Beer Marketer's Insights - We Did It, Oatly Declares: Profitable Growth in Q3; N Amer Down 10% on Big Foodservice Loss but Growing at Retail

Oatmilk pioneer Oatly turned in durable Q3 this morning, lauding its ability to finally deliver profitable growth after 3-yr revamping of corporate strategy under new mgmt team. Outlook still is clouded by uncertainties ranging from search for lasting solution in China market to down US market where brand is rebuilding after being drastically downsized in Starbucks chain. "It is early, but &#39;26 is starting to look like a cleaner year," wrote Jeffries' Kaumil Gajrawala. Revenue rose 7.1% to $222.8 mil, +3.8% on constant-currency basis. Topline gain was driven by "consistent performance" in Europe & International and "strong quarter" in China, partly offset by North America decline driven mainly by reduction in revenue to brand's largest foodservice customer, presumed to be Starbucks. Sold volume in Q3 rose 6.6% to 150.6 mil liters and produced finished goods volume was about flat at 147.6 mil liters. Gross margin was flat at 29.8%. Adjusted EBITDA was in the black at $3.1 mil, reversing $5.1 mil loss in prior year.By region, sales in Europe & Int'l segment rose 12.2% to $123.3 mil, +6.6% on constant-currency basis. N Amer sales dropped 10.1% to $62.1 mil. Excluding effect of Starbucks cutback and discontinuation of co's frozen desserts, revenues grew 5%, global prexy/COO Daniel Ordonez emphasized. Parsed another way, foodservice channel actually grew 11% to $18 mil excluding that large customer. Other key channel, retail, grew 4% as Oatly extended new European playbook to this market, starting with in-store executions. Club biz also is burgeoning, growing to 6% of revenue from below 1% in 2024, as brand plies 5 Costco regions with 2 or more due aboard in coming months. (Slide depicted 3-pk of Original entry and 6-pk of Barista entry.) So excluding one-offs, Oatly is scoring record sales in both foodservice and retail channels, Ordonez indicated. In Greater China, sales soared 28.8% to $37.4 mil, +28.7% on constant-currency basis. Oatly is staying the course there while trying to figure out most sustainable model to pursue in coming years.That strategic shift under CEO Jean-Christophe Flatin has called for dramatically reducing mfg footprint while moving more activities to outside copackers and moving marketing beyond dairy milk replacement to oatmilk's starring role in the glamorous bev recipes younger consumers seek, many of those drinks served cold rather than hot, and often with matcha rather than coffee at their core. That new marketing "playbook" reignited sales in Germany and now is being expanded to other markets, including US.

We Did It, Oatly Declares: Profitable Growth in Q3; N Amer Down 10% on Big Foodservice Loss but Growing at Retail

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