aware that China's retail market is very complex and changeable, and the traditional retail and new retail play is completely different from the B-end market, and we are building a team to meet the challenges.
The second challenge is the competitive environment. There are currently thousands of SKUs on the market, and we are happy to see more and more companies entering this track, but we still call for rational and orderly competition to do a good job in the plant-based track.
The third challenge is to make our products meet the consumer demand in different scenarios. The market is growing very rapidly, consumer demand is strong, put forward a lot of requirements for us, hope that in various segments and tracks can buy the OATLY products they want, but polishing products actually takes time, in the short term may be different from consumer demand.
However, we are also more confident that in the European and American markets, OATLY already has nearly 100 SKUs, and these products will be released in the domestic market in the future. At the same time, our Asia-Pacific Innovation R&D Center is creating products based on the preferences of Chinese consumers. In terms of production capacity, we currently have three plants in Asia, the Singapore plant is about to be commercially produced, and two production bases in China, one is ready to start production immediately, and the other has also started.
You mentioned that OATLY creates a brand from the B-side by playing categories, which is actually relatively rare in the mass consumer goods market. Can you talk about what exactly OATLY does differently?
First of all, many consumer goods brands either start from retail channels or start from e-commerce platforms. But we did not choose these two channels, nor did we go to the big chain coffee brands, but chose independent boutique cafes on the street. First, at that time, the market competition was not fierce, a store may not even be able to consume a box of oat milk a day, so many big-name competitors have ignored this market, which allowed OATLY to find an opportunity for development, which I later called "sword to the side".
Secondly, we choose to talk about brand philosophy and sustainable lifestyle, and use OATLY as a carrier to deliver lifestyle. I think both oat milk and milk are a choice on the consumer's table, not a black-and-white relationship. This choice has also allowed us to win the favor of consumers.
Third, we insist on strict control of channels in the process of development, and adhere to the consistency of brand and concept. In the first three years of OATLY's entry into the Chinese market, the channel strategy and brand strategy were well coordinated. We, as representatives of the new way of life, have channels that we shouldn't go to because our crowds aren't there. Here too would we like to thank our customers and distributors, who have had a shortage of capacity and are very accommodating.
There is also a point of team building, there are many teams in the industry are from the top down, there is a director first, and the director will form the team below. OATLY pays more attention to the bottom up, and where to start depends on finding the right person. In the past three years, many of our departments have built from the bottom up, laid the foundation, and then recruited directors. At this time, even if we recruit a person who is more accustomed to traditional playing style, the whole team is not easy to be biased, and he will be assimilated by the team.
Why? Because OATLY is a new brand that talks about a new way of life, if you use the traditional way of selling goods, it is impossible to establish an excellent category brand.
Why is the new lifestyle so important to OATLY?
I think consumer goods can't go on without being combined with culture. What a person is willing to actively consume must be integrated into his emotions, and emotions are combined with culture. If the consumer just tastes something new, then the product is very replaceable. But those consumer goods that consumers like very much and cannot be replaced must be combined with culture, and even something that can stimulate consumers to think or bring them a sense of freshness.
OATLY has such a culture. When our brand was established, the world was facing an economic crisis and an environmental crisis. We wanted to be able to solve these problems, which is why we launched our products and created the OATLY brand. We embed this culture of mission and sustainability into our products, allowing OATLY in the hands of consumers to become a representative of nutritional balance, a Lagom lifestyle (Swedish, no more, no less, just right) and even balanced emotions, thus truly winning recognition from consumers, the market and society. The precipitation of the brand's genes and culture is OATLY's most powerful moat.
Previously, OATLY released the "1+2+1" future plan for the Asian market, and you also mentioned the Asia-Pacific Innovation and Research and Development Center, can you talk about its goals in detail?
OATLY's Asia Pacific Innovation and R&D Center has three goals. The first is to introduce our successful plant-based products overseas to China, achieve local production in China, and solve the problem of insufficient capacity. The second is to develop products that meet the local tastes and needs of China for our business partners and consumers in China. The third is to discuss with peers how to promote plant-based categories to a higher level and lead the development of the entire plant-based categories.
From our observation, in the process of rapidly expanding the market, it is easy for brands to neglect brand building because of the pursuit of speed and scale. At present, there are also some competitive chaos in the plant-based market, and after a large amount of capital enters the market, it begins to chase short-term interests and sacrifice the long-term construction of the brand.
In such a competitive landscape, what strategies has OATLY developed to better convey the brand concept to consumers and maintain the brand's leading position in this category?
In fact, whether at home or abroad, we have always emphasized that OATLY is a company with a mission. "Small Company with Huge Ambition", we are a small company, but we have a big dream. This dream is to solve the pain points of human and social, such as environmental protection problems, lactose intolerance symptoms, overnutrition and so on. OATLY defines the brand vision as the starting point of these universal social issues as the company's mission. This is the first feature of OATLY.
OATLY's division, which performs product sales functions, is named "Sustainablization." Because every drink renewed with oat milk reduces greenhouse gas emissions by about 64%, our consumers unknowingly contribute to sustainable development.
Image from OATLY's official WeChat
When we connect the company's mission with the greater mission of society and even the planet, promoters from all walks of life are willing to work with OATLY because we all have a common goal.
The second feature is OATLY's approach to building a brand - the product goes with the lifestyle, the lifestyle takes the crowd, and the crowd takes the times. We use beautiful, creative ways to communicate with consumers, rather than educating them very bluntly. When our consumers use products, they are unconsciously contributing to sustainable development and moving closer to a healthier and greener lifestyle.
Finally, in all dimensions of brand, channel, strategy, crowd, vision, mission, etc., OATLY is a very unified organism. This deep integration and the unity of knowledge and action have helped us win the trust of consumers. We often receive emails from consumers who are sincere in their suggestions and hope that OATLY can do better.
Why do consumers have such a deep connection with OATLY? I think the most important reason is that they found themselves in the brand concept and practice passed on by OATLY, and found their deep pursuit of beauty, health, nutrition, sustainable development, and their desire for harmonious coexistence of people, animals, plants and the earth.
"I believe that there is a seed of truth, goodness and beauty in everyone's heart. We let the seeds in everyone's hearts sprout. Pro-OATLY consumers aren't really loving OATLY, they're loving the potentially better version of themselves. ”
OATLY has rapidly expanded from the coffee scene to multiple scenes including catering, roasting, and travel, hoping to increase the frequency of people's consumption of products through multi-scene reach. Why were these scenarios chosen? Many brands are doing scene expansion, what is unique about OATLY's practice?
Scene expansion has three directions. The first direction is to look at where our consumers are. Any consumer brand has consumers who pursue a lifestyle that fits it, and where these consumers appear, the brand should follow where it is, and follow the consumer's scene.
The second is that we consciously choose scenarios that highlight our brand power and values. When we want others to know who we are, we do not declare it loudly, but use the "sneaking into the night with the wind, moisturizing and silent" play, so that consumers can realize who we are. For example, we launched the "GOODGOOD Star Good Food ™ Doctrine" campaign with Starbucks, which is actually a manifestation of our values, we are a brand that wants to make the earth better and consumers better.
The third direction is an extension based on the existing scene. We started with a specialty coffee shop that attracted a lot of coffee lovers. They also drink coffee at home, on the go or in the office, and we want to be able to get into these scenes so that people can drink OATLY not only in cafes, but also elsewhere.
I asked a question about "scale" in an interview last year, and we all agreed that the "impact" that brands talk about only makes sense if they reach a certain level of scale. As a mass consumer goods, OATLY's consumer group must be large-scale in the future, their needs must be very diverse, is the past way of playing unable to cope with such consumer groups?
I strongly agree with you that a niche brand can't build a track. OATLY wants to build a new plant-based beverage track, and it must stand on the shoulders of giants.
The cooperation with Starbucks allows us to achieve a relatively complete coverage of the coffee shop channel. OATLY has also recently entered FamilyMart, and in September, we partnered on the Family Oat Month campaign, which means that oat milk or plant-based drinks have won recognition from key players in this channel.
We also recently launched oatmeal ice cream with KFC. KFC members are mainly young and active consumer groups. Through collaboration, we have also reached this group. These groups are very influential, and the size is growing.
In the future, we will continue to cooperate with giants in various categories and use their power to reach a wide variety of consumers. All consumers who aspire to beauty and sustainable development are our consumers.
Fat Whale's future brands will not only look at new consumer brands, but also focus on mature brands and classic brands. One of the big differences we've seen is that many new consumer brands are strong in their original intentions and bold founding teams, which allows them to seize development opportunities. But when the organization becomes large, the playing style gradually forms a routine, and people will lose sharp things. OATLY is a brand that is in a fast-growing stage with more and more employees, how do you see that?
I now spend 1/3 of my energy on products, 1/3 on polishing teams, and 1/3 on strategy and business. The issue you mentioned I'm not particularly worried about right now. Because in China, the current plant-based beverage track is jointly promoted by OATLY and other practitioners, in the track outlet, as long as you do a good job, it is actually difficult to fall behind, because we have laid a good foundation.
For a track to grow, it is inseparable from leading brands and leading technologies, which is actually the soul of all tracks. Our proprietary enzymatic digestion technology sets new benchmarks in the industry and leads the way in our processes. In the face of competition, OATLY's mentality is to be full of rivers, we get along with everyone as partners, polish the track together, and promote the development of the category, rather than having to fight for your life.
Second, at present, in the oat-based beverage track, there are not many companies with three factories in all of Asia. OATLY is one of them. We will continue to introduce new products to the market and continue to inject new vitality into this track.
Finally, I hope that our team will gradually improve, and finally everyone will be stronger than their original selves.
*Oat milk is a cereal drink