Will the baby formula shortage inspire $OTLY to make a pivot in its business?
$OTLY is currently growing fast by selling oat milk to consumers and businesses. Being at the forefront of the consumer products plant-based revolution, one idea that came to mind is creating a plant-based baby formula to help solve the baby formula shortage.
Since most baby formula is created with cow's milk, supply chain issues with the dairy industry could possibly be why we have a baby formula shortage. $ABT is a major manufacturer of baby formula in the US and they've been shutting down baby formula manufacturing plants over the past couple of years as declining birth rates meant less demand for baby formula.
By creating a plant-based baby formula, I see Oatly regaining enthusiasm from investors. Since it will take time for Abbott to restart old baby formula manufacturing plants, it will be a while before the baby formula shortage gets resolved. And with the crisis currently ongoing, I hope that Oatly uses the crisis to start creating a plant-based baby formula.
And if they're able to develop it and get it to market sooner so that Abbott can resolve the baby formula shortage, I can see more parents willing to let their kids consume plant-based baby formula. The returns from this endeavor are questionable, and if the declining birth rate trend reverses, then the endeavor will pay off massively.