Once reserved only for the shelves of natural food channels, coconut water has enjoyed more mainstream success in the last year after inking major investment deals and distribution agreements with the world’s largest soft drink companies.
“It’s only been in the last year that I think a lot of consumers heard about coconut water,” says Sarah Theodore, a beverage analyst with Mintel International, Chicago.
Last year, The Coca-Cola Co., Atlanta, became a minority owner of Zico Beverages LLC, Hermosa Beach, Calif., when it purchased about 20 percent of the company for $15 million. PepsiCo Inc., Purchase, N.Y., bought Amacoco Nordeste Ltda. and Amacoco Sudeste Ltda., the largest coconut water company in Brazil, in August 2009. Now part of PepsiCo, The Pepsi Bottling Group, Somers, N.Y., made an equity investment and signed a distribution agreement with One Natural Experience (O.N.E.), Los Angeles, in September 2009.
In June, Vita Coco, New York, reached a distribution agreement with Dr Pepper Snapple Group Inc., Plano, Texas, to distribute five Vita Coco flavors in Florida and Georgia, with other states to follow. In addition, Vita Coco now is available in airports and will be served on Jet Blue flights beginning in the fall, says Arthur Gallego, the company’s communications director. Vita Coco expects to achieve sales totaling $40 million in 2010, he says.
Those investments and distribution agreements, coupled with coconut water’s placement as a natural product, helped launch coconut water into the mainstream, Theodore says.
“I think that ‘natural’ is a big part of coconut water’s appeal,” she says. The inherent attributes of the juice, such as being low in calories, containing electrolytes are properties that are new and attractive to consumers, Theodore explains.
Coconut water origins
In the United States, coconut water is a relatively new beverage that only recently has found some mainstream success, but in the tropical climates of South America and Southeast Asia, coconut water manufacturers say the natural beverage has been consumed for thousands of years.
Ethnic populations from those areas of the world have migrated to the United States and already are familiar with coconut water. Others have been exposed to it during vacations to the Caribbean and Brazil, says Rodrigo Veloso, founder and chief executive officer of O.N.E.
In the tropics, coconut water is primarily consumed for its hydration properties as an alternative to water, Veloso says. Coconut water is rich in electrolytes, particularly potassium, and has been marketed as a natural alternative to sports drinks.
“Natural athletes” are the most important demographic for Zico Beverages, says Mark Rampolla, the company’s founder and chief executive officer.
“There’s a whole audience of people that is represented by the growth of yoga, pilates and tai chi, and, frankly, cyclists and tri-athletes, who have a different sense of who they are and about sports drinks,” he says. “I think, first of all, that audience has been moving away from typical sports drinks, and many of them never embraced it.”
Coconut water’s flavor and hydrating properties have opened it up to other usage occasions as well. In Brazil, Veloso says some locations offer cocktails served with coconut water ice cubes to prevent hangovers. Vita Coco works with mixologists to develop cocktails using coconut water as a mixer, Vita Coco’s Gallego says. Some consumers use it as a base for smoothies, Rampolla adds.
‘An acquired taste’
One challenge for coconut water companies moving into more conventional channels has been consumers’ expectations about flavor, Gallego says. Consumers often expect a sweeter taste profile because they are accustomed to the flavor of coconut milk or coconut used in confectionary applications, he says.
“There are many consumers who are interested in coconut water, but frankly don’t like the taste,” Zico’s Rampolla says. “Coconut water itself can be an acquired taste.”
For that reason, coconut water companies have released a variety of flavors along with their flagship 100 percent coconut water offerings.
Vita Coco offers six varieties: 100 Percent Pure Coconut Water, Coconut Water with Acai and Pomegranate, Coconut Water with Pineapple, Coconut Water with Peach and Mango, Coconut Water with Tangerine, and Coconut Water with Passion Fruit, Gallego says. Vita Coco uses fresh fruit purees for its flavors, he says.
The Vita Coco product line is available in 11.2-, 17- and 34-ounce Tetra Pak cartons. The 11.2-ounce package has a foil seal, the 17-ounce beverage and 34-ounce multi-serve beverages use a screw-top and flip-top lid, respectively.
In March, Zico repackaged three of its five varieties in 14-ounce re-sealable high density polyethylene (HDPE) bottles. Zico’s Natural, Lima Citron and Pomberry flavors launched in the HDPE bottles. Passion Fruit, Mango and Natural varieties still are available in Tetra Pak cartons.
In its Tetra Pak coconut waters, Zico uses only coconuts sourced from Brazil. But with the launch of its HDPE bottles, Zico began sourcing coconuts from Latin America, Indonesia and Asia, blending waters from the coconuts to create consistent taste and nutrition profiles, Rampolla says.
In March, PepsiCo’s Naked Juice, Azusa, Calif., launched Pure Coconut Water, which is sourced from Brazilian green coconuts and contains no additional ingredients. The all-natural coconut water is packaged in an 11.2-ounce carton, which promotes that it is a good source of potassium.
O.N.E. has released a variety of coconut waters targeting specific demographics, including children and people with active lifestyles, Veloso says. This month, the company introduced eight-packs of O.N.E. Kids in four varieties: Apple, Fruit Punch, Raspberry Lemonade and Orange. Each 7-ounce serving of O.N.E. Kids has about 50 calories, Veloso says.
Earlier this year, the company released O.N.E. Active, a coconut water infused with ginkgo biloba, ginseng and catuaba bark extracts to aid in concentration, energy and stamina, the company says. O.N.E. Active is available in Grape Berry, Lemon Lime and Cranberry Grapefruit varieties and is packaged in 16.9-ounce Tetra Pak cartons, the company says.
The entire O.N.E. product line is packaged in Tetra Pak cartons because they are easily recyclable, Veloso says. The package for O.N.E. Active also includes a re-sealable lid.
Overall, the versatility of coconut water makes it a competitor to many beverage categories, Veloso says. “We feel like with coconut water we have the potential of taking a scratch of every single category and creating a category of its own,” he says. BI