Oatly, the plant-based dairy alternative brand that is planning a stock market flotation, has revealed the “crucial” role of its in-house creative team and warned investors about the risk of losing creative talent.
In the prospectus for its initial public offering (IPO), Swedish-based Oatly said that it relied “heavily” on its “award-winning” in-house team “to develop and maintain our brand” and it believed that its “provocative and unconventional marketing” gave the company a competitive advantage.
“We have invested significant time and resources into creating a unique voice that speaks to consumers in a way that we believe no other competitor has been able to achieve, such as custom artwork that would be difficult to replicate, and this voice is and continues to be a crucial part of our growth strategy,” the prospectus said, citing it as a risk factor.
“If we were to lose any key individual on our creative team, it may be difficult and time-consuming to replace such employee, and any new hire may not be as effective, which could have a material adverse effect on our business, financial condition and results of operations.”
The filing said 51 people worked for Oatly in marketing and branding at the end of December 2020 but did not identify any individuals and a spokesperson declined to comment further.
John Schoolcraft, the global chief creative officer, is widely credited as the creative brains behind the Oatly brand alongside Toni Petersson, the chief executive.
Other executives in the in-house team, which is known as the Oatly Department of Mind Control, include Michael Lee, creative director and Tobias Nordström, head of planning.
The company’s leadership is known for its desire to eliminate excessive marketing process and the prospectus explained how “we have torn down the conventional corporate approach to brand-building and have developed a voice that is human, compelling and honest”.
That echoes comments that Lee made in a recent Campaign article in which he said: “As long as you remove brand awareness studies, target group surveys, midway meetings, feedback rounds, tweaks, pre-tests, more tweaks, approvals, director level approvals and re-starting the entire process all over again – the work will be fine, in-house or not.”
“Creativity is at the centre of the Oatly brand”
In a sign of the importance of advertising to Oatly’s financial prospects, the stock market prospectus includes several visual examples of its ad campaigns and packaging – an unusual move for most companies planning a flotation as they tend to stick to financial information.
“Creativity is at the centre of the Oatly brand. Through the efforts of our authentic and award-winning in-house creative team, we have cultivated a loyal consumer base that is highly aligned with our ambitions,” the prospectus said.
However, the company admitted its “provocative” approach to advertising “may expose us to lawsuits and heightened scrutiny from regulators in the markets in which we operate, as well as interest groups, such as dairy lobbyists”.
The company cited how the Swedish milk dairy lobby “sued us for an advertising campaign that the courts found was misleading and disparaging of dairy products” in 2014.
Oatly said it saw significant room for growth because the dairy alternatives category still accounts for between only 4% and 9% of total milk consumption in its key markets – Sweden, the United Kingdom, the United States and Germany.
“We intend to increase consumption by continuing to invest in branding, advertising and marketing to educate consumers about our sustainability, our values and the premium quality of our products.”
Sir John Hegarty, the co-founder and former creative chief of BBH, recently praised Oatly’s advertising, describing it as “the most distinctive work I’ve seen in the past 18 months” in an interview with Campaign.
“Oatly has great copywriting, brilliant art direction – it’s everything that you want advertising to be. I think a lot of [external] agencies couldn't do that [work] now, because they've got lots of digital and social media people but they haven't got those craft skills,” Hegarty said.
Although Oatly manages its creative in-house, it uses an external media agency, PHD, to handle media planning and buying across EMEA and the United States.
Oatly is said to be targeting a valuation of up to $10bn (£7.2bn). Revenues doubled last year to $421.4m but losses also increased by two-thirds to $58m.
In-housing has become a growing trend as major brands, including Lloyds Banking Group, Marks & Spencer, PepsiCo, Three, Unilever and Vodafone, seek to take greater control of their advertising and marketing services, although they all still retain external agencies.