Balancing profit with purpose
With Vita Coco and its great-tasting coconut water, consumers can easily reach out for their very own taste of the tropics, and there need not be a ladder, machete or palm tree in sight
One of the fastest growing beverage categories in Western Europe, the United States, South America and South East Asia, the global coconut water market is today estimated to be a $2.3 billion industry, and one that is expected to reach over $5.8 billion in value by the end of 2025. Boasting natural hydrating qualities and being a great source of nutrients such as calcium, magnesium and potassium, it has transformed itself from being a niche product to one with mass appeal, particularly for ethical and health conscious consumers.
The world’s leading brand of coconut water belongs to Vita Coco. Founded in New York in 2004, the company today has sales in more than 30 countries and boasts a global market share of over 25 per cent. “As of 2020, Vita Coco is very much the brand name that has become synonymous with the coconut water category,” begins Giles Brook, the company’s Chief Executive for the EMEA region. “Working with farmers in countries such as Brazil, the Philippines, Thailand and Sri Lanka, we use only the finest coconuts in terms of type and age to give our customers around the world a consistent experience with Vita Coco products. At the same time, our relationships with our farmers and with production sites has allowed us to build an unrivalled supply chain – one with direct access to coconut harvests – which has become a huge differentiator for us.”
Having recently celebrated the company’s tenth year in the UK – which coincided with Vita Coco’s fifteenth birthday in 2019 – it is currently enjoying its highest market share ever in the country, recording a figure of 61 per cent in its last 52-week review at time of press. Needless to say, therefore, that the journey from being seen as a speciality health beverage to becoming a mainstream brand has been an inspirational one. “In the early days of our presence in the market, Vita Coco coconut water would typically be sold by the likes of Holland & Barrett and other health-focused stores,” Giles details. “What we could see almost immediately was that people were purchasing the product in significant volumes. So, we knew that the demand was there, it was just a matter of working out how we could expose Vita Coco to a wider audience.
“At first, we invested a great deal of time into driving quality PR in order to better educate consumers of the wide range of benefits possessed by coconut water. It was around this time as well that our Co-Founder and CEO, Mike Kirban struck up a business relationship with Madonna, and it was her investment in the business that really helped to promote the brand in ways unseen previously. In subsequent years, Vita Coco signed up Rihanna as an ambassador, and that too gave us the opportunity to accelerate our market reach and expansion. As the aforementioned supply chain went on to be strengthened, we would also continue to build up the necessary infrastructure and teams needed to prosper in our core markets of not only the UK or the United States, but also in rapidly developing hotspots such as China and Western Europe. The result has been that, in an industry segment where competitors have come and gone, Vita Coco remains as the leading name in a field that is now about to ride a whole new wave of growth.”
While the heritage of the brand – and main core of its business – has, and will continue to be centred around coconut water, one of the things that Vita Coco is more excited about doing at this time is building out what it calls a ‘Better for You’ beverage platform. To achieve this goal, the company has identified a three-pronged approach which will see its efforts split into either developing new products under the Vita Coco name, making targeted acquisitions of existing, complementary businesses, or launching entirely new brands themselves.
“Under the Vita Coco name, products we have launched include our Vita Coco Cold Brew coffee blend, our Sparkling range, our Coconut Milks and our Coconut Oil goods,” Giles explains. “We have also recently brought to market our CBD infused sparkling coconut water. These products very much speak to the laid back, relaxed characteristics of the brand and thus fit excellently within the Vita Coco family.”
Outside of the coconut water spectrum – but very much in line with its idea of building a ‘Better for You’ beverage platform – in June 2018, the parent company of Vita Coco, All Market Inc. (AMI) announced the acquisition of Runa, an organic energy drink brand made with the guayusa leaf. “In Runa, we identified a fantastic US-based brand that would provide great access into the natural energy space,” Giles continues. “In my opinion, this is a perfect example of us acquiring an existing business, which we then work with to align with the market reach of our own brand.”
Last, but not least, the third string of the bow being used to build the company’s wider beverage platform, is the creation of entirely new brands or ranges. In 2019, one such development saw the introduction of its Ever & Ever range of aluminium canned, still and sparkling waters into the US market. Launched as a ‘catalyst for change in the water aisle’, it offers consumers the chance to purchase single-use waters that won’t harm the environment in the way that plastic packaging can do. “One of the things we have always strived to do as a business is find the right balance between profits and purpose, and Ever & Ever encapsulates this down to a tee.”
It was this approach to business that helped inspire the launch of the Vita Coco Project. Created in order for the company to reinvest in its farming communities, the mission of the project is to raise one million people in coconut farming areas out of poverty. It is working to achieve this by – among other things – helping farmers to increase their annual yields and grow sustainably, and enhancing and empowering communities by giving back a portion of its profits, or by building classrooms and awarding scholarships. Meanwhile, in Europe, Vita Coco’s business has just been accredited with Certified B Corporation status, recognising its status as a business that meets the highest standards of verified social and environmental performance.
As of March 2020, Vita Coco estimates that it is cracking and opening some 2.5 million coconuts per day. Despite this incredible figure, it still sees huge room for expansion in the years to come. “In the UK alone, despite our success, we currently have only 3.5 per cent household penetration, so the opportunities to increase this through not only our coconut water but also our other product ranges are massive. That is what really excites us,” Giles enthuses.
With market data suggesting a new wave of consumers turning their attention to coconut water, now is definitely the optimum time to capitalise on this increased interest. Vita Coco is making every effort to do so, in one part by carrying out a rebranding exercise, which saw its logos and website updated in order to catch the eye of both existing and new consumers, and in another by continuing to innovate with its core products. “We are pleased to have developed a range of drinks we call Pressed, which include a slightly higher concentrate of coconut puree in order to deliver a richer, coconut taste,” Giles adds. “We launched this range into the UK in 2019, and within nine months it is carrying a retail value of approximately £5 million. What is most intriguing, however, is that over 85 per cent of sales are coming from new customers.”
These figures certainly suggest that there is much more of a market out there for Vita Coco to reach, and explains precisely why more coconut water-based innovations are on the horizon. As for what exactly this will be, as Giles concludes, watch this space!