The oat milk maker is to open its first UK factory at Gateway Peterborough in a move that will create up to 200 jobs.
The multi-million pound production centre will turn out 300 million litres of oat drinks and will have the capacity to increase its production to 450 million litres.
Construction work on the state-of-the-art premises is expected to start soon with production getting under way in 2023.
The news has been given a warm welcome by North West Cambridgeshire MP Shailesh Vara, whose constituency will be home to the prestigious manufacturing hub.
He said: “This is fantastic news.
“Oatly are a global leader in their sector and it is a massive show of confidence in the UK for them to open a factory here.
“As the UK pursues its path outside the European Union and seeks economic recovery following the coronavirus pandemic, I am delighted they will be coming to Peterborough in my constituency and creating more jobs and opportunities.
“This is also great news for the plant-based industry generally as the company will be sourcing its oats from across the UK.
Mr Vara added: “Oatly’s values of sustainability and protecting the planet align with the city’s ambitions and clearly signify the area as a destination of choice for companies looking to succeed in the UK.
“I look forward to working closely with the company as it invests in the local community and develops its workforce in the lead up to the opening of the factory.”
Founded 27 years ago, the Sweden-headquartered company, with a $200 million turnover, is a global leader in the manufacture of oat drinks with its products available in more than 20 countries across North America, Europe and Asia.
Its Peterborough factory will provide an end-to-end production process using oats sourced from across the UK and supplying the domestic market with its plant-based dairy produce.
Oatly has focused on making sustainability central to its production process and is seeking to ensure that by 2029 it uses 100 per cent renewable energy and that it decreases its energy and water consumption as well as waste by 75 per cent compared to 2019.
The investment will be seen by political and business leaders as a sign of confidence in the future of the UK as the country pursues a new path outside the European Union and as it battles to recover from the economic impact of the Covid-19 pandemic.
Oatly is among a number of leading food and drink makers to arrive in Peterborough.
American spice giant McCormick is to create about 300 jobs when it opens a production centre at Gateway Peterborough, while food supplier AM Fresh has just arrived at Peterborough Gateway and taken on about 120 staff.
Peterborough is also home a dairy products maker Meadow Foods, in Fengate, along with cereal producer Pioneer Foods, drinks giant Kingsley Beverages, chilled foods firm Hain Daniels, sandwich maker Greencore, brewers Oakham Ales, and chips and fries giant McCain Foods while Bakkavor, which produces meals, salads and pizzas, has factories at nearby Bourne and Spalding.