Three images of Oatly packages (cover image)
Brand StrategyJuly 8, 2022

How To Make A Smooth Transition From Challenger Brand to Industry Leader

July 8, 2022
Cory Profile Picture
Cory Schröder
Senior Content Marketing Manager

There’s something to be said for existing in the “challenger brand” realm. Not yet a market leader, but no longer an unknown, niche company — being a challenger brand in 2022 is “all about being nimble and quick and taking risks”, according to Talk Talk founder Charles Dunstone.

It’s a scrappy, exciting, and often confusing stage of growth for many brands. In the words of The Guardian’s Emma Hall, “When you can't compete with the spending power of the big fish, you have to use other tactics to get yourself noticed. “ In essence, you have to be prepared to do something bold at all times and flout existing conventions.

And that’s just what many a challenger brand has done — relied on creativity, public stunts, guerilla marketing techniques, and more to get their foot in the door of their industry. Think Uber, Airbnb, Innocent, or Robinhood — exciting challenger brands exist in every industry. They take risks, do things differently, and are permitted to act in ways that established brands wouldn’t be able to get away with.

But what happens when a successful challenger brand… isn’t really a challenger anymore? When do they become a market leader and lose their quirky underdog status in the eyes of consumers? And how do they adapt to this new stage of growth successfully?

This article will explore this concept in detail through a case study on none other than everyone’s favorite milk alternative brand, Oatly. We’ll discuss how this scrappy, brash fighter made its way up the ranks — but now teeters at the edge of the “challenger” category and will likely need to reassess its brand strategy.

So, let’s dive in.

Case Study: Oatly

Source: Labbrand

Back in 2014, challenger brand Oatly managed a miraculous rebirth from the ashes of obscurity. While the brand had been around since 1994, it wasn’t until 20 years later that it made its way onto the international scene — thanks in great measure to its new CEO, Toni Petersson.

Instead of sticking with an approach that hadn’t proven supremely successful, Petersson pivoted. Under his vision, the brand began to find success by:

  • launching bold, guerilla-style marketing campaigns

  • taking on bigger industry players in a David & Goliath-type legal situations

  • switching to clever, yer informational packaging

  • doubling down on its focus on sustainability

Let’s look at a few examples of how Oatly used the above techniques.

A True Challenger

First, instead of launching traditional OOH ads, Oatly chose to take a more informal, guerilla approach. Consider the below image:

Source: Medium

When Oatly was ready to unveil its new look and products in Germany, it began in Berlin. The above OOH ads, which were placed in Berlin Mitte, aren’t what one might call traditional. They’re amusing and irreverent — leaning into a certain type of humor that shows the brand to be both modern and trendy.

Or, consider another of Oatly’s OOH campaigns:

Source: Posterscope

Again, it’s sassy, bold, and alternative — it positions Oatly as a non-traditional brand willing to take risks and fight the status quo in order to get its name out there. And it worked.

Next, let’s consider the ways in which Oatly used its “David” status to take on industry “Goliaths”. In 2014, Oatly debuted its tagline “It’s like milk but made for humans” and was quickly sued by the Swedish Dairy Association for “misleading people” and “scaring them into thinking cow’s milk is dangerous”.

The Swedish Dairy Association actually won this case, as the European Trademark Office (EUIPO) ruled that the average person in an English-speaking EU market “understands milk is, in fact, intended for calves”. However, Oatly wasn’t convinced — they believed that the average person in an English-speaking EU country was, in fact, not aware of their belief: that cow’s milk is not good for their body.

In response to this ruling, Oatly published the actual text of the lawsuit in its ads — a bold move that consumers loved.

Finally, let’s consider Oatly’s fun brand packaging — which also lends itself to a discussion of its unique brand personality. Silly and visually appealing — yet still highly informational — Oatly’s packaging was yet another way for the challenger brand to show consumers how it was different from its competitors.

Source: Fonts In Use

Instead of relying on cold hard facts, Oatly leaned into its goofier side and created packaging that entertained, as well as informed.

All of this, and more, allowed Oatly to carve out its space in the plant-based industry, as well as the larger dairy industry. However, in 2022, Oatly is now a well-known, highly successful brand with a global presence — and it’s reached the very edge of the “challenger” growth stage.

With this approach toward industry leader status, Oatly will have to start changing its approach to marketing and branding — or risk losing the trust of its loyal customers.

The Tipping Point

The most convincing example that Oatly is nearing the edge of the challenger brand category? Its recent lawsuit with family-owned oat milk company, Glebe Farms — and the way the public has reacted to the situation.

But first, a bit of background. In 2021, Oatly sued Cambridge-based Glebe Farms for using the phrase “PureOaty” on its packaging.

Source: The Vegan Review

The suit claimed brand and trademark infringement and challenged that “Glebe’s PureOaty product ‘took unfair advantage’ of its brand positioning and accused it of trying to ‘pass off’ its product as Oatly’s.”

In August of 2021, the judge rejected Oatly’s allegations and Glebe Farms won. And in May 2022, Glebe Farms took a page right out of Oatly’s book and launched a bold, cheeky DOOH campaign in London’s Victoria Station.

Source: The Drum

This ad, which was joined by many others in a day-long takeover of the station, made its position quite clear: Oatly is no longer the scrappy underdog, we are.

By telling the world that successful milk alternative brand Oatly sued them, a small, family-owned business, Glebe secured its role as the David of the situation — effectively transforming Oatly into its very own Goliath.

And consumers agreed. The Drum reported that social listening data from Synthesio found that in August 2021, “39% of the social conversations linked to Oatly following the judgment were negative. In the three months before the lawsuit, just 13% of conversations about the brand were negative.”

In response to the situation, Lucy Hopkins-Parkinson, a spokesperson for Oatly, said (in true Oatly-fashion):

"Nice job on the billboards! We’re flattered by the shout-out. We can’t wait to open our UK factory in Peterborough next year where we’ll also be buying oats from British farmers, and creating around 200 new jobs. We wish our future neighbors well as we all work towards our shared goal of a more sustainable food system. See you in 2023!"

However, what once might have been viewed as an edgy and humorous response now sounds a bit… well, disingenuous? In this situation, Oatly ends up looking like a sore loser, picking on smaller brands.

What Oatly needs to understand is that it’s pretty much reached the end of its run as a challenger brand and is now inching into a role as an industry leader. With that being said, Oatly will need to reassess its brand marketing strategy — and make some real changes to the way it speaks to and connects with consumers going forward.

So, let’s discuss three tips brands like Oatly can take under consideration as they transition from challenger brands to industry leaders.

3 Tips For Brands Moving From Challenger to Industry Leader

1. Gather Up-to-Date Consumer Data

In order to make as smooth a transition as possible from scrappy challenger to established industry leader, you absolutely must have up-to-date consumer data from a reliable source.

Keep in mind, the way that consumers perceived your brand, as well as its products and services, in the past will not be the same as how they perceive you now — especially if you've grown a great deal.

Therefore, the data you may have collected over the previous years or even months won’t be effective when it comes to building your brand strategy going forward. Instead, you need to-the-minute data on how your target audience views you now — ideally from advanced brand monitoring software.

With this data, you can answer questions like:

  • Have your target audience’s brand associations changed?

  • Have brand consideration or preference levels increased or decreased?

  • Are your top purchase drivers still the same?

  • And more…

With this updated data, you can build out a strategy that fits better with your emerging industry leader image — as consumers will now view your brand in a different light.

2. Reassess Your Brand Messaging

In the case of Oatly, they really took the irreverent, underdog image and ran with it. Everything about their brand messaging was brash, humorous, and just a bit too much — but it worked.

Now that they’re nearing the end of its challenger phase, Oatly will need to reassess its brand messaging — aka how it speaks to consumers. From tone to diction to syntax, Oatly will need to ensure that the way it communicates with consumers going forward fits with its evolving industry leader brand image.

Now, this doesn’t mean Oatly should do a full 180 and abandon the brand identity that’s allowed it to become so successful. But it would be prudent to reevaluate the finer points of its brand messaging to ensure it’s ready for its next growth stage.

3. Refine Your Brand Personality

Similarly to the above point, when a brand transitions from a challenger to an industry leader, not everything that’s made it successful can or should remain. In the case of Oatly, its brash, devil-may-care attitude is what made it such a stand out in the plant-based industry.

Its brand personality was outspoken, witty, and borderline insolent, and people loved it! As a challenger brand, it felt fresh and revolutionary — like they were there to take on the industry without apologies.

But as an emerging industry leader… Oatly is becoming the big-name brand it was once grappling with. With this transformation in mind, brands like Oatly will need to take the time to refine their brand personality.

Again, we’re not recommending a brand loses all of the unique qualities that made it successful — just that it smooths out some of the edges that may no longer seem as charming as they once were.

Case in point, Oatly’s response to the loss of the Glebe Farms lawsuit. A few years ago, their response may have been just the right amount of plucky and smart-alecky. But today, it feels a bit like they’re punching down — and consumers aren’t seeing Oatly in the same light as they previously have.

So, when making the transition from a challenger brand to an industry leader, make sure your marketing team takes the necessary steps to refine your brand personality — before it gets you in a spot of trouble.

Final Thoughts

Reaching the end of the challenger phase of one’s growth is an exciting time for a brand — signaling both new opportunities and new challenges.

However, there’s no perfect way to shift from a challenger to an industry leader. There will always be bumps in the road and smart brand managers will learn from their mistakes and adapt. But they’ll also have to accept that the strategic approach that allowed them to reach their current heights may no longer propel them further.

In this case, the best approach is to gather the latest consumer data and insights and conduct internal reassessments of important brand attributes — such as messaging, personality, and more.

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