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Case study on Oatly – A research report Sustainable Marketing Management

Article · January 2021

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Case study on Oatly – a research report

Sustainable Marketing

Management

By: Shaharyar Shabbir Khan

1. Background description

With the intensification of global environmental problems, consumers’ environmental awareness is gradually increasing in recent years. More and more consumers are showing environmental protection needs for companies and their products (Mohr, Webb & Harris, 2001). Food industry received significant attention as the consumption and production of food significantly impacted the environment (Otles, Despoudi, Bucatariu & Kartal, 2015). As the sustainability concept gains popularity, consumers increasingly expect food companies to combat climate change. At the same time, companies have gradually realized the long-term significance of sustainable development (Boiral, Baron & Gunnlaugson, 2014). In this context, green marketing and sustainable marketing have become essential strategies for companies to achieve economic benefits, social benefits and environmental sustainability.

The Swedish company Oatly AB (hereinafter Oatly) is a vegan food company that produces oat drinks as its main product. Because oats are more sustainable than animal milk products, as it costs less amount of water, land and other resources. Furthermore, oat milk is responsible for less greenhouse gas emissions than soymilk or dairy milk (Röös, Patel & Spångberg, 2016). Oatly is considered a representative company willing to participate in sustainable consumption. They have recently begun to explore the topic of “sustainable growth” as well (Bocken & Lehner, 2020). Oatly has several owners, such as The Blackstone Group, Verlinvest, China Resources, Industrifonden, Östersjöstiftelsen, and other individual owners. In 2020, Oatly sold $200 million of shares to investors, including the Blackstone Group, which funds some companies to carry out extensive deforestation in the Amazon region and bring road development deep into the jungle to export food (Westra, 2020). With the innovation of food technology, the demand for plant milk has increased from consumer groups such as animal protectionists, vegetarians, and people who are intolerant to milk. The dairy market in Europe and the United States has begun to actively cater to the above groups, thereby bringing safety and nutrition. Plant milk has become more popular in the market. For example, more than 540,000 people in the UK are now vegans, triple what that number was a decade ago (Askew, 2018), which provides opportunities for Oatly’s rapid development.

Green marketing, as an essential way to promote sustainable consumption, can effectively construct a functional fit between the company and environmental protection, corporate social responsibility, and building corporate image, and thereby enhancing consumers’ purchasing intentions. To fully understand the situation Oatly and the food industry is facing, one must understand the concept of sustainable development and the challenges ahead. Oatly is a fast- growing company, which is visible in major parts of the organisation (Oatly, 2018). Among others, transportation between factories has increased due to the continuous, and additional travel is required in order for colleagues to establish new partnerships and introduce them to new offices around the world (Oatly, 2018).

2. Research Questions and Purpose Discussion

The purpose of this case study was to explore the strategies and challenges that are faced in sustainable marketing practices within the food industry. The perspective that was studied derives from how public consumption is affected by external factors such as the transparency of a company and the challenge of facing issues in regard to maintaining legitimacy. Firms are able to create and increase their value through marketing efforts in order to maintain and attract their consumers, by purchasing the firm’s products, a consumer should be able to make conscious choices socially and environmentally (Hart & Milstein, 2003). However, it remains crucial for firms to engage their stakeholders and to enhance their reputation as a firm by spreading the sustainable practices throughout their whole business system (Hart & Milstein, 2003). This study also sought to examine the relevancy of these matters through a qualitative research approach, creating a suitable theoretical framework and also presenting information in regard to sustainable marketing issues. The following research questions presented are for further analysis and examination of how sustainable marketing practices can be applied for firms operating in the food industry and their main challenges by doing so.

What kind of sustainable marketing strategies can a firm within the food industry apply?

What challenges can be faced within the sustainable marketing segment in the food industry?

3. Theoretical framework

In order to answer and provide perspective to the research questions, this theoretical framework was created. It is based on three following articles.

Deegan (2002) explains in his article “the legitimising effect of social and environmental disclosures – a theoretical foundation” that without legitimacy, an organisation will have troubles surviving. Deegan (2002) defines legitimacy as a resource that can be managed and affected by the firm putting in efforts to change it. Legitimacy is something that a firm can gain as a result of publishing specific social and environmental information about their operations, where the information could picture the firm’s operations as either good or not so good. The information could be published in an aim to comply with rules and regulations, gain economic benefits by being transparent operational areas, a belief from the management that the public have “a right to know” about their social and environmental performance, to be a good corporate citizen or as a response to negative press regarding accidents or incidents that already have affected the firm’s reputation (ibid). Deegan (2002) also develops on the mutual impact and influence between the society and the firm.

The firm will publish information about their operations with an expectation that the society will accept and legitimise them. If the society or the local community where the firm is operating disapproves of an action from the firm, it is essential that the firm need to correct it in order to retain their legitimacy. If not, customer loyalty might diminish, the financing actors could withdraw their funding or even laws and regulations to restrict the firm’s operations will be lobbied for, due to the actions of the firm. It is the most powerful stakeholders that can influence the firm’s actions, as the firm is trying to act in a way that gain those stakeholders approval. (Deegan, 2002)

Although, when a firm have gained legitimacy from the society, it is not considered to be a static resource. Instead legitimacy is described by Deegan (2002) as dynamic, since the constantly developing society and stakeholders increased interest in CSR.

Lindblom ((1994) in Deegan, 2002) outlined four actions that a firm can conduct in order to obtain or maintain legitimacy:

“Educate and inform it’s “relevant publics” about actual changes in the organisation’s performance and activities;

Change the perceptions of the “relevant publics” but to not change its actual behaviour

Manipulate perception by deflecting attention from the issue of concern to other related issues through an appeal to, for example emotive symbols; or

Change external expectations of its performance.” (Deegan, 2002, p.297)

In the article “Why ethical consumers don’t walk their talk: towards a framework for understanding the gap between ethical purchase intentions and actual buying behaviour of ethically minded consumers” by Carrington, Neville and Whitwell (2010), the authors explain the issue of understanding how ethically minded consumers actually consume, as there seem to be a gap between their intentions and actual behaviour. Ethical consumption is a concept that has developed during the last years as a result of increased attention towards social and environmental sustainability from the society. There are a constantly increasing number of products that are labelled ethically produced, as a consequence to increased demand of those kinds of products (Carrington et al., 2010). This has led to the emerge of a new type of consumer: the ethically minded customer. However, a study showed that out of the thirty per cent of the respondents that answered that they consumed ethical products, only three per cent actually conducted the purchase.

The discrepancy between intention and action is explained by that the consumer is affected by both internal and external complex processes which needs to be considered. To be able to reduce the gap between intention and action Carrington et al (2010) suggests three following actions in a framework. First, the customer should be exposed to both in-store and out-of-store visual media so that they would not forget why they intentionally though about buying the ethical products. Second, involve the household of the consumer to also request ethical products by educating them, which would lead to an increased probability that those products will be purchased. Third, increase the visibility of the product in store, educate the staff in store to be able to pass information on to the consumers regarding the product and use symbols to extend the marketing communication (ibid).

Prakash (2002) explains that green marketing includes evoking claims about industrial ecology, increased responsibility taken by suppliers, life-cycle improvement, waste reduction and regulating how environmentally damaging the product/service is. The author further develops that either a firm can position their products as sustainable, or their entire firm, including the firm brand, and it can be done in three alternative ways. First, a firm can position themselves as green by enhancing its value-adding process, second, enhance their management systems as green, or third, enhance their products as green. By doing so, and present measurable performance indicators, which will simplify the customer to compare competitors, customer approval can be gained (ibid). Prakash (2002) states that powerful stakeholders can influence and impact firm to green themselves and their products, but simultaneously, firms can experience a gap between what the stakeholders ask for, i.e., green products and then see a lack of actually buying the greened products. Hence, it is important for firms to understand why consumers buy their products, is it to fill a hygiene need, i.e., to satisfy hunger or to not be cold or is it because the product is green (ibid).

4. Methodology discussion

The chosen methodological approach for this case study is the qualitative research approach. In regard to answering our research questions, the suitable method was applied by conducting secondary data through a variety of sources. Firstly, the qualitative approach is suitable in the meaning of exploring the complexities that are beyond controlled approaches (Gillham, 2000). Secondly, other methods for investigation were not practicable for answering our research questions, therefore a qualitative methodological approach by conducting secondary data theories was preferred. Specifically, a qualitative research approach allows us to investigate and analyse complexities that are beyond what is referred to as” controlled” approaches (Gillham, 2000). In view of this, a qualitative case study provides us as researchers insight, discovery and space for analysing and interpreting theories, instead of hypothesis testing (Merriam, 1998).

For this case study the following research questions were: What kind of sustainable marketing strategies can a firm within the food industry apply? and What challenges can be faced within the sustainable marketing segment in the food industry? The methods for our data collection were conducted by extracting theories suitable for our applied research questions, the different approaches were from literature and studies within the significant area of our chosen theme, sustainable marketing, consumption and transparency. Additionally, the research for suitable theories were conducted by the University of Gothenburg’s online library” Supersök”, with terms such as” transparency”,” green marketing” and” sustainable marketing” were used for researching relevant theories. The goal of qualitative research is not to create a set of results that another researcher has conducted, but instead, through a detailed study within a certain subject, create a perspective, based on our own analysis (Gomm, Hammersley & Foster 2000).

In order to gain better insight of how Oatly operates as a company, we looked upon their operations that were presented in their sustainability report. Through this information being conducted, we gained valuable information for analysing their transparency and also their sustainability motivations. Previous research about Oatly was also analysed from different perspectives in order to gain more insight about them. Furthermore, to create a critical point of view in our case study we evaluated their motives and their actions. With the support of our theoretical framework, former studies applied within relevant were analysed to get a wider range of perspectives such as the theories within legitimacy, green marketing and ethical consumers. These theories maintained a significant context to critically analyse how the actions of Oatly reflects and affects their marketing and also the challenges ahead due to their controversial shareholder.

Importantly in this case study, we did consider the process of prejudices. According to Gillham (2000) prejudices may be based on inadequate evidence and in research of evidence our preferences interfere, not solely what we expect to find but also what we want to find. Gillham (2000) presented ways in which to go about in order to decentre from and to strive for a level of honesty. We found this important in order to not be influenced by either media, the common narrative and what we also expected to project upon this case study. We focused on what Gillham (2000) examined as looking for discrepant data. For basic research integrity, as Gillham (2000) noted, looking for evidence in the sense of contradictory and negative is important in order to emerge our own understanding in this case study. Our goal was not solely to focus on theories that suited our own perception of the truth, but also to integrate two sides of the narrative in order to provide critical analysis to our case study.

5.1 Marketing Strategy & Market Communication

Oatly’s vision is to run through all aspects of enterprise’s operation and production practice with the concept of sustainable development and become the market leader and thought leader of the industry (Oatly, 2018). Oatly’s marketing strategy is formulated to achieve the vision of sustainable development and their overall goal. The strategy is based on how an enterprise understands the influence of social and the environment in the process of operation, so as to achieve the goal of sustainable development. It is mainly reflected in the following four aspects of the value chain: resource efficiency, suppliers, committed coworkers and upgraded society (ibid).

In 2012, Toni Petersson took over as CEO of the company. In the face of Oatly’s previous situation, he carried out radical reforms on Oatly. He changed the previous marketing strategy and appointed John Schoolcraft as the creative director to create a new image of Oatly (Ledin & Machin, 2020). Oatly brought together a group of people with different backgrounds and lifestyles, and what brought them together was the idea of sustainable development that they shared. They combined their strengths and creativity to promote Oatly’s development (ibid). Oatly focuses on influencing and shaping markets to drive the transformation of the food system. Through marketing means to obtain the attention of the society and consumers, use communication and advertising to increase the exposure rate, and promote public opinion to cultivate consumers. According to Oatly, that is the foundation for their success: selling consumers a value proposition, not just the product itself. Instead of emphasizing the function of the product, they pay more attention to the value of the brand and a healthy attitude towards life (Oatly, 2018).

Ledin and Machin (2019) argue that Oatly’s unique marketing approach and communication towards consumers is what characterizes them on the market. They describe that in terms of marketing communication, Oatly has made a lot of efforts. Modifying the product packaging, using street posters and promotional videos, sharing information through social media, creating topics are some of the initiatives. Oatly uses product packaging as a direct platform to communicate with consumers, where they directly declare its brand concept and negative comments from customers on the packaging. With the novel and full of design sense packaging, the purpose is to stimulate consumer curiosity and purchasing desire (Ledin & Machin, 2019).

Among Oatly’s marketing communication, the most famous ad is the Anti-milk campaign. Oatly benchmarked itself with the milk and traditional dairy industry, positioning itself as a milk substitute from the start. They used slogans to promote itself in 2015, such as’ It’s like milk but made for humans’ or ‘No milk, No soy, No badness’ (Billing, 2019). Although Oatly was also accused in court, it also brought them support and attention. The lawsuit has played a huge role in Oatly’s promotion and sales (Gustafsson, 2015). In 2017, Petersson wrote a song called “Wow No Cow” on his own and filmed the video in a field of oat. The song basically repeats the lyrics “It’s like Milk, but Made for Humans, Wow, No Cow,” with the message that Oatly’s products could be used as substitutes for milk (Ledin & Machin, 2019). Two years later, Oatly attempted to continue a provocative marketing strategy resulted in a far different direction. This time, Oatly’s new campaign, “Spola Mjölken”, translated into “ditch the diary” attracted the attention of consumers in Sweden. The controversial campaign claims that consuming oat-milk decreases one’s climate impact by 75 per cent, as a more climate positive substitute instead of milk (Hällegårdh, 2019). The campaign caused negative reactions from milk-farmers and oat- farmers as well, and their argument is foremost due to the aggressive marketing approach towards the dairy industry (ibid).

In 2016, China Resources was offered and bought 30 per cent of Oatly’s shares. Together with Oatly, China Resources created a joint venture for Oatly to be able to enter the Chinese market. This led to reactions in Sweden, as many found it controversial that Oatly, an outspoken sustainable firm, agreed to sell shares to China Resources, as the corporation simultaneously invests in coal power plants (Nordgren, 2019). After their entry into China, Oatly offers their products in more than 10,000 coffee shops in mainland China. That includes Starbucks, which is the world’s largest coffee chain, Pacific Coffee, also owned by China Resources, and several boutique coffees shops in first-tier cities (Tencent News, 2020). The coffee shop strategy has been an important strategy of Oatly, from Sweden to Europe, the United States and China. They first used coffee shop channels to enter the market and build brand and reputation, and then took advantage of that to open the market and explore opportunities to enter other channels (ibid).

When Oatly entered the Chinese market, their main focuses were targeting the young consumer segment. Most of these young people are people with overseas study and living experience. This group is not only highly professional and self-cultivated, but also interested in healthy life, environmental protection and other fields. Using social media to communicate with the target group, Oatly could reach the young consumers and share their values with them. Oatly’s CEO, Toni Petersson stated that he believed that China would be Oatly’s biggest and most important market in the next three to five years (Hou, 2019). Earlier mentioned, another notable reaction from the public was due to Blackstone investing in Oatly. This has caused controversy among consumers and public cafés as well, now boycotting Oatly (Larsson, 2020). In Oatly’s defense Toni Petterson argued that this investment will create more opportunities for growth and for them to be able to increase the consumption of oat-milk which, as Oatly promotes, is a better substitute to milk (Larsson, 2020).

5.2 Product development and Supply Chain

Stated in Oatly’s sustainability report of 2018 the overall purchase volume of oats is 78 per cent followed by rapeseed oil which represents 9 per cent. The production and development of Oatly’s products is created in their headquarter in Landskrona Sweden but since the high volume of products being produced, they do not manufacture all their products in Landskrona. Majority of their packaging consists of paper and the rest of plastic which are part of their segments of” Oat Fraiche ” and” Oatgurt” (Oatly, 2018). Further presented in their 2018 annual sustainability report, Oatly emphasises on a large part of their production being in Landskrona. One of their sustainability goals is to minimize their climate footprint due to transportation from other countries and their aim is to use renewable energy in all their facilities. However due to expanded production with development of new packaging lines, their own factory in Sweden could not withstand the volume. Therefore, external partners have been retained, and presented in 2018, 60 per cent of their package production is in Sweden, 32 per cent within the European Union and 8 per cent of external partners is in the US (Oatly, 2018).

When it comes to development of their products, Oatly introduced their initiative in engagement of a SLU-research project as business partners, named” New Legume Foods”. The project emphasises on developing climate-saving and also protein enhanced vegetables grown in Sweden. Developing a small-scale production from flour which Oatly aims to review as a new product development, in order to gain further knowledge of how raw materials can be used for climate saving causes (Oatly, 2018).

In the article” Sufficiency Business Strategies in the Food Industry—The Case of Oatly” the authors Bocken, Smekken Morales and Lehner (2020) examined the results of different interviews made in order to further investigate Oatly’s business strategies. Following the results, Bocken et al. (2020) noted that Oatly has focused on technological solutions in order to maximise the efficiency of their products. By doing so their priority is” developing products that last”, this is made by having products that could withstand on shelfs for a longer time, moreover the products of Oatly can be stored in ambient temperature. Oatly argues that this is one step further for decreasing consumption since the products have a longer lifespan (Becken et al., 2020). Another implementation that Bocken et al. (2020) showcased in their results of the interviews is that Oatly is planning to implement refillable packing, this is part of their vision in order to use all of their resources as efficiently as possible in order to create reusable and recyclable packaging as part of their products.

Earlier mentioned, Oatly stated in their sustainability report 2018 that one of their goals is to minimise the climate footprint when it comes to transportation from their factories. Recently through collaboration and innovation, Oatly has partnered with Einride and their electrically converted vehicles from Daf, in order to minimize their carbon footprint from their factories in Landskrona (Ny Teknik, 2020). According to Oatly the four electrically driven trucks will decrease their emissions by 87 per cent driving from their factory in Landskrona to their warehouse in Helsingborg (Ny Teknik, 2020).

Also stated in their sustainability report from 2018, is that Oatly elaborates on their actions to keep a sustainable supply chain. Regarding their suppliers, they state that before engaging in any cooperation, the suppliers will be thoroughly evaluated. In 2018, Oatly developed requirements and a code of conduct that was mandatory for the suppliers to live up to and sign, and those are followed up via audits. They further state that Oatly had trouble keeping up with their fast growth, which has led to suppliers that have not done sufficient efforts to be sustainable was detected. Oatly also reports that previously sustainability audits and supplier requirements only included the environmental sustainability, leaving the social sustainability untold, but leaves a promise that in the future, social suitability will be included (Oatly, 2018). According to Oatly, the incomplete sustainability work will be improved by becoming a member of the organisation Sedex, the Supplier Ethical Data Exchange (Oatly, 2018). The organisation “provide an online platform, tools and service to help businesses operate responsibly and sustainably, protect workers and source ethically” (Sedex, 2020). Not all of Oatly’s suppliers are members of Sedex, those that are not will be assessed via the above- mentioned requirements.

The main ingredients in Oatly’s products are oats and rapeseed oil. According to Oatly (2018), their reported emissions have increased between 2016 and 2018, which they explain is due to newly retrieved information regarding the production of rapeseed oil. 90 per cent of the oats, which are the major ingredients in Oatly’s products, around 78 per cent, are grown in Sweden, as mentioned above. The remaining ten per cent is grown in Canada, to be sold in the product in the North American market. The quantity of organic oats in their products has decreased during the years, Oatly reports. That is explained to be that EU legislation does not allow certain minerals and vitamins to be added in organic products, such ingredients that Oatly have it several of their products (ibid).

6. Analysis

What kind of sustainable marketing strategies can a firm within the food industry apply? One of the marketing strategies that was identified in the case study was the use of their CEO Toni Pettersson in their commercials and communications, a strategy that can be associated with what Prakash (2002) writes about how firms can position either their products as sustainable, or the entire firm brand. By using Pettersson in their marketing, it is assumable that Oatly is trying to position their entire brand as sustainable, as he is closely linked with the whole organisation. Another thought presented by Prakash (2002) is that powerful stakeholders can influence the firm. Whether Prakash’s (2002) thoughts can be used the other way around, that a powerful stakeholder, i.e., the CEO can influence the society is partly supported by Deegan (2002), who discusses the mutual impact that firms and society have on each other. Then, according to Deegan (2002) Oatly could gain or keep legitimacy, by Pettersson being the one presenting controversial information, since he is considered to be a powerful stakeholder.

Another marketing strategy that was identified during the case study was the use of packaging as a communication and marketing mean. On their product packages, messages and prompts regarding Oatly’s sustainability work are printed. This is a suggestion that Carrington et al. (2010) promotes in how to reduce the consumer gap between intentions and actual purchase. Carrington et al. (2010) describes that by exposing the consumer to several communication ways, which could include the packages, the consumer will be reminded of their intentions to complete the purchase. The marketing ads that Oatly have produced is described by Ledin & Machin (2019) as both provocative and startling. The song “Wow No Cow”, and the commercial “No milk, No Soy, No Badness” and “Spola Mjölken” got a lot of attention. The last resulted in a public debate between the milk and oat farmers. According to Carrington et al. (2010) another way to increase the likelihood of consumer actually purchasing their products, is for the customer to be exposed to both in-store and out-of-store media. Whether that kind of exposure is considered to give Oatly legitimacy, is explained by Deegan (2002). He states that if the society disapproves of an action from the firm, it is essential for the firm to correct it in order to retain their legitimacy. Otherwise, it might result in stakeholders withdraw their collaboration with that firm and boycott them.

To write an extensive sustainability report could also be a marketing strategy. Oatly have described in their sustainability report how they coordinate their operations to be sustainable, and also provide explanations to their operations, in their own perspective. In the report from 2018, they describe that due to their fast growth, several of their environmental performance indicators showed that they performed worse during 2018 than the years before, and not following the sustainable development that they strive for. They also describe negative aspects of their sustainability work, such as that they have not included social sustainability unit 2018, but from then they will. Deegan (2002) describes that legitimacy can be gained even though the information that the firm is presenting is bad. This can be due to that Oatly believes that by presenting negative information and being transparent, they can gain economic benefits. To inform the public about inconsistencies is defined by Lindblom ((1994) in Deegan, 2002) to be an action to obtain legitimacy from stakeholders. According to Carrington et al. (2010) educating the consumer, and let the consumer educate their households, can increase the buying of their products. By being transparent with their operations and performance, and also explain the results, the ethical consumer can access the information and hence get an understanding of Oatly’s operations.

What challenges can be faced within the sustainable marketing segment in the food industry?

The growth of Oatly has created both opportunities for the oat producers but also have caused major challenges. The ethical consumer can in this case start to question whether the growth of the more climate-friendly substitute is worth the sacrifice being made along the way by Oatly. Implying this case, the major investors, as previously mentioned The Blackstone Group and China Resources has caused controversy among the ethical consumers and cafés. Interestingly in this case study this issue is connected to the theory explained by Carrington et al. (2010) where new types of ethical customers do showcase an increased awareness for what is ethical and not, but the problem relies on the fact that there is a gap between their intention and action as previously mentioned. One could argue that the ethically minded consumer can criticize or in fact boycott Oatly. On the other hand, if the action of buying Oatly does not change, and the ethically minded customer faces difficulty in choosing another brand or the local store solely offers either milk or Oatly. Carrington et al. (2010) suggested different actions and one of them is the exposure of in-store and out-of-store visual media where the consumer can be clearly reminded of what is an ethical choice or not, but this responsibility however, relies upon the store itself to showcase to their customers. Another relevant action where the responsibility relies upon the consumer itself is educating and involving the household that the consumer operates within. Carrington et al. (2010) highlights the involvement of the household by educating them could lead to products, in this case, Oatly not being purchased. One could argue that depending on how ethically involved the consumer is, this could still recur within households, a consumer that has a clear opinion on what they perceive as ethical or not, might be implied upon others.

This case study has identified the challenges that Oatly is facing of remaining legitimate since their rapid success of a unique marketing strategy. The promotion and claims of being a climate- saving choice and a substitute to products within the dairy industry have attracted ethically minded consumers. However, one could question if their marketing strategies will withstand the current backlash Oatly is facing due to their investors. One could draw the comparison to Deegan (2002) that without legitimacy an organisation, and in this case Oatly might have trouble to withstand on the market. Additionally, Deegan (2002) also implies the fact that an organisation can promote themselves through publishing necessary information on social and environmental actions, both positive and negative.

Oatly in this case did present an explanation on their website as well a pedagogical video on why The Blackstone group, according to them, was the right choice. As Deegan (2002) explained, the public should be entitled to know, even if the information itself is controversial and something of abhorred opinion. In this case Oatly could be gaining on a positive note due to their transparency and as Deegan (2002) implies in one of their four actions for firms to take in order to maintain legitimacy, is in fact, to inform and educate relevant publics about the changes being made within the firm. However, the ethical consumer could be more aware of Oatly’s marketing strategies, knowing that it might not be as sincere as previous ones. The challenge within the food industry, and in Oatly’s case is marketing strategies communicating a better choice for the climate by buying oat-milk and simply boycotting the dairy industry.

The promotion and highlighting of the CEO Toni Petterson is an interesting approach and a possible challenge. How much impact will a specific entrepreneur and hence a spokesperson bring to a firm. As mentioned earlier, Petterson was the driving force for Oatly’s sustainability development, after joining Oatly in 2012, a repositioning of the brand took place. There are several examples of entrepreneurs relying on their personal abilities to influence the development of firms, not only Pettersson’s influence on Oatly, but also Elon Musk and Tesla, Steve Jobs and Apple. Whether it is suitable to compare Petterson’s association with Oatly with Elon Musk and Tesla could be bold, but it is an interesting aspect and a possible challenge, given the significant changes that Pettersson brought to Oatly. The possibility that Oatly still would “only” be an alternative for people with allergy and vegans, without Petterssons involvement, what would Oatly be without Petterson.

Previously mentioned, the marketing campaigns of “Spola mjölken” or “It’s like Milk, but Made for Humans, Wow, No Cow,” did create controversy for being a substitute for milk (Ledin & Machin, 2019). However, what is examined in this case study is if the ethical consumer will be led on to Oatly’s future sustainable marketing communication, and still buy their products. Question is, are Oatly’s products a more sustainable choice, even if the customer does not buy dairy products, they do however purchase a product where their investors invest in the deforestation and fossil fuel industry, and how does that change the customers ecological footprint then? Deriving from the green marketing theory by Prakash (2002), the author states that a firm can position their products to be sustainable and by enhancing their management systems as green as well. Interestingly, Prakash (2002) also highlights the power of stakeholders and if firms experience a gap between what stakeholders ask for as well for lacking in providing a completely green product, this can create a non-legitimate way of communicating towards their customers. Oatly is facing a challenge of remaining legitimate through transparency, but the question is if their actions really match what they are communicating and therefore legitimacy can become a great challenge in order to still have the demand of an ethical consumer.

Conclusions and Recommendations

As stated in the beginning, the food industry’s sustainable development is considered a significant issue affecting the environment. This study was undertaken to review the previous studies/researches, and summarize the topics regarding legitimacy, gap between ethical purchase intentions and actual buying behaviour, and green marketing. By investigating the current situation of Oatly, we answered the research questions on the sustainable marketing strategies and challenges faced by sustainable marketing practices in the food industry.

The sustainable marketing strategies that a food company can apply include: firstly, to use stakeholder influencing power to enhance the brand as green or sustainable, instead of enhancing the product only, which proves what Prakash (2002) and Deegan (2002) indicated in their study that powerful stakeholders could influence the firm, and to a more extent, influence the society. Secondly, to use packaging as a useful marketing tool. Customers can intuitively and effectively see Oatly’s sustainable concept through the slogan on the package. Combining with Carrington et al. (2010) and Deegan (2002) research, the study found that using in-store and out-store visual media including song, slogans, campaign, companies can reinforce users’ purchase intention to narrow the gap between intentions and actual buying behaviour. Another marketing strategy is that companies can write a sustainability report that also gives credence to the business. In the sustainability report, there is no need to be afraid to declare negative information because Deegan (2002) confirmed that it would confer legitimacy on appropriate behaviours and obtain certain economic benefits. The last strategy is to educate consumers by being transparent and allow consumers to influence their families purchasing the product. The above marketing strategies are practical strategies for the food industry to choose from, and the main purpose is to increase consumers’ purchase intention.

We found the sustainable marketing challenges faced in the food industry is the gap between customer purchase intention and their real action. This is because customers are concerned whether the brand and product are as sustainable as the company claims to them and whether they are worth the sacrifice. If not, food companies will face the legitimacy problem and lose customer trust. Moreover, the impact of stockholders cannot be ignored through marketing communication. In Oatly’s case, their fans are staging a boycott on the brand and its products due to the new investor Blackstone, which is the largest investor in oil, gas, and Amazon deforestation, clearly does not share the same values with Oatly. This new choice made Oatly’s customers start to question their product legitimacy. We shortly suggest that companies should communicate to the market by informing and presenting the details when facing questions from the market as it could be wise to deliver both positive and negative information in order to gain trust and legitimacy.

References

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