Core Insights - OATLY is undergoing a strategic review of its Greater China operations, considering various options including potential divestiture, after seven years in the market [1][4] - The company reported a 3% revenue growth in Q2, but the Greater China segment experienced a 6.4% decline in revenue year-on-year [2][5] Financial Performance - In Q2 2025, OATLY's Greater China revenue was $27 million, continuing a trend of declining growth since 2020, while the first half of the year showed a 12.5% increase to $56.95 million [2] - The adjusted EBITDA for the Greater China segment showed a loss of $636,000, marking five consecutive years of unprofitability [2] Market Dynamics - Approximately 62% of OATLY's revenue in Greater China is still reliant on the food service channel, which is currently under pressure, although retail channel growth has partially offset this decline [2][3] - The plant-based market in China has shifted from initial hype to a cooling phase, with significant competition from local brands impacting OATLY's market share [3][5] Competitive Landscape - OATLY faces increasing competition from local brands such as Yili, Mengniu, and Vitasoy, and ranks fourth in the Tmall plant-based beverage repurchase list [3] - Market analysts attribute the decline in OATLY's performance to factors such as waning consumer interest, high product prices, and the rise of domestic brands [3] Strategic Options - Three potential paths for OATLY's Greater China operations have been suggested: exiting the market, forming partnerships with local brands, or operating independently [4] - CEO Jean-Christophe Flatin indicated a preference for the independent operation route, emphasizing the need to maximize value after restructuring [4][7] Operational Capabilities - OATLY has established a fully localized team and R&D center in China, significantly shortening the product development cycle to respond to market changes [4][7] - The company has successfully penetrated both B2B and B2C markets, with its products being used to create approximately 1.4 billion cups of oat lattes since entering the market [6][7] Market Share - OATLY holds a 62.9% market share in the Chinese oat milk market, reflecting a growth of over 10 percentage points year-on-year, despite the challenges faced [5][6]