Oatly has entered into a co-manufacturing partnership with Ya Ya Foods Corporation as it looks to shift towards a more asset-light model.

As part of the agreement, Canadian co-packer Ya Ya Foods will assume the property lease at Oatly’s production site in Ogden, Utah, and acquire the majority of the assets used in the facility’s operation.

The company will also take over the lease and responsibility for the completion of construction of the oat milk maker’s production facility in Fort Worth, Texas.

Oatly expects the “hybrid partnership” – which will see it retain full ownership and operation of its oat base production lines at each site – to result in future capital expenditure savings and “have a net positive effect on its cash flow outlook”.

In November, the oat milk giant revealed it would be cutting its employee headcount as part of a raft of cost reduction measures, after reporting a widening loss for the third quarter.

Under the agreement covering the two US facilities, the company will produce its proprietary oat base before transferring it to Ya Ya Foods to be co-packed into Oatly products on-site.

The deal will see Oatly receive approximately $72 million, plus an additional credit amount towards future use of shared assets related to the Ogden facility.

The company will also receive an additional credit towards ongoing construction at the Fort Worth site.

Oatly CEO, Toni Petersson, commented: “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, added: “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”.

He continued: “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 US and Canada”.

The transaction is expected to close in the first quarter of the year.

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