Selling Oat(ly): When sustainability and investment collide, brand reputation suffers

Swedish oat milk brand Oatly’s latest $200m investment was led by Blackstone – a private equity firm that directly contravenes the promise emblazoned on Oatly products to be ‘a good company’.

Never mind the boycott, it's the long-term effect Oatly needs to worry about, warns Alex Myers
Never mind the boycott, it's the long-term effect Oatly needs to worry about, warns Alex Myers

Blackstone, you see, has multiple investments in businesses accused of being responsible for deforestation. It has built giant real-estate empires on the back of human anguish and its implausibly rich 'Bond villain'-style CEO, Steve Schwarzman, is a major campaign donor, advisor and friend to Donald Trump.

Not a good look for a brand built on a sustainability mission.

No wonder, then, that the streets of Stockholm are awash with oat milk spilled by incensed coffee-shop owners.

The brand is facing a global backlash across social media and rising calls for a boycott.

For marketers building positive-impact brands, it’s like watching our favourite pub burn down.

Oatly is the mainstream poster child for ‘purpose-driven business’, having sparked a global oat milk revolution from humble beginnings with punchy slogans such as: "Milk, but made for humans."

Every Oatly customer – regardless of whether they are vegan activists or not – gained a feelgood dividend from choosing the brand over less sustainable alternatives.

It’s a success story built not on value, but values. So why do this?

Oatly claims it is subverting ‘big money’ by offering a great sustainable investment, casting the move as a bold approach to changing the world of finance.

It’s straight out of the Innocent playbook, when the smoothie brand was bought by drinks giant Coca-Cola in 2013.

At the time, the move appeared at odds with Innocent’s values, but it claimed Coca-Cola’s scale, means and distribution network would accelerate its mission.

Reviews were mixed, but Innocent survived the fallout because, rationally, it was true.

The challenge for Oatly is that this line of defence is utter bollocks. Blackstone’s money is no different to anyone else’s, and the firm won’t suddenly see the light and replace its existing portfolio with sustainable investments.

More likely, it will see sustainable brands as a viable addition to the roster that might even deflect attention from its dodgier investments.

It’s like an athlete injecting anabolic steroids into their thighs at the starting line screaming: “It’s for the good of the sport!”

Wouldn’t being locked out of lucrative sustainable investments better incentivise big money to clean up its act?

The capital might not be as cheap or free-flowing as it is from Blackstone, but a principle is only really a principle when it costs you money.

So what’s the impact? In the short term, not much.

The investment will help Oatly grow and the boycott will lose momentum.

But it’s the long term Oatly needs to be worried about.

The purpose and mission that has got it to where it is today is its superpower. Kryptonite for the dairy industry.

There are now upstart brands in its category suddenly more authentic, and Oatly can no longer claim a moral high ground over its cheaper global competitors.

In short, Oatly’s promise to be ‘a good company’ has been broken by taking bad money. That’s a knot it can’t untie.

And whatever happens to it from here is a fascinating litmus test for conscious business.

Alex Myers is founder and chief executive of Manifest and chairman of CPD platform for the creative industries Incite.Global

Thumbnail credit: via @oatly on Twitter

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