Oatly Group AB, the Sweden headquartered oat-based dairy products maker, is exploring a China business carveout, said four sources familiar with the situation.

JP Morgan has been engaged as the sellside advisor, said the first three sources.

The company is in talks with some potential buyers, including strategic players and private equity funds, said the sources.

Chinese soft drink maker Genki Forest is among interested parties looking at the deal, said the first and the fourth source. The deal size is around USD 200m, said the second source.

The potential carveout is driven by the uncertainties over the Chinese consumer market as well as the tariff war risks, said the second source.

The Greater China market accounted for 15% of revenue, the Europe & International markets 55%, and the North America market 30% for the first quarter of 2025.

The Greater China segment has seen a 37.6% jump YoY in revenue to USD 30m in the first quarter of 2025, driven by sales to a new food service customer and entry into the club consumer segment within the retail channel, according to its 1Q25 earnings release.

The company has a factory in Ma’anshan, according to its 2024 annual report.

Oatly posted its second-best earnings in 1Q25 since its IPO in 2021 with USD 197.5m in revenue, a 0.8% YoY decrease, and USD 3.7m in adjusted EBITDA loss, an improvement of USD 9.5m compared to the prior year period. The company reaffirmed its guidance to becoming profitable this year, as per its earnings release.

The company’s biggest shareholder is China Resources Verlinvest Health Investment, with a 45.4% stake. China Resources and Verlinvest, an international consumer investment company, formed the joint venture to invest in Oatly in 2016, according to its previous press release.

Oatly’s potential China carveout is amid the trend of foreign consumer companies exiting China. A recent example is Starbucks’ sale of its China business, which has attracted nearly 30 local and international PEs to submit bids, according to CNBC’s report in July 2025.

Oatly said in an email that it declined to comment on market rumor or speculation. JP Morgan and Genki Forest did not respond to requests for comment.