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How much purpose is enough for consumers?

Profit AND Purpose. Can you really have both?

Profit is the yardstick of the success of a brand or company, so success basically means profit. But a meta-study conducted by Goldman Sachs has now shown that brands that distinctly associate themselves with social or environmental activism enjoy 25% more success.  Unilever, with its slogan “purpose led, future fit”, along with Ikea, Natura, Nike, Tesla and others are examples of “green giants” loved by both consumers and investors alike.

Now it’s all about “people, planet AND profits” – but this new paradigm is hard to live up to in practice, and thus still very much unestablished. For people-centered do-good-ism has been chiefly driven by smaller, purpose-driven brands whose identity exists in opposition to big, profit-driven corporations. The latter are defined as the enemy, harnessing the narrative power of the David and Goliath myth.

Oatly: The Limits of Principle

“We promise to be a good company which means that our drive to help people upgrade their lives always comes before the reckless pursuit of profit.”

Big purpose, big promise – transported by bold communications focused traditionally on transparency and comparison. The challenge “Food industry, show us your numbers” is emblazoned on every Oatly oat milk carton, demanding disclosure of producers’ environmental impact in a clear message that created a loyal fan base, generating enthusiasm for legitimate reasons. Sales exploded, but to grow the brand further the company needed more money. That’s when things started getting tricky.

Oatly secured a capital injection of 200 million from the investment firm Blackstone – which environmental organizations have named “the biggest driver of climate destruction on the planet” as the world’s largest investor in the coal industry. This news undermined Oatly’s popularity with its fan base of course, leading Oatly to defend itself, again claiming moral high ground for steering bad money into good causes.

So has Oatly had to pay the price for compromising its positioning against “the reckless pursuit of profit” without regard for the environment, or gotten away with it?

Company figures show Oatly sales continued to rise after the disclosure. This stylishly packaged plant-based milk alternative has now gone mainstream, and the mainstream is by no means as informed and motivated as the alternative scene. The lead users comprising the initial fan base were disappointed, but as long as mainstream consumers are buying, it’s all good: As a plant-based milk alternative, Oatly is unquestionably beneficial for the environment, so “happy planet, happy shareholders”, right?

The influence of lead users

In the Oatly case, the lead user (LU) fan base uniformly demonstrated a pro-sustainability, pro-conservation attitude. Oatly built a brand community around the idea of fighting the “bad guys” by generating enthusiasm for transparency in its campaigns and attacking the food industry establishment, attracting many followers. LUs wield tremendous market power, influencing roughly 30% of German consumer spending. An OECD study has demonstrated how LUs play a key role in the rise of mass markets: “A lead market often originates in areas with demanding customers who are willing to pay for the innovation.”

Lead users rewrite market rules and create new belief systems, and often have a strong affinity for innovative products deriving from their personal background. Mainstream buyers not so much. Nor do they share LUs’ ability to create a new social narrative that moves markets. They have the power to change habits, alter behavior patterns and even shift cultural values. Oatly LUs succeeded in changing the behavior of a host of consumers in a way that benefited the product. Suddenly, the once unfamiliar taste of oat milk became accepted, even in coffee, first for sustainability reasons and then as part of a hip alternative lifestyle.

Baristas, lead users and multipliers got oat milk into the relevance set of the mainstream, altering conceptions of what milk is and popularizing the product as a lifestyle consumer choice. Importantly, mainstream consumers aren’t concerned about purpose. They may buy the Oatly brand, or just as well buy their local supermarket’s generic brand – they just want oat milk as the new lifestyle product, more or less regardless of the brand’s virtue signaling.

Taste and foam-friendliness for making latte were not originally the foreground product concerns, marketing instead focusing on activist sentiment in a category in which milk is ensconced. The company leveraged the good-versus-evil paradigm of “planet over profit” and their LUs as strident advocates of sustainability.

Our lead user research has revealed that what matters is not how much social or environmental progress has actually been attained but rather whether sustainability efforts are simply being made. Thus if you say you want to make the world a better place bit by bit, delivering transparency if not results, the public will get on board. Making a profit is fine as long as your heart is in the right place.

For LUs however, pronouncements are not enough, for they require brands to take action and want to see progress. They are concerned with a dimension beyond the utility of the easily substitutable product itself, seeing the commitment and purpose behind the product as non-negotiable.  

Oatly says it wants to steer investor money in the right direction, but for the Oatly fan base things are going wrong, with their virtuous and light milk substitute having gone over to the dark side, now working with Blackstone. The brand has sacrificed its positioning of giving consumers a clear conscience through “People and Planet Over Profit”, so now it is just another substitutable product among many. Social media marketing posts are now much less about commitment than functional aspects like product taste and foamability.

By effectively departing the path of “People and Planet Over Profit”, Oatly has turned its back on LUs, who are left to look for alternatives, and no longer will the brand community be the driver of growth. Any effect on buying by mainstream consumers will only become apparent down the road, assuming a better alternative emerges.  

Oatly made the right decision, perhaps, if the business objective is to grow the brand into a mass-market product. Who knows, maybe the company founders are already planning their exit and looking out for the next green product to shake up the industry? They should be aware however that LUs are very unforgiving of those who abuse their trust, defecting to the side of the powerful. Social entrepreneurs are scrutinized closely before trust is placed in them, so making a wrong move can have consequences, even if the intentions were good.  

Planet & Profit?

In Western Europe, roughly 20% of consumer spending is influenced by lead users who have strong views about what the brand stands for. The narratives surrounding this consumer segment don’t always gain traction however, as the idea of bringing economic and societal objectives into harmony through sustainable business models remains largely unrealized. The goal of aligning profit-making with people and planet is an as-yet unfulfilled vision for society, so brands can’t yet have it all, all at once. Brands marketing themselves on the basis of their commitment to causes are best advised to remember that it’s “people and planet first” – the profits will follow.

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Authors: Europa Bendig & Wiebke Eberhardt

Europa Bendig is specialized in cultural codes and narratives that give brands and portfolios cultural relevance and promote customer loyalty. She has been consulting on innovation processes for NGOs and international enterprises for 18 years, active primarily in the areas of luxury goods, health, services, beauty, living and social businesses.

As a New Business and Marketing Strategist, Wiebke Eberhardt is in charge of the Changing Cultures Magazine. She passionately devotes herself to the idea that the powerful tool of marketing will be used in the future to positively influence preferable behavior and change life for the better.

Image references

Image 1: "Change" // Image 2: "Oatmilk" // Image 3: "Oatly-Barista" // Image 4: “Ad” // Image 5: “OatlyUK-Twitter”