Oatly and Ya YA Foods Enter $98.1 Million Co-Packing Agreement

Oatly Group AB, the Swedish company known for pioneering Oat Milk, has entered into a $98.1 million co-packing agreement with Ya YA Foods, a Canadian-based contract manufacturer of aseptic food and beverage products.

The partnership, which was announced in a joint statement on January 3, is part of Oatly's "asset-light" supply chain strategy. Oatly will continue to produce its proprietary oat base in both of its Ogden, UT and Fort Worth, TX facilities while Ya YA Foods will co-pack the products on-site at both locations. 

As part of the agreement, Ya YA Foods is acquiring the majority of Oatly's assets, including equipment and property lease, at the Utah facility and will be responsible for completing the construction of Oatly's production facility in Forth Worth. Oatly will retain ownership and operation of the proprietary oat base production lines in both facilities.

The partnership comes on the heels of Oatly's reported third-quarter loss of $107.9 million. In November, Oatly reported it would 'institute cost-saving measures that include using co-manufacturers more extensively,' plans which aimed at saving up to $25 million annually.   

In August, Oatly announced it would cut its capital spending in half following repeated losses, which it blamed on lack of production capacity.