Spilled milk: Oatly recall and missed earnings cap a tough week for the popular brand

Oatly’s oat milk is among 53 products being yanked from shelves nationwide over possible bacterial contamination. The Food and Drug Administration (FDA) says that Oatly’s Oat Milk Barista Edition—plus several other brands’ nondairy specialty beverages, including bottled cold brew by Stumptown and Intelligentsia and several Aloha plant-based milks—have been recalled by the California-based manufacturer of these products, Lyons Magnus.

Lyons issued the recall voluntarily after acknowledging that those products failed to meet commercial sterility benchmarks in a routine test, putting them at risk of contamination with cronobacter. If that particular genus of bacterium sounds familiar, it’s because America’s baby formula shortage was partly caused by Abbott also recalling popular formulas over cronobacter contamination fears. Though rare, cronobacter infections can cause symptoms that run from fever and vomiting to UTIs.

According to the FDA, Oatly’s particular product falls into the “foodservice channel.” In other words, it was sold commercially to coffee shops and cafes—meaning the brand dodged a bullet here with consumers who make their own coffee.

But the recall’s timing may be the bigger problem for the Blackstone-backed Swedish company. Oatly Group AB released earnings on Tuesday, and they revealed yet another unpretty quarter. The company’s stocks have now plummeted 80% since it IPO’d in May of 2021 at $17 a share.

At the time, with oat milk outperforming soy and beginning to rival almond, it laid out ambitious expansion plans. Oatly couldn’t make enough alt-milk, and vowed as much as $400 million in capital expenditures to satisfy growing demand in 2022, and even bumped those spending targets up to $500 million as recently as May.

On Tuesday, though, it announced operating losses of $74 million ($26 million more than last year’s) and drastically reeled in those expansion plans: 2022’s capital expenditures would now be more like . . . $240 million. Oatly’s outlook was being updated to compensate for “the war in Ukraine, COVID-19, and inflationary and supply chain pressures,” CEO Toni Petersson explained.

The recall is a relative blip in comparison, but certainly doesn’t help. Oatly’s share prices have fully rebounded following the one-two punch of a recall and missed earnings, but that’s only from trading at $3.24 Tuesday night to $3.50 today.