Oatly uses Swedish oats to manufacture plant-based alternatives to dairy products. In 2016, the company received the highest rating in the sustainability study Hållbarhetsbarometern.

”The food industry is responsible for at least a quarter of the global greenhouse gas emissions, and nearly 15 percent comes from meat and dairy production. Meat and dairy production is resource intensive, and plant-based products allow us to make more climate-friendly choices”, says Toni Petersson, CEO of Oatly.

”I believe that we should seize every opportunity to make the Swedish food industry more competitive, and at the same time take responsibility for the future of our children and coming generations. Consumers demand healthy and sustainable products, and Oatly’s oat-based products have become more popular in the last years”.

Successfully commercialized Swedish research

Oatly’s story begins with Professor Rickard Öste, and his postgraduate research at Lund University. His supervisor had discovered lactose intolerance – the inability to to digest a sugar found in milk products – in the 1960s. Some people just can’t process animal milk and their reactions range from diarrheas to severe allergic reactions. The research provided an explanation for how lactose intolerance works, and how it differs in various parts of the world.

Rickard Öste finished his PhD thesis on lactose-related reactions. In the summer of 1985, he was visiting Japan, and came upon a couple of soy milk vending machines. Japanese people are lactose intolerant, and apparently they had developed a plant-based alternative. At the same time, researchers had uncovered a new property of oat: they contain beta-glucans, a kind of soluble cellulose fiber thought to improve blood glucose regulation and lower cholesterol levels.

Rickard Öste got an idea: to refine oat into various products, such as a lactose free alternative to milk. After intensive development, the first oat drink arrived, and Öste’s research team received a patent for it in 1994. The following year, the Oatly company was founded. The production facility in Landskrona was built a decade later, and consumer demand for oat-based products has increased more and more. Rickard Öste is still actively participating in Oatly’s operations, and is a member of the company board.

”We have grown from 45 to almost 100 employees in three years, and we are about to invest 350 MSEK in the Landskrona facility to increase production capacity. We use only Swedish oat in our products, and the health benefits and sustainability are important reasons for our success”, Toni Petersson says.

Patented manufacturing process

The manufacturing process that retains the loose oat fibers, the beta-glucans, is patented. This is how it works:

  • During the first stage of the process, oats are mixed with water and the soft mixture is milled.
  • In the enzyming tanks, natural enzymes that break the oat starch down into smaller components are added. The primary enzyme is maltose (also called malt sugar), which sweetens the products naturally.
  • During the separation, bran is removed (the loose shells from the oats). That leaves the loose fibers, the beta-glucans. The oat base contains macronutrients from the oats, in other words, protein, fat, and carbohydrates.
  • Different ingredients such as rapeseed oil, calcium and vitamins are added, depending upon the product.
  • Prior to packaging, the products are heat-treated to extend the shelf life, then collected in the sterile tank.

Reduced climate impact

”We are not a giant company, but we still want to do what we can to improve and change the unsustainable food industry. Traditional foodstuffs will eventually have to be replaced by more healthy, climate-friendlier and innovative alternatives. My conviction is that our oat products, along with other sustainable products, can be a future Swedish export industry. We have a comparative advantage; the Swedish oat grow strong in the Nordic climate, they contain minimal traces of heavy metals, and many pesticides used elsewhere are forbidden here. Fiber-rich foodstuffs such as oat can reduce the risk of lifestyle diseases: obesity, diabetes, cardiovascular disease”, Toni Petterson says.

”We believe that animal products are always worse for the climate than vegetable ones. It is a provocative thing to say in a country where milk is a staple commodity, and dairy production is a major part of the Swedish agricultural sector. Milk have a number of beneficial properties, but according to several life cycle assessments, oat drinks outrank them from an environmental point of view. They cause less impact on the climate, and the oat drink production is less land-intensive. One factor that affects the climate impact comparison is the greenhouse gas methane, that is released in large amounts by ruminating animals. Another advantage is that land otherwise used to grow animal feed can be used for something else, such as biofuel production”.

Oatly’s sustainability efforts have been acknowledged: in 2016, the company received the highest rating in the sustainability study Hållbarhetsbarometern (Sustainability Barometer), comparing the public’s perception of the sustainability of convenience goods businesses. The study looks at four elements of sustainability, namely, societal responsibility, environment and climate, transparency and long-sightedness. Hållbarhetsbarometern, which in 2016 was based on 15 000 interviews and included 160 companies, is the most comprehensive study on the sustainability of Swedish companies.

”We have a number of projects coming up, and we are expanding internationally, in Europe and elsewhere. China is an intriguing market with plenty of potential. Rickard Öste made a study on Chinese school-children a couple of years ago, in collaboration with Swedish and Chinese researchers; the results show that oat milk enriched with minerals and vitamins is just as healthy as cow’s milk. The USA, where demand still is rising for healthy vegetable products, is another interesting market”, Toni Petersson says.

The article was published in January 2017.