Oatly's 2025 Q1 Earnings Call: Unpacking Contradictions on Gross Margins, Consumer Trends, and Strategic Pricing

Gross Margin Improvement Expectations, U.S. Consumer Behavior and Category Trends, Sales and Pricing Strategy in Europe, North America Growth and Profitability Strategy, and Gross Margin Improvement Timeline are the key contradictions discussed in Oatly's latest 2025Q1 earnings call.



Revenue and Growth Strategy:
- Oatly reported a constant-currency revenue growth of 0.7% in Q1 2025, with a 9.2% volume growth, though it faced challenges in North America.
- The company is focused on igniting positive momentum globally through disciplined resource allocation and demand-driving investments, which are expected to accelerate growth later in the year.

Cost Efficiency and Margin Improvement:
- Oatly achieved a 450 basis point year-over-year expansion in gross margin to 31.6%, driven by supply chain improvements and efficiency gains.
- The company has reduced its cost of goods sold per liter by 15% year-on-year and 6% quarter-on-quarter, contributing to improved profitability.

Brand Activation and Market Performance:
- Oatly's brand activations, such as partnerships with Nespresso and local activations like 'It Works in Tea' in the UK, have shown positive results in terms of awareness and product penetration.
- The company has seen increased traction in European markets, with notable growth in Germany and the UK, where these brand activations have been implemented.

North American Challenges and Strategy:
- Oatly faced challenges in North America due to changes in sourcing strategy at its largest customer and SKU rationalization, leading to a decline in its segment's year-on-year sales.
- The company plans to implement its brand and distribution strategies in North America later in the year, emphasizing strong demand-driving investments to accelerate growth.