Swedish plant-based milk maker Oatly is investing S$30 million ($22.3 million) alongside Singaporean beverage firm Yeo’s to kit out a new factory in the city-state, as it sets its sights on cracking the Asia-Pacific region’s growing market for dairy products.
Yeo’s produces a number of well-known drinks brands which are sold across Asia, including soy milks, ice teas, and coconut waters, as well as a range of ready-made curry pastes, instant noodles, and other convenience foods. It formed a partnership with Oatly last year, becoming the Swedish startup’s first Asia-based supplier.
Yeo’s Singapore factory will be refurbished and fitted with the necessary equipment to become Oatly’s first production facility outside of Europe and North America.
The factory is expected to begin churning out the startup’s oat-based milk analog during the second half of this year, using oats imported from Sweden.
It will initially produce an estimated 60 million liters of oat milk per year, though the two partners said they could expand that with further investment.
“This strategic partnership positions both companies to tap the surging demand in this region for plant-based dairy,” Yeo’s group CEO Samuel Koh told The Business Times.
“We believe that this segment will continue to grow exponentially as consumers become more aware of the impact of their food and beverage choices on their health and the environment.”
China will be the prime target for Oatly’s Singapore factory, with other regional markets close behind. Daxue Consulting predicts that China will become the world’s single largest market for dairy products by next year; while its vegan foods market will be worth $12 billion by 2023, according to Euromonitor.
Last month, Oatly announced plans to establish “one of the world’s largest plant-based dairy factories” in Peterborough, UK, by the first quarter of 2023, with an annual production capacity of 300 million to 450 million liters and an estimated 200 new jobs created.
And in February, Oatly confirmed rumors that it would seek to go public, announcing that it had filed confidentially for an IPO in the the US. Commentators have suggested the company could raise as much as $1 billion if it floats.
Oatly co-founder Bjorn Oste on scaling alt-milk and the need for local food production – listen to our podcast here
In terms of private funding, Oatly most recently raised $200 million in a funding round led by Blackstone Growth, the growth equity vehicle of US private equity giant Blackstone Group, in July last year.
Netherlands-based Rabobank affiliate Rabo Corporate Investments and New York-based Orkila Capital also participated in the round, alongside Oatly’s co-founders and celebrity investors such as TV personality Oprah Winfrey, Hollywood star Natalie Portman, former Starbucks chairman and CEO Howard Schultz, and musician Jay-Z.
That round was reported to value the alt-milk maker at around $2 billion. At the time, it claimed to have recorded $200 million in sales for 2019, with its products available in over 50,000 locations across 20 countries. It also said it employed 550 staff across Europe, Asia Pacific, and North America, and the Blackstone-led funding would be used to expand its presence and open new production facilities in all three regions. The newly announced Singapore and Peterborough facilities appear to be the results of that plan.
Headquartered in Malmö, Sweden, Oatly produces and markets a range of plant-based dairy alternatives made from oats using enzymatic action. The startup was founded in the 1990s around scientific research into plant-based proteins carried out at Sweden’s Lund University, before relaunching as a consumer brand in 2013.