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 a percent of the company as part of a $200,000,000 deal.

Lisa takes 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 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 increase the plant-based sector if all that we’re doing is keeping the cash-flow within a vegan circle? 

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 the business. If you 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 they may not 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

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.

Read Oatly’s statement in full here:


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