Swedish oat drink brand Oatly’s approach in China has set an example in F&B as its marketing strategies really worked and its products satisfy the growing Chinese consumers’ demand for healthy products.
Oatly brand lands in China
Oatly is a vegan food brand from Sweden which produces alternatives to dairy products from oats. It was founded in 1990 using research from Lund University and today, Oatly is Scandinavia’s leading brand of plant-based products. The Swedish alternative milk brand Oatly is well aware of the Chinese consumer’s lactose intolerance and their huge demand for plant-based milk.
In 2016, the brand launched in Hong Kong and is now sold in supermarkets, as well as Starbucks and Pacific coffee shops. It has since opened an office in Shanghai and deployed a new Chinese character for “vegan milk” to attract more milk drinkers to its products. Furthermore, 2019 has been a good year for oat drinks. In coffee shops, oat has become the most popular alternative milk and Oatly has become the first choice for many Chinese consumers.
Recently, the Swedish oat-milk maker Oatly AB has sold a $200 million stake to a group led by private-equity giant Blackstone Group Inc. that includes Oprah Winfrey, Natalie Portman, former Starbucks Corp. chief Howard Schultz and the entertainment company founded by Jay-Z.
How Oatly entered the Chinese market?
While many food & beverage brands find distributors in China, which get the products in different groceries and supermarkets, Oatly took a different route. In November 2016, it formed a Joint Venture with China Resources Corporation (CRC) which is a Chinese state-owned conglomerate that owns a variety of businesses in Hong Kong and Mainland China. The company’s main business focus is the export of mainland Chinese products (including energy) to Hong Kong. Its retail operations include Chinese Arts & Crafts, and supermarkets in Hong Kong.
Then, in early 2018, Oatly started its operations in China and its APAC HQ is in Shanghai.
Oatly collaboration with coffee shops following the Chinese demand for Coffee
One key factor for Oaty’s spread in China has been its strategy of using “coffee”
Given the surge in Chinese growth in coffee drinkers and goers, Oatly tried to ride this wave by creating his barista edition, which was his flagship product with strong demand from bars across China.
This idea has been very successful in China as its barista edition works very well with espresso and makes coffee taste good, in fact, when mixed with an oat drink, the taste of coffee gets smoother.
Oatly localized its product to the Chinese market demand for coffee, by having a great ROI. Obviously, it used Chinese social channels such as WeChat, Weibo, Xiaohongshu, and others to promote its products.
As you can see in the previous image, in fact, Oatly uses Wechat to promote its Barista edition product and collaborations with various coffee shops in China.
In addition, its choice of the Shanghai location is not surprising at all because If any city in China drinks coffee, that is Shanghai, where people have been drinking coffee since the 1990s or earlier. There are thousands of boutique coffee shops throughout Shanghai, therefore, the best choice for Oatly to enter the Chinese market.
Another diffusion of its products is due to the collaboration with vegetarian-friendly restaurants and healthy food cafes. Currently, Oatly is in over 3000+ cafes and vegan-friendly restaurants in China.
Oatly’s collaboration with Heytea: A localized marketing strategy
By adapting its products to the local market, in 2019 Oatly launched a collaboration with the Heytea tea brand. In fact, as everyone knows, China is historically a tea-drinking country. Oatly found its unique collaboration with tea brands in China. The collaboration with Heytea, known in China for its flavorful and aesthetic milk tea, is an example.
Many coffee shops feature Oatly in their storefront with posters and stacks of products, this is because the popularity of Oatly in China has made it a marketing element for coffee shops.
In the future, we will see more cross-collaboration between Oatly and healthy lifestyle brands in China.
In 2020 Starbucks chooses Oatly in China for a new vegetable-based lunch menu
In April 2020 Starbucks Corp rolled out a plant-based food and beverage menu in China, collaborating with Beyond Meat and Oatly plant-based products brands. The aim was trying to recover from coronavirus shutdowns.
The partnership with Starbucks will be the largest in Asia so far and China is probably going to be one of the most important markets for it. Its milk is on the menu at some 4,300 Starbucks locations in China, bringing its points of sale in the country to around 11,000.
Starbucks ‘ new menu items make it easy and enjoyable to explore new lifestyles. It is trying to cash in on changing habits in China. In fact, recently, health and wellness, including healthy eating, have been one of the most important consumer trends in China.
Soy milk is already widely available in China, but the growing demand for different products among Chinese consumers has led Oatly to enter the Chinese market with the aim of not replacing soy as it plays an important role in Asia, but to make its way like a new type of vegetable milk.
With the new Starbucks tie-up, China is now Oatly’s biggest market in Asia. The company is building a plant in Singapore to help meet demand in the region. It is scheduled to open early next year.
Oatly’s threefold increase in demand from online orders
Like many others, Oatly’s offline businesses were affected by the virus-related closure of cafes and grocery stores, but its losses were more than offset by e-commerce.
In China, Oatly beefed up its online presence as coffee shops were ordered to temporarily shut down in February.
Since December, the company has seen a threefold increase in demand from online orders on sites like Alibaba, JD.com (JD), Pinduoduo, and Little Red Book. E-commerce currently makes up a third of Oatly’s sales in China.
As you can see in the image below, Oatly has a presence on all these Chinese e-commerce platforms and opened a store on both Tmall and JD.com.
Currently, E-commerce platforms have become the main purchase media for Chinese consumers, even in the plant-based milk sector. Therefore, these platforms present great opportunities for foreign brands that want to sell products in the Chinese market.
However, it is not so easy to create an online store on these platforms, therefore brands can find distributors or contact us as we can help you with all managing tasks.
Brands can also choose to invest in cross-border e-commerce platforms like Tmall Global, JD Worldwide, and Kaola. These platforms offer brands the opportunity to:
- sell their products without having a physical presence in China,
- skipping over lengthy product registration and approval processes,
- not incurring in long paperwork to export them and avoiding inventory risks.
You can also read our Strategic Guide to Export Food Brands in China
How does Oatly use the Chinese social network to promote the brand’s value and products?
Oatly is using Baidu as a brand window for Chinese consumers
Baidu is the main search engine for finding information in China, so the brand that wants to be recognizable among Chinese consumers should open an account on Baidu.
In addition, if you want to break into the Chinese market, Baidu SEO is a must step and a must-have. To be visible on Baidu a brand in this sector should know that Baidu knows only Mandarin and gives priority to websites hosted in China.
Oatly knows well because its Chinese website is hosted in China. Furthermore, as can be seen from the image above, Oatly is present on Baidu to reach Chinese consumers who cannot use google as it is banned in China.
Oatly is using social media to show the brand’s initiatives and products benefits
Chinese people spend a lot of time on social media doing many things like, chatting with friends, creating videos, buying products, and others, however, what is important for brands is that Chinese people go on these channels also to:
- obtain information about products and brands’ value
- obtain suggestions from other people like KOLs (Key Opinion Leaders)
As they spend time on these platforms, it means that these are the best places where to put their marketing efforts, therefore brands should open an account and then interact with Chinese consumers posting advertising, articles, news, images, and so on. Of course, you should localize your content and understand the Chinese consumer’s behavior and culture before doing your marketing campaign on these platforms.
This is exactly what Oatly is doing on her Wechat, Xiaohongshu, and Weibo accounts.
As how you can guess in the previous image, for example, Oatly is using these platforms to entice consumers:
- the use of its products as a new healthy lifestyle,
- the use of recyclable and therefore eco-sustainable products,
- promotion of all its oat milk products,
- education on how best to use its products in daily life.
KOLs are a good way to influence Chinese consumers to buy your product
KOLs are always a great way to influence Chinese consumers to buy your products as they are seen as more loyal than the company’s advertising campaigns. They are also important in plant-based milk as they offer consumers an example of a healthy and balanced life through sports and plant-based drinks.
Collaborating with the KOLs is what Oatly is doing on social media like Weibo, the image above clearly shows it.
However, if a company wants to collaborate with KOLs, it must be very careful in its choice as not all KOLs are reliable and produce results for companies.
Is the right KOL for my brand? Is it in line with my core business and are its followers my target market? His followers are true or not? These are all questions that are difficult to answer. This is why GMA is here to help you choose the right KOL for your brand image.
Zhihu is the best platform to leverage your community to talk about your brand
Since Chinese consumers spend a lot of time online looking for brand and product advice and trust the advice of other consumers who have already tried these products, what a company absolutely needs to do is try to get people talking about it on questions and answers like Zhihu.
As you can see from the image above, questions and answers about Oatly are widespread on this platform. For example, even the Food and Beverage Innovation forum talks about it.
How to let people talk about your brand?
Companies can, for example, create:
- Q&A Campaigns (Answering questions, brands can establish a relationship with users and build their reputation this way. It allows them to promote themselves and introduce their products)
- KOL Endorsements enhance a brand’s image and reputation (brands can invite experts or key opinion leaders to answer questions for them. Answering questions on Zhihu allows them to showcase their expertise and connect with both industry experts and general users)
- Zhihu Live (it allows brands to conduct online presentations on specific topics. Brands can have opportunities to provide in-depth knowledge and communicate with users in a more direct way)
- In-Depth Articles (Brands can publish long-form content to gain credibility in their industry which is highly valued by people in that industry).
Do you want to know more about How to market your brand in the Chinese market? Contact GMA a digital marketing agency, specializing in the Chinese digital market.