Operations
03 January
Oatly eyes 'asset light' manufacturing in Ya YA Foods deal
After shortages, brands are seeking long-term supply chain solutions.

Photo by Leon Seibert on Unsplash
After shortages, brands are seeking long-term supply chain solutions.
Oatly was a pioneer in the oat milk category. In 2023, it is looking to usher in an alternative manufacturing model through a new partnership.
The news: Oatly signed a new partnership with contract food and beverage manufacturer Ya YA Foods that will create a new hybrid model for production. Through the $98.1 million deal, which is expected to close this quarter, Oatly is looking to shift its manufacturing to an “asset-light” model.
Here are the details:
Key quote: “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,” said Oatly CEO Toni Petersson, in a statement.
What it means for Oatly: Oatly’s category creation and knack for eye-catching brand-building propelled runaway popularity since its 2017 US debut, and it now accounts for 22% of the plant-based milk market in the country. But there was a downside: The brand was among many that faced a mismatch of supply and demand over the last two years, leading to product shortages. Correcting those issues appears to be the subtext of this deal. Ya YA CEO Yahya Abbas told Bloomberg that Oatly “will never again miss demand.”
What it means for Ya YA Foods: The Toronto-based company is moving into the US for the first time. This deal will expand the footprint and raise the profile for Ya YA, which is a co-manufacturer that is also making a name in protein beverages, fruit juices, sports drinks and broths. “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,” Abbas said in a statement. Owning the facilities could unlock potential to make products for other customers at those locations, as well.
What it says about the supply chain:
The worst shortages are over, but brands still need long-term solutions. While the container ship backups we've heard so much about in recent years are easing up, supply chain challenges are going to continue to be present going forward. After all, raw material shortages, rising costs and climate change are still with us in 2023. This agreement shows that brands have a choice of whether they want to own production facilities or work with others. Oatly is splitting the difference: It chose to partner and transfer some of its operations, even as it will retain some operations that make it unique.
Partnership can bring production close to home. Another supply chain choice is where production will take place. While proximity is likely key for a beverage like oat milk, it’s still worth noting that Oatly is keeping domestic operations in place through this agreement. We may see more such decisionmaking in 2023 with the growth of nearshoring, in which brands and retailers move supply networks closer. According to a recent survey from Capterra, 88% of small and medium-sized businesses surveyed said they planned to or already had switched at least some of their suppliers closer to the US in 2023.
Owning less can bring more growth. While it won’t have US facilities in its portfolio, Oatly’s asset-light model could free it up for other kinds of expansion. As Petersson suggests, it can redirect investment into innovation and go-to-market activities that will help it reach new customers, which is especially important for a category-creating brand. In the end, all functions are customer-facing. Shoring up production also stands to increase consumer confidence that the brand's products will always be available in the dairy case.
Ask Instacart answers prompts with personalized recommendations.
A pair of recent launches from Instacart highlight how the grocery ecommerce company is integrating two of the key emerging areas of technology into its offerings: Generative AI and marketplaces.
Let’s take a look:
Instacart is seeking to harness generative AI to create a more personalized shopping experience.
A new tool called Ask Instacart that is launching this week is designed to allow customers to type in questions about specific recipes or general recommendations for an occasion. Embedded in the search bar, Ask Instacart also provides personalized questions to be asked by customers. In addition to specific items, it provides information about food preparation, product attributes and dietary considerations.
For those eying how generative AI will play a role in the shopping experience, Ask Instacart shows how search can be transformed into a place for discovery. Instacart is aiming to provide answers to the more open-ended questions that people would naturally ask, not just simply provide info in response to a question that has one answer. It shared the following sample prompts:
The tool is also showing the way for generative AI to integrate with retail media. Ask Instacart is designed to integrate with a brand's sponsored products campaign, so that the answers to questions that match consumer needs can also provide a way for brands to stand out.
To create the tool, Instacart combined the language understanding of ChatGPT with its own AI models. It added in catalog data from 80,000 retail partner locations around the country, which together have more than one billion shoppable items.
Beyond mission: Ecommerce marketplaces have honed a shopping experience where it’s easy to find what you’re looking for. But if shoppers want to happen upon something they didn’t know they needed, social media or the store is still the best place to visit. Instacart is showing how generative AI can make discovery a marketplace function. It also signals that advertising will come to generative AI by way of retail media. Going forward, the growth of discovery could make retail media more valuable as a tool for advertising that raises brand awareness, not just lower-funnel conversions.
Instacart will power a new virtual convenience store for the grocery chain Aldi.
Aldi Express will feature 2,000 of the most-shopped Aldi items, ranging from prepared food and snacks to grocery staples.
Drawing on 2,100 Aldi locations around the country, items will be delivered as fast as 30 minutes, the companies said.
“Through ALDI Express, we’re making shopping more convenient so you can satisfy a craving or get a missing ingredient in minutes,” said Scott Patton, VP of National Buying at ALDI, in a statement. “Together with Instacart, we’ll continue to find ways to innovate and make the online grocery experience even more effortless and accessible.”
Aldi began offering delivery via Instacart in 2017, and has since expanded services to include pickup as well as alcohol delivery.
Aldi’s marketplace moment? While Aldi previously offered delivery, making the assortment available through a virtual store offers the opportunity to create a marketplace for its goods. With the virtual store, it will more closely resemble DoorDash and Uber Eats, which have been expanding their grocery assortment. With a marketplace, additional revenue opportunities could open up for the grocer, such as advertising through retail media.