Swedish plant-based dairy producer Oatly, entered a co-manufacturing deal with Toronto-based Ya YA Foods to produce Oatly products in the states of Utah and Texas in order to reduce its capital expenditure and improve cash flow. The deal is expected to close in 1Q 2023.

Under this hybrid production strategy, Oatly will produce its proprietary oat base at plants in Ogden, Utah, and Fort Worth, Texas while Ya YA Foods will handle the transformation into finished products, which according to Oatly will allow for reducing costs in the short term.

Ya YA Foods will acquire a majority of the assets used in the operations, including mixing and filling equipment, and assume property leases of Ogden and Fort Worth facilities while Oatly will retain full ownership of and operation of the production lines used in making the oat base. Oatly will also receive CAD 72 million (~USD 53 million) and additional credit towards future use of shared assets at the Ogden facility as well as credit towards ongoing construction of the Fort Worth facility.