At a New York café, a customer might order their usual coffee, and the barista suggests trying it with oat milk. They enjoy it and later decide to look for the product at a nearby store.

This hypothetical scene sums up a business strategy employed by Swedish company Oatly when it entered the U.S. market in 2017. Rather than relying on widespread availability in stores from the outset, the company focused on specialty cafés and their staff to introduce consumers to a product that was unfamiliar to many of them.

But why did the company choose cafés as its gateway to a huge consumer market?

When the Barista Becomes a Marketing Channel

What makes Oatly’s approach distinctive is that it didn’t simply put its product in front of consumers; it chose a setting where they could try it in a drink they already knew.

One case covered in the international business course taught by Dr. @Stephen Rosenbaum at Al Yamamah University examines Oatly’s expansion through food service channels—channels that let companies offer products to consumers through cafés, restaurants, and other establishments.

The company targeted professional baristas at independent cafés, drawing on their expertise and relationships with customers. Having the product in a familiar cup of coffee allowed consumers to try it before deciding whether to buy a full carton.

Company documents indicate that this strategy helped build brand awareness, allowing Oatly to capitalize on consumer interest and support the expansion of its products into retail stores.

Can a Café Open the Door to Stores?

The experience shows that a distribution channel does more than sell a product; it can also shape how consumers discover and trust it.

For a new food product, simply being on store shelves may not be enough to persuade consumers to buy it. Trying it at a café they trust may reduce their hesitation and help them form an impression of the product.

According to Oatly’s 2021 IPO prospectus, by the end of 2020 its products were available in about 10,000 cafés and more than 7,500 retail stores in the United States. These figures reflect the company’s presence across both channels, but they do not mean that cafés alone were responsible for sales growth.

This experience offers an idea that Saudi companies developing new consumer products could apply: partnering with a business that lets customers try a product may be more effective during the awareness-building stage than trying to reach the largest possible number of points of sale.

In some markets, a product’s journey doesn’t begin on a store shelf, but with a small trial that gives consumers a reason to look for it later.

Academic reference:

Krampe, C., & Fridman, A. (2022). Oatly, a serious ‘problem’ for the dairy industry? A case study. International Food and Agribusiness Management Review, 25(1), 157–171.

https://research.wur.nl/en/publications/oatly-a-serious-problem-for-the-dairy-industry-a-case-study/

Disclaimer: This material was prepared under the supervision of an editor at “Yamamah Insights” with the assistance of AI tools for financial education purposes. It is not a recommendation to buy, sell, or hold any security. The views expressed are those of the authors and do not necessarily reflect the platform’s views.