Why change is hard. Were Oatly right to partner with Blackstone?

Oatly made the headlines for all the wrong reasons when it was revealed that American private equity fund Blackstone had bought 10% of the company for $200,000,000.  

We take a look at why the champions of positive change decided to partner with backers who have such a chequered and controversial history – and were they right to do so?

Change isn’t easy.  These are the words that begin Oatly’s fightback against the backlash they have faced after accepting investment from Blackstone, an American private equity fund with a chequered history of what projects they have chosen to finance.

On face value, the choice to accept funding from Blackstone (in return for 10% of the business) seemed questionable. Plant-based is the food industry’s rising star at the moment, with brands such as Beyond Meat having no problems securing record levels of finance for a vegan product. Oatly would have had their pick of investors, so why would a company whose mission is based on ‘change’ choose such a partner to give them the money they need to scale up?

Once a company gets to a certain size, the opportunities to raise huge sums of cash from ethical sources become limited. ‘Vegan’ should not be just a closed economy. The unfortunate reality is that if ethical companies had to only rely on plant-based money generation, then their opportunities to scale up to compete with well-established meat and dairy brands would be severely reduced. 

Global organisations are currently scooping up growing plant-based brands as they recognise the direction the market has taken. If someone takes a specific stance against Oatly taking investment from Blackstones, should they also take a stand against Ben & Jerry’s new range of vegan Ice cream knowing the company is now part of the Unilever brand family? Or should we realise that for a plant-based brand to break through the glass ceiling they will need to accept funding from non-vegan investors? Is it possible to create a vegan world if all that we’re doing is keeping the vegan cashflow within our vegan circle? Yes, we’re growing as a community, but not fast enough to have the kind of impact we need to be having on the world at large.

Even if you are going the crowdfunding route (and I would argue that the 400 million dollars Oatly now requires to break into the mainstream go beyond this option) then you’re not going to have a choice about who is investing in your company. Vegans and non-vegans alike will own equity in your business. If we look closer at any large vegan company which has sold equity in their business via any method, then the vast majority of the time we’re going to find connections that we don’t like. Even if you think about bank loans and the interest paid in return – how many banks can claim to have only funded completely ethical businesses and projects?

A very high-profile social media campaign was run against Oatly's decision to partner with Blackstone

Not that I could immediately defend or support Oatly’s decision to partner with Blackstone, who have also invested in companies that have links to the commercialisation and deforestation of the Amazon rainforest. But let’s take a look at Oatly’s journey. Originally, their distribution was exclusively through independent organic and vegan stores. They took an ethical decision to eschew the supermarkets who made a large part of their profits from meat and dairy products. But if they wanted to reach out and reach a wider audience (ie the main part of the population who did not visit vegan retailers) and convert them to plant-based, then could they instead work in partnerships with supermarkets to bring change from within? Oatly were one of the leading voices in opening up a new sector on the supermarket shelves which has paved the way for many other plant-based brands to follow and reach a huge new audience in return. At the same time it proved to the supermarkets that there was a market (and money to be made) from stocking vegan products.

Oatly has now put investment and finance in their sights in the same way. Their decision to work with Blackstones seemed to be in full knowledge of the controversy surrounding the ventures their 4 trillion dollars has also funded. Can Oatly engage with Blackstones and prove they can make as much profit from backing sustainable, ethical companies such as theirs? Can they even steer and influence other funds to actively look to back more plant-based companies – by seeing the market-leader finding success from more ethical investment opportunities? At this point, we don’t know, but that doesn’t mean they shouldn’t try.

I will say from my own experience that even the most non-vegan organisations can be a curious bunch and haven’t been able to ignore the trend towards plant-based. Even on a personal level, I’ve had many surprisingly positive conversations with large non-vegan companies, where the people in charge want to ask questions about veganism, or tell me that their daughter has been vegan for a year, or ask if palm oil is vegan (let’s not start that conversation!).

It is our duty to guide unethical businesses towards the right path. This must be done at first by dangling a money carrot, but what’s more important is where you’re leading them.

Final thoughts:

Creating a vegan world can’t be done amongst us vegans alone, or by slowly converting the population person by person. It’s not always going to be palatable to think about working with businesses or investors who lack credible ethics. But think about this – how are they going to learn if we don’t teach them? Of course, it’s down to every individual to make their own ethical buying decisions – that is a concept at the very heart of veganism – but we can’t blame businesses for being unethical if we’re only leading by example but shutting them out. Instead, we must encourage positive change. And there’s no better way to do that than from the inside.

Let us know your thoughts in the comments below.

Please add your own comment:

4 comments on “Why change is hard at Oatly

  1. I think that Oatly did the right thing; they have done a fantastic job of getting the plant based message out there in a fun way that appeals to a broad market, not just vegans or those with allergies/intolerances and I can only see it as a good thing that they have engaged with Blackstone who can provide the equity and strong arm that they need in order to further this message across the globe. I also see it as a good thing that investors believe in the Plant Based message enough to want to invest in the market. It’s the beginning of a big global shift and I applaud Oatly for being brave enough to make this move knowing they would come under fire. I’m happy that Oatly will be remaining on the supermarket shelves for a long time to come

  2. I agree that we need to be open-minded and work with non-vegan companies, to show them how things can be done, through attraction and from the inside. We can do little on the outside. Thanks Lisa!

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