The Oatly-Blackstone deal: how will consumers respond?

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By Dr Caroline Moraes, Reader in Marketing and Consumer Research
Department of Marketing, University of Birmingham

Consumers are more likely to boycott Oatly if they believe the negative arguments being presented against the brand.

Swedish vegan milk brand Oatly has caused controversy among political and climate activists over its decision to sell a stake of the company to a capital investment consortium. The problem is that the consortium includes Blackstone, a private equity company involved in funding Donald Trump’s presidency campaigns, and a Brazilian infrastructure project connected to deforestation in the Amazon. The oat-based products brand is facing protests and significant consumer boycott calls on Twitter, being accused of selling out to investors who are not aligned with the brand’s sustainability ethos.

As a consumer researcher, what is happening to Oatly interests me for two main reasons. First, I question whether this controversy will have an impact on how Oatly’s consumers behave towards the brand. Second, I wonder if consumers would be willing to boycott Oatly as a result of the issues at hand.

To address my first question, it is important to highlight that Oatly has positioned itself as an activist brand for sustainability. Brand activism occurs when a brand takes a position on socio-political issues. It tends to involve a concern for the most pressing societal problems and attempts to influence and/or drive positive change accordingly. Brand activism reveals the nuanced interrelationship between consumer cultures and political subjectivities, and existing research suggests that consumers welcome brands that take a stance on societal issues.

When there is congruency among a brand’s core activist messaging, its values and corporate practices, brands are seen to engage in authentic brand activism. This type of brand activist presents the best potential in terms of both positive consumer responses to the brand and positive societal outcomes.

Oatly has gained and sustained its consumer base by providing alternatives to dairy products which are more environmentally friendly than their competitors. Through its own brand activism, Oatly has emphasised the environmental benefits of dairy-free milk substitutes, relying on local baristas to build brand awareness and eventually becoming one of the most popular milk-alternative brands in the marketplace.

Yet, Oatly has defended its decision to receive capital investment from a company that clearly does not subscribe to the same political stance and values. As such, there is a misalignment between the brand’s activism and its new investor, and much potential for consumer backlash.

When this misalignment occurs, brands can be perceived to be engaging in inauthentic brand activism, potentially damaging brand legitimacy and authenticity perceptions, and causing consumer scepticism and loss of trust. When brands fail to walk their talk, they can be perceived to be engaging in a type of symbolic tokenism that serves the status quo, potentially stifling positive societal changes towards a more sustainable and responsible future.

Of course, this kind of misalignment is not new. For example, consider cases such as Ben & Jerry’s and Innocent Smoothies. Both brands were acquired by corporations that do not fully reflect these brands’ values and sustainability practices. Yet, these two brands are still going strong.

This point brings me to my second question, that is, whether consumers are willing to boycott Oatly due to its acceptance of Blackstone’s capital investment. Research suggests that a parent company’s perceived moral transgressions can lead to negative consumer feelings towards the brand, motivating anti-brand behaviours. These types of behaviour tend to be directed at strong and well-known brands. Therefore, it is possible that Oatly’s consumers would feel sufficiently motivated to abandon the brand.

However, “moral debates about consumption are an essential and ancient part of human politics and an inevitable consequence of the unique way human relationships with the material world have developed.” Increasingly, activists and consumers dissect and share comments about brands’ moral transgressions online. Research shows that brand-related negative word-of-mouth can spread quickly, affecting brands negatively. Nonetheless, most people are flexible when it comes to voting with their wallets, and taste preferences, convenience, normative influences and, say, too much or too little information can play a role in whether consumers choose to stop buying a brand.

Additional research on boycotts can illuminate why consumers may or may not continue to buy Oatly. For example, consumers are more likely to boycott Oatly if they believe the negative arguments being presented against the brand. Therefore, if they agree that this capital investment is detrimental to what Oatly stands for, they are more likely to stop buying the brand. Another factor that might drive consumers to boycott the brand is if they perceive the brand to be hypocritical.

Additionally, research shows that perceived likelihood of boycott success also affects consumer intention to boycott a brand. For instance, if consumers believe that the boycott call has a chance of getting Oatly to change its decision to accept Blackstone’s capital investment, they are more likely to boycott the brand. However, if consumers perceive chances of success to be low, they are less likely to stop buying the brand. Another issue is that, often, consumers believe that their individual actions do not have an aggregate effect in the marketplace, making them less likely to stop buying the brand.

When consumers really like a brand, as is the case with Oatly, they are less likely to boycott it. It can be difficult for people to find equivalent substitutes for loved brands that they consider just as good and tasty. And when consumers attempt to find substitutes, there is no guarantee that substitute brands will be better at practicing sustainability consistently. Nevertheless, a recent news article makes the point of showing consumers that substitutes for Oatly do exist, asking consumers to consider shopping for alternative brands.

Finally, an important but provocative question to ask is: why do we continue to responsibilise individual consumers and their choices for global responsibility and sustainability challenges that are actually structural? If it were not possible for companies to fund political campaigns and infrastructure projects that destroy forests, for example, there would be no inauthentic brand activism, nothing for consumers to boycott and much positive change towards sustainability.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.

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