Origin Story Interview W/ Björn Öste, Oatly & Good Idea Drinks

Origin Story Interview W/ Björn Öste, Oatly & Good Idea Drinks

Brighter Future

 / 

Oct 26, 2022

#BrighterFuture #entrepreneurship #Sustainability #ClimateChangeSolution #originstoryseries #seekthechange #oatly #goodideadrinks #PlantBased #HealthAndWellness #FoodInnovation #Nutrition

Brighter Future

Today, we are joined by Björn Öste, the co-founder of the hugely successful Oatly, a plant-based milk alternative that has taken the world by storm and skyrocketed to success in recent years.

Hi, Björn. Thank you for joining us today. Before we jump into business, we’d love to get to know you a little better. Could you tell us a little bit about who you are and where you come from?

Sure! I was born in the city of Östersund, which is located right in the middle of Sweden. When I was about eighteen months old, my parents moved the family to Stockholm, so I consider that my hometown. It’s where I grew up, had my formative years and went to school. I really recommend that everybody visit Stockholm some time. It’s a wonderful city. In the summer, it’s quite a spectacular spot.

I was the youngest of four boys, which meant I was the one everybody beat up, and I had to fight to get food at the dinner table. Okay, maybe not that extreme—just the standard older brother behaviour. We were a typical Swedish middle-class family. Just like my brothers, I went to university to study engineering. It’s funny that we all became engineers, and although we all started out working for big companies, we all ended up as entrepreneurs!

That says something about the way society is changing. Many people would rather start their own business than work for a big company. When I talk to students or the younger generation at colleges in Sweden and the US, it seems nobody wants to work for big corporations anymore. Why would they when they could be the master of their own destiny?

It’s very interesting that all four of you ended up as entrepreneurs. Where would you say you got your entrepreneurial drive from?

I started my first company in the late 1980s, which was at the beginning of the IT boom. At the time, large Swedish corporations were quite bureaucratic, which was good for those with an entrepreneurial eye. They’d had many sweet years as semi-monopolies in the telecom and technology industries, but things were changing. With advancements in technology, opportunities were being created everywhere. So, in that sense, I was a child of that time.  

There’s also possibly a link to my family situation, upbringing or genetics, because for some reason, I’ve never been afraid of taking risks. I had a very fun meeting years ago with three guys, all entrepreneurs, who did crazy stuff. And we realised that we were all the youngest of four. So, maybe there’s a pattern there. It makes you wonder how much one’s childhood environment has to do with it, especially if you grow up feeling protected by that family unit. As the youngest, someone will always take care of you if you fall and get hurt, for example, which makes you more willing to take risks.

Growing up in Sweden has also been tremendously helpful because it’s an extremely entrepreneurial country. There are more unicorns per capita coming out of it than anywhere else in the world. Well, maybe also Finland and Estonia—as well as Northern California. But there’s certainly something special about Nordic countries. It’s fascinating.

That’s an interesting observation. I wonder what that might be linked to? Maybe it’s the lack of sun for half of the year!

We joke a lot about that! What else is there to do in six months of darkness? You sit indoors and work, right? And why not? In the past, if you grew up in an environment where the beaches were nice, the trees were full of delicious fruits every day, and when you cast a net in the water, it’s always full of delicious fish and seafood, why would you bother working hard? In the Nordics, if you look at the industry structure, big forests and mining industries were the main employers one hundred to two hundred years ago, which fostered a type of collaborative working. It wasn’t an environment that was particularly suitable for individualism. It brought people together to solve complex problems, which is an entrepreneurial trait.

At what stage of your journey did you become aware of the issues around climate change, or when did it become part of your entrepreneurial journey?

I really only became aware of it around the 1980s or 1990s. That’s when people were really talking about it. I remember Sweden investing heavily in nuclear power, which must have been in the early 1980s. When I was in university, there was a referendum on whether we should invest in more nuclear power or not, which made the physics classes I was taking very interesting.

The climate crisis wasn’t as acute as it is today. People were talking about it, but today, the consequences are much more evident in the form of extreme floods, heatwaves and other natural catastrophes. When I joined my brother in the late 1990s to start building Oatly, I had a chance to dive into all of the research about carbon emissions and the environmental impact of the dairy industry, and I was shocked. It’s one thing to hear about it, but it’s a scary revelation when you’re really confronted with it in great detail and depth.

When Oatly started, what was the initial messaging around the brand? Was it focused on climate change, or was there another message the brand stood for?

No, we didn’t focus on the climate advantages at that time. For a start, we just didn’t have all the data we have today. But we implicitly knew that it was a big, important message. When we launched in the Nordics—where everybody loves milk, nobody sees a problem with it, and lactose intolerance is very rare—we focused on the medical health aspect. We started by addressing the families of children with milk protein allergies. This was a big target audience for us, but we also weren’t a threat to the dairy industry. Milk protein allergies are a relatively small, marginal issue, although it’s a severe issue for the people concerned. Most of the children born with a milk protein allergy will grow out of it between the ages of seven and twelve, so it’s very different from lactose intolerance.

However, it’s a social problem as much as it is a medical problem because, particularly in a dairy culture, protein-allergic children are unable to, for example, go to their best friend’s birthday party because they’re serving ice cream. And the allergic child has to bring their own food, which can be socially awkward for a six-, seven- or eight-year-old. Even as a family, the only way to avoid an allergic reaction in an affected child was to prepare the same milk-free food for everybody. With Oatly, we could help these families improve their quality of life by allowing them to eat the same food in a safe way by replacing the dairy proteins.

We launched our ice cream, cream and milk simultaneously to provide families with the tools to cook complete and traditional meals but substitute all the key dairy components. And it worked extremely well. So, that one person with a milk protein allergy was really five or six consumers reached, not one. And it solved a big social issue, as families could now have a birthday party with their child’s ten best friends, and all of them could have ice cream and love it.

Then, the other aspect was exploiting oatmeal’s ability to lower cholesterol, which appealed to a different audience: older white men, typically with high cholesterol. It’s not necessarily men, of course, but that was the target group. We soon learned, however, that they weren’t the buyers of our products, and we had to target their wives or daughters. So, that’s how we started.

Thanks for sharing! It’s really interesting to see how the marketing side has changed over the years because of shifting societal norms and trends. Let’s jump back into your story. How did you go from being in the IT business to building Oatly with your brother?

It’s all his fault. He was dabbling in inventing new meals and playing around with them. In around 1994 or 1995, he started showing us his oat milk. I was either living in the US or the UK building a software company. We were doing computer security and selling it to banks and governments worldwide. But I saw his product in real life at the food show in London in 1995. Seeing how people came to the show booth to eat or drink the product was pretty impressive. I wasn’t used to that in the software industry. However, the company was underfunded and under-supported in Sweden, so he was struggling and trying his best.

Anyone close to the product realised that it was good, and the idea had legs. The more you drink it, the more you like it, and the more you realise you can do with it. My mother used to make fantastic bread with oatmeal, but with Oatly, it was phenomenal. The bread retained moisture much better and had a much better flavour. So, when I sold my software company in 1997, I saw a chance to invest in my brother, be part of his journey, and help him out. I quickly shifted from being an investor to being passionately involved in the business. I helped drive the business development, and I wrote the business plan. Soon after, we hired a CEO, secured  some investors, and off we went.

Amazing! So many entrepreneurs have incredible ideas—ideas with the potential to have a real impact on the world—but they never act on them. It takes bravery, confidence and vision to take something from an idea to reality. What helped you confidently get on board with Oatly? How did you know it was an idea you could make successful?

I’d spent ten years building a software company, and I learned a lot of business mindsets and negotiation skills while working at large corporations that I took with me to Oatly. When you work with large corporations, whether they are retailers, distributors, or big food companies, the same skills are required. So, the first thing I did when I joined my brother was sit down and negotiate a deal with Danone. I had done much bigger deals with Hewlett-Packard, Sun Microsystems, Samsung, Telecom Australia, etc., and those skills transferred seamlessly. It’s all about business relationship management, which was tremendously helpful because, as it turned out, our deal with Danone—launching a yoghurt using our product in 1998/1999—didn’t work out. However, they paid us to get out of the agreement, which was money we needed immediately. We invested it into developing our own brand, and in 2001, we launched Oatly.

That worked out well! Speaking of transferable skills, you’ve gone on to build other companies since then. Today, you’re also the co-founder of Good Idea Drinks. Could you tell us a little bit more about that, too?

By 2008, my brother and I separated some of the R&D of Oatly into an independent company. And since none of the other investors were interested in it, we took it on ourselves. Oatly is a very science-driven product, as it is hard to get milk from oats in the first place. That’s why there were so few people out there doing it. Today, there are 1000s of brands globally making milk from oats, but making a good quality product is really hard.

It requires a multidisciplinary research effort by many experts in many different disciplines that, at least in those days, were not used to collaborating. We also added a medical expert to the team because we wanted to optimise our oat milk’s ability to reduce LDL cholesterol. We started doing clinical trials in the mid-late 1990s. That’s how we laid the foundation for launching our products using research. We realised that the actual health benefits of products and food was a really interesting area that nobody seemed to be working on. Now, several of these trials have been published in international scientific publications. It is interesting to look back at the food industry’s initial reaction to it: they shook their heads and thought we were lunatics.  

I think they did that because, in the food industry, people weren’t used to and didn’t realise that we had a product with lots of layers of patents. So, when we did clinical trials, it was only on our product, and nobody else benefited from those trials. We learned there are opportunities to develop foods that deliver true health benefits, and you can do clinical trials to prove that. So that launched Oatly into a lot of interesting projects.

In the early 2000s, we considered that maybe we don’t need oats to achieve results and had to think about whether it was worth researching those avenues. There were other options in the plant-based dairy category that could have other impacts on oat-based foods, but those weren’t necessarily interesting or exciting for Oatly. For example, bread or cookies, which are solid products, not liquid oats.

We saw incredible opportunities in the intersection between food, true health and deep food tech. In 2008, we encouraged our scientists to explore beyond the specific and direct needs of Oatly. Specifically, looking at the research on Oatly with cholesterol, metabolic syndrome, glucose management, as well as investigating other issues and how we could address and understand those within our area of expertise.

Metabolic syndrome, for example, is all about obesity, blood sugar, diabetes, and cardiovascular disease. We began looking at sourcing healthy components from wholegrain cereals, fruits, berries, and microbes, then combining those in clever ways to produce whole foods that taste delicious. Food that functions well in your everyday life and truly addresses serious health concerns. Today, we have five different products in various stages of clinical trials that haven’t been launched yet. But they are directly addressing type two diabetes and Alzheimer’s patients with memory loss, and we have a product targeting patients with cardiac arrest. These are all extremely promising products.

To get back to your question about Good Idea Drinks, seven or eight years ago, we started looking at some research from a group of scientists at the University in Sweden who looked at amino acids and proteins and their ability to improve metabolic health. They started with whey proteins and realised that they improved blood glucose management in the body.

I started digging into their research and engaged with them, eventually bringing two teams of scientists together. We came up with a really interesting beverage where you combine five amino acids with the mineral chromium, drink that with your meal, and get an average of 25-30% blood sugar reduction. It’s an excellent tool for pre-diabetics. In general, if you keep reducing and managing your blood sugar, you dramatically reduce your risk of developing diabetes. We felt that we had an important and compelling medical health benefit in this product.

So, we launched a product called Good Idea Drinks. We did some test marketing, but COVID happened, so we had to slow it down. We eventually started it again late last year. This year, we’re on the market in the US and the Nordics. We named it Good Idea Drinks because we think it’s a really good idea for everyone to drink it. And you don’t have to be pre-diabetic to do so. If you and I drink it with our lunch, for example, we will immediately notice that we aren’t as tired at that boring one o’clock meeting when everybody’s fighting to stay awake. So, that annoying post-meal slump is dramatically reduced. And you’ll also notice that you don’t get the same craving for snacking in the afternoon. In that sense, it’s a really interesting energy beverage because it has zero calories, and it also helps you to manage the energy you have in your system that you have consumed in a much smarter way.

It's a tremendous tool for pre-diabetics, and it’s also a great tool for anyone who works and needs to keep their efficiency up all day. It would help if you drank it with breakfast and lunch for all-day results. And there are other areas in which it can work. For example, athletes are learning to manage their blood sugar and are more aware of its impact on their performance. If we start sponsoring different types of athletic events, for example, there will be tremendous potential for the product. It’s a good idea that we hope to bring to the world.

Wow! That does sound like a good idea—the name certainly fits! Does all of this mean that you’ve personally cut out dairy and coffee, for example, or other beverages?

Coffee will be the last thing I ever give up. I love coffee. Again, that comes from my background—all those long dark winters up in the north in Sweden and Finland. Did you know that Finland consumes the most coffee per capita in the world? And Sweden is just two or three places behind. Again, it’s those long, dark days and nights—we need that coffee! I like to drink Good Idea with my coffee in the morning, as it’s very good at helping to balance that out.

I do eat some dairy, primarily high-quality cheese, as there are some components in dairy foods that not even Oatly can do. But I don’t feel bad about that because the people producing these delicious cheeses are not the big factory cow farms that pollute and are utterly disgusting industrial operations. Personally, I stick to small, artisanal farms with high quality standards throughout their process. Nothing beats a good cheese plate!

I’m not anti-dairy in general. There is a good argument for dairy 2.0. A new type of dairy industry where we do the right thing and keep the focus on the quality of the product, which the dairy industry has never done. The industry has always been about producing large volumes at low costs. It very much takes the approach of screwing the environment and using lots of antibiotics, not to mention the awful conditions those poor animals are kept in. In the US, they employ illegal immigrants because that’s the cheapest labour source they can find to run the whole operation. It’s so pathetic and sad. It has to end. That said, it’s not all bad apples. Some good farmers are suffering and struggling to survive. Something has to be done about creating a new dairy industry. One that is not part of the problem but part of the solution to the environmental situation we have today. There’s ample evidence that it’s possible, but I’ll have to leave that for somebody else to figure out.

What would you say is the most fulfilling part of your work?

One is seeing the people around me grow and thrive. I enjoy coaching them and helping with advice, whether in my company or other companies. That’s very rewarding. I love to see young, hungry, eager people build interesting things—it’s fun! And, of course, it’s amazing when you have an idea, come up with a plan, and then see that plan materialise. So often, plans are never executed because things change. But when you have a direction, a vision, and realise that vision through activities and actions, it is very fulfilling. That’s why, I think, my brother has reached a pretty distinguished age, yet he’s not slowing down. I’m 62, and I don’t see myself retiring yet as there’s no goal, no golden reward at the end. I want to be involved in building and creating for as long as possible, particularly when you’re reaching people who are suffering and having a meaningful impact on their lives. That’s a big driver for me.

Starting and running a successful business comes with many obstacles and challenges. Having that WHY driving you forward, and that feeling of having a meaningful impact, seems to be an essential element of success. What were the biggest challenges you faced in your career, or perhaps even mistakes you made and learned from?

I get asked this question lot, and I don’t have a good boilerplate answer. There are so many things. But to summarise, in all of my businesses, we have been the underdog and have had to fight the big establishment. To survive, you must learn to swim faster, and to be more agile and smarter than these massive organisations, which are slower and more bureaucratic than start-ups. When you realise that about them, they become much less of a threat, and you start to see the opportunities.

When I first joined my brother at Oatly, I didn’t know anything about the food industry. So, naturally, I went out and asked the people who had been there and done it—respectable people who seemed to know what they were talking about. I would say the first mistake I made was that I listened to them (and by that same logic, nobody should ever listen to me now!). We were changing the industry, and there I was talking to the old guards of the old system. They didn’t get it, and I didn’t get it. They had phenomenal careers and knowledge, but we talked past each other because I was there to change their world.

In their time, after World War II, the food industry became all about high-volume production, low cost, owning the distribution channel, and then reminding the consumer to look for a specific brand when they made their way to the big retailers. You could do that by showing your commercial in the customer’s living room every day. It was never about what the consumer wanted. It was about dominating distribution and flooding the new airwaves with your commercials. It worked extremely well for the likes of Unilever, Nestle, Pepsi and Coke.

But in the 1990s, things began to change, particularly with the emergence of the internet and social media. Perhaps more importantly, the dominance of big retail started to break up, creating lots of opportunities for new start-ups in the food industry. It led to the global food industry we have today. For example, with Good Idea Drinks, more than 70% of our business is online. It’s all completely different from how things were done just a couple of decades ago.

That’s a very interesting point. When you’re moving forward, disrupting an industry and aiming for progress or change, it doesn’t make sense to simply repeat the systems and processes of the past. When you think about your career to date, is there a time when you took a completely different path than you had planned for yourself?

Every day? Maybe not every day, but yes, it happens a lot. As humans, we adjust. I don’t have any good examples that spring to mind right now, but my gut feeling is that’s just how we live today—especially as entrepreneurs. Things inevitably change, and you can’t plan too far in advance. My plan is always to stay nimble and adjust accordingly when I notice that something works.

Many of the entrepreneurs we’ve interviewed have reported experiencing an “A-ha!” moment. A moment where things just click into place or finally take off. Have you ever experienced that in your career?

Yes, and Oatly is a great example. We launched the brand in 2001. By 2012, we had a very strong niche marketing strategy targeting certain consumer groups. We knew that it was pointless for us to try to be a mass-market product or do extensive advertising. So, between 2001 and 2012, the strategy was to focus on one category, achieve our goals with it, then move on to the other consumer groups that naturally fell into place as a result. It’s sometimes described as a bowling pin strategy: you hit one pin and others naturally fall down with it. And you keep that going in very niche markets. It’s a strategy that worked well for the company. We saw that our growth numbers were improving every year. We had a compound annual growth rate of between 15 and 25% for ten years, which is pretty good!

Around 2011 or 2012, we realised that we had won all these key influencers, opinion leaders, and categories, and were ready to go mass market. But we needed a completely different strategy to do that. We had to become a lifestyle brand, engage consumers, and be something very different from what they were used to, which led to many strategic decisions. Ultimately, we had to replace our entire management team because they were stuck in traditional food thinking. We brought in a CEO from a trendy backpack/apparel company. So, hiring and finding the right people was a big “A-ha!” moment for us, as well as seeing them take the lead and implement or perfect our rough ideas and make them a reality. Seeing the success of it when we launched has quite possibly been the biggest learning and “A-ha!” moment. That formula of understanding and engaging directly with the consumer is incredibly important. And if you succeed in it, it can be so powerful.

There’s no doubt that Oatly is having a positive impact on the world, both now and in the future. What type of future do you hope to help create with your work?

From my point of view, what I can do to help is create a new food industry—one focused on nutrition, health, and nutritional safety. We talked about food safety, meaning not getting sick from eating food, and I’m not degrading that at all, but it has led to many nutrients being killed off over the years in the process. So, we need to be smarter, right? We need to lead by developing safe foods that are also very nutrient-rich, to the point where they deliver true health benefits. I think that’s something the world has never seen before.

I hope to help create foods that target critical diseases—as I mentioned before, type two diabetes cannot necessarily be cured through a food product, but we have the ability to improve the quality of life of those impacted. Perhaps to the point where they may not have to take insulin as much and can dramatically reduce their intake of medication and live a far better life. I think there’s an incredible opportunity there to help people with their health and wellness.

We are committed to doing that, and we have a good chance of succeeding, but time will tell. There’s also the bigger picture to consider, as we are all concerned about sustainability. For example, fixing a food system that is the largest contributor to greenhouse gases, and so we’re helping by coaching others and investing in other companies that work in this space. We are also doing some work ourselves, as my brother and I have invested in a company, a science group in Sweden, that has developed ultra-resistant wheat. That is a very interesting project because you can start growing wheat again in soils with poor irrigation systems and help less fortunate populations. Suppose you can bring products back to areas where you can grow grains and provide them with a way of producing food and generating an income. That would be a huge benefit to thousands of people. This wheat alleviates poverty, improves and cleans the soil, and absorbs salt from the soil, making it possible to start growing other crops there again after a while. So, that’s a very interesting project with the potential help solve many different issues. That’s the type of future we’re helping to create with our work.

Amazing! It’s incredible how many innovative solutions are being created all over the world. It’s inspiring and reassuring to know that great ideas that will shape a better future for this planet are constantly being invested in and developed. How would you like future generations to look back upon your journey? And what would you like them to take away from it?

If anything, I hope my story inspires others to do more and do even better than I’ve done. That would be fun. That’s the best I could hope for. It’s also why I love coaching others. Going out to Paris, for example, to sit down with them and talk about their ideas is always a positive for me. Of course, part of that is a little payback because I said my mistake was listening to some grey-haired industry experts. Still, in my career, I have had a couple of people who have been incredibly instrumental in helping guide me through business decisions and all kinds of strategic thinking. And if I can do that for others now, I’m very happy to do so.

All across the globe, there are entrepreneurs, young and old, just starting out on their journey, building businesses that could, like Oatly, potentially change the world. What advice would you offer to those people?

I have one piece of advice that seems so simple but is often overlooked: trust your gut. I trust that first sensation or feeling I have when I’m entering a new situation. Whether it’s meeting a new person or starting a potential commercial deal, your first reaction is often the right reaction. I think when you try to rationalise things, you miss out on those heart and gut feelings, which causes a lot of problems. You need to listen to your heart and focus on shared values. And if you don’t have that, you’re setting yourself up for trouble.

That’s very true. So many of us can look back on situations we’ve gotten ourselves into and see that the signs were there from the beginning—if only we had listened to ourselves! If there was one lasting message that you could share with the world, a message that every person alive could hear, what would that one be?

Go for it! Believe in yourself, lead with your heart, and go for it!

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We have to extend a massive thank you to our wonderful guest, the legendary Björn Öste, for joining us for this interview and sharing his many years of knowledge and experience, as well as his vision for the future. Oatly is a name many of us know and product many of us love, so it’s been fascinating to dive into the mind of one of its founders. We hope you’ve learned as much as we have from this insightful conversation. As always, if you would like to find out more about Björn and the amazing work he is doing, we recommend that you check out www.oatly.com and www.goodidea.us.

To stay up to date with all of our latest content and interviews with inspiring entrepreneurs like Björn, subscribe to the Brighter Future newsletter here.

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