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Executive Talk

From oats to milk

Food scientist and chemistry professor Rickard Öste, who invented the oat-milk drink, has made Hong Kong his base for taking a wide range of new inventions to market.

TEXT: Jan Hökerberg
18 JUNE, 2019

Oatly’s co-founder Rickard Öste has seen the Oatly brand taking off in many markets, especially in the US.

A friend of Rickard Öste and his brother Björn – the co-founders of the drink company Oatly – once said that “Rickard has more ideas during an ordinary weekday dinner than most people have in a lifetime”. After spending two hours with Rickard Öste in his new office in Hong Kong Science Park, it is obvious there is certainly some truth to that statement.

Öste recalls an idea he had, in the mid-1990s, when he heard a radio programme about World War II, and how allied pilots discovered that drinking blueberry soup before their missions helped them get their night vision back quicker after the Germans shot up flares.

“My idea at that time was to invent a drink that would help night truck drivers who are temporarily blinded by full-beam lights from vehicles approaching from the opposite direction. The project never materialised due to lack of financing so it was dropped,” says Öste.

But he has not given up on berries and talks excitedly about a new idea involving how wild berries can help people with Alzheimer’s or dementia maintain their memory. He has already two researchers working on that and a study is underway for release next year.

Meanwile, in a laboratory in Sweden, he has developed a special version of oatmeal cereal with 10 per cent more fibre, which he and his Chinese wife Yi Ren like to consume for breakfast.

Öste’s passion for oats started in the 1970s when he studied at Lund University under professor Arne Dahlqvist, who in 1963 had discovered lactose intolerance – a condition that makes it impossible for some people to fully digest the sugar (lactose) in cow milk.

Öste realised there was a great market for whoever managed to develop an alternative to cow milk, but it took him two decades to come back to the idea. It happened when he met a grains trader who had a big surplus of oats. Remembering his old idea, together with a small group of researchers, he spent weeks and months in the laboratory, carrying out research and travelling to countries such as Japan, where soy milk was popular.

“We became more and more convinced about the potential to use oats as an alternative to cow milk. Oats have many characteristics that are close to mother’s milk. With a small addition of canola oil, we found that oat milk has many advantages, such as a pleasant taste, balanced macronutrients and fibres that reduce cholesterol. it also contains natural antioxidants and important vitamins,” says Öste.

80%

The percentage of less greenhouse gases that Oatly claims that its oat milk creates compared to cow milk.

In 1994, he and his research colleagues founded Ceba Foods, which later became Oatly, in Malmö together with some institutional investors. His brother Björn also joined as an owner.

After its introduction to the market, the Oatly drink saw many years of slow or moderate growth. However, in 2012, the company decided to bring in Toni Petersson as CEO, who with his entrepreneurial background differed from most of his predecessors.

“His mission was to change Oatly from a health drink to a lifestyle brand,” says Öste.

Oatly challenged the dairy industry by asserting that oat milk creates 80 per cent less greenhouse gases than cow milk. In 2014, Oatly was sued by the Swedish dairy lobby in a legal effort to stop Oatly discrediting cow milk. “We lost in court but we won in the market, since we made all our arguments public on the internet,” comments Öste.

With a message to consumers that science proves the need to consume more plant-based foods, CEO Petersson recorded a promotional video in which he was singing and playing “Wow, no cow”, a song he had written, in a field of oats on his keyboard while drinking an Oatly drink.

My attitude has always been that problems mean possibilities.”

The new marketing direction paid off immediately and after Oatly launched in the US it became a tremendous success.

“Coffee shops have been the door opener and created the big breakthrough for us. Big cities have a coffee-shop culture and Oatly is part of this urban trend – we have even created a barista edition of our oat milk” says Öste.

This year, Oatly expects to reach a turnover of around SEK2 billion (CNY1.5 billion) and Öste believes that it could double by 2020. A decade ago, Oatly had only one factory in Landskrona, Sweden. Today, Oatly has two factories in the US, one in Sweden, one in the Netherlands and the company is planning two more plants in the US, one more in Europe and two in Asia. The Oatly brand is marketed in more than 30 countries around the world.

In 2016, a joint venture between the Chinese state-owned enterprise China Resources and the venture capital firm Verlinvest, which has links to the world’s largest brewer AB InBev, took over around 70 per cent of the ownership of Oatly, although Rickard and Björn Öste still have a minority shareholding.

The China market is still in its early days even though Oatly is now established in Shanghai. Between 2008 and 2011, Öste spent a lot of time in China trying to convince authorities through research that oat milk is as good as cow milk. “We didn’t enter China at that time because of differences of opinions among our then board of directors,” says Öste.

He believes that there are several reasons for Oatly’s recent success: “The timing in deciding to market it as a lifestyle brand was perfect. In the early 2000s, there were no social media. Now, we can position ourselves much closer to consumers and we can sell the products on the internet. Growing consciousness about environmental issues has also been an advantage for us.”

Oatly’s CEO Toni Petersson recorded a promotional video in which he was singing and playing “Wow, no cow” in a field of oats.

The office in Hong Kong Science Park belongs to Aventure, which Öste and his brother divested from Oatly to pursue research and development opportunities outside Oatly’s principle product. Öste moved to Hong Kong last year because he thinks it is the perfect location for undertaking research on food and beverage products and inventions.

“In Hong Kong, you have 4-1/2 billion people within four hours of flying time. Whatever regimes these people live under, they all need to eat and drink,” Öste says.

“I have contacts with researchers at universities in Hong Kong and we are planning studies that include testing how Asians perceive different kinds of oat products,” he says.

“My philosophy over the years has been to go from market to science and then back to the market. And my attitude has always been that problems mean possibilities,” he says.

Facts about Aventure

Aventure is a research-based company in the field of food, nutrition and biotechnology. The business concept is to develop unique, scientifically validated food, nutrition and biotech concepts, including products and patents, with large market potential. Below are some of the company’s subsidiaries:

  • Glucanova is focusing on liquid high-fibre oat products, such as IKEA’s oat smoothie Munsbit.
  • Double Good has developed and launched the flavoured mineral water Good Idea which, if taken before or during a meal, will reduce the blood sugar spike after a meal by 20-30 per cent.
  • Lument has developed the first oral food-based contrast agent in the world. It is a foam that improves abdominal computerised tomography (CT) scans.
  • Ottos Barnmat is an innovative baby food company in Sweden with a focus on organic and fresh baby food products.
  • SweBol Biotech is focusing on a transparent and sustainable supply chain of quinoa, kaniwa and related crops from Bolivia, including high-end products from these or similar raw materials.