What the Oatly-controversy teaches us about the demand for transparency

The Oatly-controversy

You probably heard already, Oatly has made the decision to sell a stake in the company to a consortium that includes Blackstone, a powerful private equity firm headed by Trump donor Stephen Schwartzman. Blackstone, in its turn, is allegedly investing in projects that link to deforestation in the Amazon rainforest. This hit me quite hard, as I am actually a great Oatly enthusiast myself. Oatly was the first plant-based alternative that has made me ditch milk. And just like every first relationship, it holds a unique place my heart. And I can’t disagree with Oatly choosing Blackstone as an investor to be controversial, but, from a consumer point of view, I do not think that it is just this partnership that is making Oatly fans to call out to ‘cancel’ the brand. I believe this comes from the consumer demand for radical transparency.

Transparency of investment matters too

Of course, similar to the Unilever buying Ben & Jerry’s and The Vegetarian Butcher and Alpro joining Danone, these shifts make people uneasy. This comes along when sustainable brands move from niche to mainstream. There are definitely more ethical investors I wish Oatly had chosen for, but it can be true that in this case these lacked the punching power that Blackstone has and Oatly needs. But consumers are interested in (read also: critical of) how these mainstream investors are willing to change their portfolios and position themselves as ‘a force for good’. In this regard, I disagree with the words of Nick Cooney, Managing Director of Lever VC quoted in Justfood.nl: ‘Who a food company receives investment from is not one of the things that consumers seem to care about.’. I think the case of Oatly proves that actually, consumers care. According to several brand studies, over 90 percent of consumers say transparency by a brand is important to their purchase decisions. Financial transparency is just as much part of this as the traceability of key ingredients. Consumers want to know how the profit of Oatly – which comes from their purchases – is reinvested responsibly.

Transparency means owning up to mistakes

I believe that Oatly has underestimated the expectations for radical transparency by consumers, especially coming from their key audience: sustainability minded people that try to shop consciously. After all, Oatly itself actively advocates for consumers to think critically about the dairy industry and to expect transparency. In big letters on their packaging it says: ‘Hey, food industry show us your numbers’. The lack of communications up front and the lack of clarity on the agreements between Oatly and Blackstone is why Oatly’s biggest fans now start to doubt the brand. It also does not help that as the critique explodes online, the tone of the company strikes many as too defensive and seems to blame the critical consumer as ‘unable to see the bigger picture’. See below a snapshot into the discussions.

From the bad to the promising

So, did I lose my belief in first love Oatly? Well, no. In our work at The Terrace we believe successful positioning of a company’s sustainability is all about covering ’the good’, ’the bad’ and ’the promising’. Oatly so far been an example of a brand that shows what’s not going well; their 2018 sustainability report stated on the front cover: ‘Slightly worse than last year’ for instance. I don’t think that ‘canceling’ the brand will help in any way. I see the current discussion as part of a positive development where consumers ask questions and hold corporations accountable for their actions. And whilst I will open up my monogamous relationship status with Oatly, I hope that the brand will learn from it, comes back with more transparency on their financial decision-making and then keeps making waves in their industry. In other words: Hey Oatly show us your numbers!

I am curious what you think though: are you still on board the Oatly revolution? And do you believe the investor-relation itself or the lack of transparency is an issue? Show me your opinion about this article by sending me an email.