Oat milk leader Oatly has revised its full-year guidance after sales dropped in the US and China, where it is mulling a potential restructuring.
Swedish plant-based milk giant Oatly continued to struggle in the US and Greater China in Q2 2025, leading it to reduce its revenue expectations for the year and initiate a strategic review of the latter market.
While the company’s revenue for the April to June period was up by 3% (at $208.4M), this was largely due to favourable foreign exchange rates. When discounting these, its sales slimmed by 0.2% from Q2 2024, reaching $201.7M.
Meanwhile, the company’s losses swelled by 84%, primarily due to fair value losses on convertible notes. It has now revised its full-year outlook, with constant currency revenue growth expected to flatline at 1%, compared to its prior expectation of 2% to 4%.
“Our updated guidance reflects slower-than-expected top-line progress in our North America segment, as well as a soft macro-environment in our Greater China business,” said Oatly CEO Jean-Christophe Flatin.
At the same time, the company’s adjusted EBITDA loss – revenue excluding all non-operational and one-time expenses – shrank by 67% to $3.6M. “This continued progress and the actions we are taking to drive the business give us the confidence to reaffirm our full year profitability guidance,” he told investors in an earnings call.
China operations continue, but a carve-out is a possible option
Oatly continued to drive growth in its home market, where sales were up by 12% (before foreign exchange impact) compared to the year-ago period, reaching $118M. Its volumes also grew by 9.4% in the Europe and International segment, thanks primarily to its barista lineup.
Most of its revenue (79%) in this region comes via retail, where its 4.7% growth outperformed both the wider oat milk category (whose sales were up by 2%) and the overall plant-based milk segment (up by 4%).
In North America, year-on-year sales of Oatly decreased by 7% to $63M in Q2, with volumes down by 7.5% due to lower sales to the segment’s largest foodservice customer. Outside that client, however, the business recorded its highest quarterly foodservice revenue, while posting record retail sales.
Daniel Ordonez, the company’s COO, noted that the North American results were below its expectations. “Given the success we’ve seen in Europe and internationally using the same playbook, we know what’s possible, and we remain committed to applying these lessons to drive the consistent performance that we expect from our North American business,” he said.
And while the company had previously suggested that the US’s tariff wars could undermine its profitability plan, CFO Marie Jose-David said its guidance “assumes no direct impact from tariffs”.
Meanwhile, Oatly’s sales in Greater China were down by 6% to $27M, thanks in large part to a drop in foodservice, which makes up 62% of its revenue in the region. The firm has long struggled in China, and is now conducting a $1.4M strategic review of this segment.
“We will consider a range of options, including a potential carve-out with the goal of accelerating the growth and maximising the value of the business,” said Flatin. “We will continue to operate in the region, including our Ma’anshan facility.”
He added: “Our Greater China business has improved over the past few years. And it is much stronger now. It has been a strong contributor, delivered better results, established market leadership and is now well positioned for the future. We believe in the future potential of this business.”
Oatly bets on lookbook and bats away protein concerns
Oatly ascribed its European growth to the refresh playbook it deployed late last year. Part of this involved increasing its relevance by leveraging its barista portfolio and targeting Gen Z with new taste experiences. It also plans to attack barriers of conversion, most notably preconceptions about taste, as well as increase distribution.
“Anywhere we taste blind, we see that around one in two people prefer Oatly to cow’s milk in their coffee,” noted Ordonez.
The playbook has delivered success in Germany, the UK and Sweden, its three largest European markets, and is now being rolled out in the US. “We are confident that with proper execution and future steady investments, this strategy can drive incremental demand,” he said.
A key tenet of the playbook is the Spring/Summer lookbook it unveiled in May, featuring a range of recipes highlighting innovative use cases for its barista milks. “The lookbook is helping us break down those barriers and drive incremental demand, generating excitement with quotes reminiscent of fashion and unexpected recipes that totally change the way in which consumers view oat milk,” said Ordonez.
The recipes range from a maple miso latte and lacto-fermented blueberry matcha to a salty banana split. “These are premium signature drinks that tap into Gen Z’s obsession with flavour and cold drinks. Can you imagine any of these drinks with cow’s milk? We don’t think so,” he said.
The company is now translating the success of these flavours into new products. In Sweden, it has launched a popcorn-flavoured barista oat milk inspired by the lookbook’s sweet and salty popcorn latte, while in the UK, it has released a ready-to-drink matcha latte.
As the company looks to replicate the success of its European playbook in North America, Ordonez addressed a question about whether Oatly’s low protein content and dairy’s resurgence in the US played a part in its weak performance in this region.
“The protein topic is more of a value phenomenon in North America, less than a volume phenomenon when you look at the dairy category,” he said. “We don’t make a choice between health, protein, [and] fibre, and we strongly believe that we are focused on driving both penetration and frequency in that order.”
He continued: “Taste remains the number one barrier to consumption for plant-based products and certainly for oat milk and plant-based milk. So you will see, without ignoring the point of our protein, a lot of focus on the health topic via enhanced fibre content, wholeheartedly driving the taste strategy, which is starting to prove to work in Europe.”
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