Oat Milk Recall: OATLY Embroiled in A Potential Pathogen Contamination Turmoil

On August 19, 2022, OATLY China issued a product recall announcement, which stated that it would voluntarily recall 12 batches of Oat Drink Deluxe 330ml sold in the Chinese market to ensure product safety because of the the potential for microbial contamination. Actually, this is not the first time that OATLY has been accused of pathogenic bacteria contamination.

The ins and outs of the incident

July 29, 2022 COMPANY ANNOUNCEMENT - FDA

Lyons Magnus, a California-based Food and beverage maker issued a voluntary recall, covering 53 of its beverages and nutritional products (including an Oat-Milk Barista Edition from OATLY) in the U.S. market. The reason was these products did not meet commercial sterility specifications and might include Cronobacter sakazakii. It is known that Cronobacter sakazaki can cause fever, vomiting or urinary tract infection.  

August 10, 2022 COMPANY ANNOUNCEMENT - FDA

Due to the potential for microbial contamination (including Cronobacter sakazakii and Clostridium botulinum), Lyons Magnus expanded its voluntary recall, covering a total of 89 beverages and nutritional products. It is said that Clostridium botulinum may cause severe food poisoning.

Lyons Magnus is also one of OATLY's partners. The products disclosed in the expanded recall include OATLY's Oat-Milk Barista Edition, Oat-Milk Chocolate, Oat-Milk, and Oat-Milk Barista Edition.

August 19, 2022 OATLY China Official Account

OATLY released a recall announcement in the Chinese market, stating the only OATLY product for the Chinese market produced by Lyons Magnus was Oat Drink Deluxe 330ml. However, it was not on the recall list announced by Lyons Magnus in the United States.

OATLY China immediately sent the involved products to a state-approved laboratory for inspection to ensure the safety, even though they were imported in compliance to relevant regulations. The results showed that no microbial contamination was found in the products, and OATLY had not received any product-related illness report or health complaint. The announcement concluded that OATLY would take preventive measures to voluntarily recall 12 batches of Oat Drink Deluxe 330ml sold in the Chinese market.

The health halo of plant-based milk

Health is the most significant driving force for consumers to choose plant protein drinks such as oat milk. The recalled 12 batches of Oat Drink Deluxe 330ml are not related to the food safety incidents in the United States. However, OATLY took preventive measures to show its conscientiousness to consumers. This recall has caused economic losses, but it can make consumers continue recognizing its food concept and prevent the brand’s reputation from depreciating.

However, OATLY uses environmental protection and lactose intolerance as its selling points, claiming or implying that plant-based beverages are an alternative to milk nutrition. The question is, can oat milk thoroughly replace milk and become a necessity for human life?

Plant milk was initially designed to solve the nutritional intake problem of lactose-intolerant people. It was later advocated by vegetarianism, and now it is valued by people who pursue environmental protection, thinking that its production consumes far lower energy costs than milk. From a nutritional point of view, although plant milk contains protein, high-quality fat, dietary fiber and some secondary plant metabolites, etc., its protein content is lower than milk's. Except for soy milk, the types of essential amino acids that other kinds of plant milk contain are incomplete. In addition, the content of ingredients such as calcium and vitamin D is also lower than that of milk. Hence, even if plant milk has unique nutritional advantages, it is still difficult to completely replace cow milk.

The fast-growing OATLY with a soaring plant-based market

Since 2015, OATLY has risen rapidly with the development of the global plant protein market. From 2019 to 2021, OATLY’s revenue scale climbed gradually, with a total operating income of 204 million, 421 million, and 643 million US dollars, respectively.

The latest earnings presentation of OATLY shows that the total operating income for the first half of 2022 was 344 million US dollars, an increase of 20.2% from 286 million US dollars in the same period last year. Moreover, OATLY also won the top spot on the iiMedia Ranking of China Oat Milk, with a high score of 93.67. However, the loss shown in the earnings report should not be neglected. In the first half of this year, OATLY's adjusted EBITDA reached 124 million US dollars. Currently, the EMEA region, including Europe, the Middle East, and Africa, is OATLY's only profitable sales area.

With the change in people’s lifestyles and capital boost, oat milk has attracted much attention in recent years. According to the "2022-2023 Global Plant-Based Market and China's Oat Milk Consumption Trend Analysis Report" released by iiMedia Research, the overall market size of China's oat milk industry is on the rise as a whole. In 2020, the market size of oat milk in China reached 1.75 billion yuan, with a year-on-year growth rate of 153.6%. In 2021, it also rose more than doubled, with a year-on-year growth rate of 141.7%. In the next four years, the market size of oat milk will be expected to maintain an upward trend, with a year-on-year growth rate of around 50%. From a global perspective, the plant-based market has gradually entered a rapid developing promotion period in recent years after the initial market exploration period.