Oatly has struck a production deal with Canada-based Ya Ya Foods Corporation as the alternative-milk group looks to move to an “asset-light” model.
The agreement will see Ya Ya Foods take control of two of Oatly’s North America-based production facilities and acquire technical equipment.
Sweden-headquartered Oatly said it will retain full ownership and operation of its oat-base production lines in its facilities in Ogden, Utah and in Fort Worth, Texas. The oat base will then be transferred to Ya Ya Foods to be co-packed on-site.
Oatly said the deal is part of a “shift towards an asset-light supply chain strategy to expand its hybrid production network globally to better support its growth, capacity needs and product and format innovations”.
It added that it “expects this hybrid partnership to result in future capital expenditures savings and have a net positive effect on its cash flow outlook”.
The deal comes as Oatly was forced to cut jobs to save costs following disappointing third-quarter results in 2022. It said at the time it expected annual savings of up to US$25m from the reorganisation, announced in November, which will take effect from this year.
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Meanwhile, the deal with Oatly marks Ya Ya Foods’ first foray into the US manufacturing market. The deal is expected to close in the first quarter of this year.
Ya Ya Foods will take over the lease of Oatly’s factory in Ogden and acquire its mixing and filling equipment. The company will also be responsible for completing the construction of the facility in Fort Worth.
Oatly will also receive “an additional credit amount towards future use of shared assets” at its facility in Ogden, and an additional credit towards ongoing construction at its Fort Worth site.
Toni Petersson, Oatly’s CEO, said: “We believe an increased focus on our oat base technology, innovation, branding and commercial execution will better position Oatly to drive profitable growth, while reducing the capital intensity of our future facilities, and ultimately convert more consumers to plant-based and create more products that are healthy for people and the planet.”
Ya Ya Foods CEO Yahya Abbas added: “We expect this transaction to enhance our growth and further strengthen our capabilities: the two properties we are acquiring will increase our geographic profile and scale, allowing us to serve the vast majority of the United States and Canada.
"This highly strategic partnership with Oatly is a key step towards achieving our goal of becoming the leading aseptic beverage co-manufacturer in North America.”