Ya Ya Foods takes over Oatly production duties

The Oatly Group AB and Ya Ya Foods Corporation, a Toronto-based contract manufacturer of a broad range of aseptic food and beverage products, enter into a long-term strategic hybrid partnership in North America. In this hybrid partnership, Oatly will continue to produce its proprietary oat base at both the Ogden, Utah, and Fort Worth, Texas, facilities, which will then be transferred to Ya Ya Foods to be co-packed into Oatly products onsite at each location.

As part of the agreement, Ya Ya Foods will acquire a majority of the assets (including mixing and filling equipment) used in the operation and assume the property lease at Oatly’s production facility in Ogden, and assume responsibility for the completion of construction of the production facility and the lease in Fort Worth. Oatly will retain full ownership and operation of proprietary oat base production lines in each facility.

Under the terms, Oatly will receive approximately $72 million, plus an additional credit amount toward future use of shared assets related to the Ogden facility. Oatly will also receive an additional credit toward ongoing construction at the Fort Worth location.

Today’s announcement is part of Oatly’s shift toward an asset-light supply chain strategy to expand its hybrid production network globally to better support its growth, capacity needs and product and format innovations. The company expects this hybrid partnership to result in future capital expenditures savings and have a net positive effect on its cash flow outlook. The partnership also marks Ya Ya Foods’ entry into the U.S. manufacturing market.

Toni Petersson, Oatly’s CEO, said, “We are excited to partner with Ya Ya Foods, a leading food and beverage manufacturer who brings deep production expertise and shares our commitment to meeting the highest quality product and safety standards. 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.”

Yahya Abbas, CEO of Ya Ya Foods, said, “We look forward to working with Oatly and supporting their transition to a more asset-light model, allowing them to leverage our significant expertise in aseptic beverage packaging. We are pleased that Oatly recognizes our top-tier food safety track record and unique capabilities and has confidence in our ability to meet their high standards. We expect this transaction to enhance our growth and further strengthen our capabilities: 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. This highly strategic partnership with Oatly is a key step toward achieving our goal of becoming the leading aseptic beverage co-manufacturer in North America.”