Oatly faces boycott backlash for its investment from Blackstone


Dive Brief:

  • Oat milk brand Oatly has come under fire from activists and consumers threatening boycotts after the company signed a $200 million deal in July that included an investment from the private equity firm Blackstone. The firm is headed by Stephen Schwartzman, a major donor to President Trump, Business Insider reported.
  • Blackstone also has ties to two Brazilian companies that are reportedly linked with deforestation in the Amazon. The private equity firm denies claims that the companies are participating in activities leading to deforestation.
  • Oatly defended its decision to take an investment from the private equity firm on Twitter, saying it understood Blackstone was an “unexpected choice,” but it would help “expand our sustainable mission and create more plant-based products.”

Dive Insight:

Politics for breakfast used to mean reading the morning news with a cup of coffee. Today, the phrase embodies something more along the lines of considering where the brands on the breakfast table got their money.

Schwartzman, who heads Blackstone, donated $3 million to Trump’s reelection campaign via the super PAC America First Action. He also led the investor consortium in July that took a 10% minority stake in the Swedish company, which also included Oprah Winfrey, Natalie Portman and former Starbucks CEO Howard Schultz. While there was little buzz about Blackstone’s associations with Trump or Amazon deforestation at the time of the investment deal, an examination of the investment in August by activists ignited a firestorm of calls to “cancel” Oatly on social media.

The oat milk brand has built up a $2 billion plant-based milk empire, according to the Wall Street Journal. Boycotters referenced the irony of being a plant-based, sustainable company and electing to affiliate itself with a firm that has ties to companies accused of Amazonian deforestation and donating to a president who has supported controversial environmental policies.

Oatly stands by its choice and chose to defend its investment in an open letter to the public where the company said that the online debate has become “black and white” while the deal itself was ‘”nuanced.” 

“Blackstone is like the biggest supermarket of the private equity sector,” the company wrote. “We thought that if we could convince them that it’s as profitable (and in the long-term even more profitable) to invest in a sustainability company like Oatly, then all the other private equity firms of the world would look, listen and start to steer their collective worth of 4 trillion US dollars into green investments.”

More sustainable companies are growing to be increasingly important to consumers, particularly in light of the ongoing pandemic. Oatly has positioned itself as a green, plant-based company in the better-for-you space, which has helped drive consumer interest. Plant-based milks have become desirable for many consumers looking for alternatives. Oat milk has carved out a niche because of its appeal to those with nut allergies or lactose or gluten intolerances. In the first week of March, compared with the previous year, oat milk sales spiked 347.3%.

Although the product is popular, the market is tight. A widespread call to boycott Oatly and promote its competitors, including Califia Farms and Chobani, has the potential to hurt the company’s bottom line.

As U.S. politics become more polarizing, calls to boycott companies for political reasons have become more prevalent. Earlier this summer, Goya was called out when its CEO Robert Unanue praised Trump in a speech at the White House. In 2018, Nathan’s Famous faced a threatened boycott after Executive Chairman Howard Lorber held a fundraiser for Trump. In 2017, companies including Hershey, Mars and Jelly Belly were targeted in a boycott because the National Confectioners Association hosted its annual conference at the Trump National Doral resort.

Although these situations cause a stir on social media, they don’t always end up causing any significant movement in sales. Companies could note, however, that mixing business with politics is becoming a riskier bet, and it may be worth thinking twice before taking an investment or establishing an alliance.


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