After launching in the US in 2004 and then in the UK in 2010, the category is still gathering momentum. Claire Phoenix talks to European CEO and former Innocent Drinks executive Giles Brook, who predicts further healthy growth.
Who is drinking coconut water, and why?
Giles Brook: The coconut water category has exploded in the last few years and is being tipped as the next big thing, estimated to be worth £100m in Europe by the end of 2014.
When Vita Coco pioneered this category in the UK back in January 2010, there were just a few coconut water brands in specialist food stores. Just three years on, over a dozen coconut water brands have emerged, all vying for space in this lucrative category.
While many of us think its inherent health benefits are recent discoveries, it dates back to World War Two, where it was used for emergency plasma transfusions. Similarly, coconut water has long been an ingredient in the diet of ethnic communities.
These days, everyone from Madonna to my next door neighbour is discovering coconut water. Athletes and fitness fanatics enjoy coconut water for its high potassium, mineral content and fast, natural hydration, while health-conscious individuals enjoy this tasty alternative to water without preservatives, fat, or cholesterol and with fewer calories or sugar than juice or smoothies.
At Vita Coco, we position ourselves as a lifestyle and sports drink; a fun-loving brand with compelling credentials for natural hydration.
Why has it suddenly taken off?
Brook: From the consumer viewpoint, it meets the demand for natural, healthy products. Essentially, we’re thinking twice about what we put into our bodies, be it food or drink.
Also, key opinion formers such as dieticians, nutritionists, high-profile sportspeople and celebrities are endorsing Vita Coco and the benefits of coconut water.
From a trade viewpoint, we’re carving out a new category and are well placed to do for coconut water what Red Bull and Innocent have done for sports and energy, or juice and smoothies. Importantly, as data has shown, we offer buyers more incremental growth than copycat or duplicate offerings.
We meet three need states: hydration, nutrition and functionality, where consumers want the hydration benefits of water but with a different taste profile, or the nutrition of a chilled juice or smoothie without the calories or sugar, or the functionality of a sports drink without the artificial or synthetic experience.
We have great optimism in the category, as we’re ahead of where smoothies were at the same time of their category evolution. The signs are all very positive for us.
To give you a snapshot of our performance levels, in a leading supermarket where Vita Coco 330ml Natural is distributed in all stores, it was the no 2 branded impulse (< 500ml) line in chilled juice and smoothies in 2011, second only to Tropicana orange juice 330ml.
Our 1-litre is enjoying equal success and we have just seen two major supermarkets extend us from 200 stores to over 650 stores.
Today, it can be bought from over 7,000 stores across the UK and over 11,000 across Europe, where we have representation in UK, Ireland, France, Germany, Switzerland, Belgium, the Netherlands and Sweden among other European countries.
Commodity prices of coconut-derived products have unsurprisingly gone through the roof. One of the biggest challenges for us and the category is global supply, and we were astute in putting a five-year global supply chain strategy in place two years ago.
Has it been popular in other countries?
Brook: Yes. Historically, coconut water has proved popular in the areas in which young, green coconuts are cultivated, namely South East Asia, the Caribbean and South America, and is often referred to there as ‘miracle water’.
When our founders Ira Liran and Michael Kirban set about creating the Vita Coco brand in New York, importing coconut water from Brazil, the category was almost nonexistent. Today, it’s one of the fastest growing lifestyle beverages in North America, with sales topping ?$1bn in 2012.
Initially indirectly imported into the UK by a wholesaler, our new company All Market Europe Ltd secured the rights for Europe, and a small, dedicated team share a passion to make this healthy beverage accessible to all UK consumers.
There are lots of brands out there. How do you see the competition?
Brook: Vita Coco coconut water has pioneered the evolution of a brand new category within non-alcoholic drinks in the UK and Europe.
We welcome good competition, but where it becomes problematic is when brands enter the market with products that do not deliver strongly on taste or quality.
If a consumer’s first experience is through one ?of these brands, then the market opportunity will be eroded, as consumers are put off coming back.
Vita Coco 100% Natural Coconut Water is produced by extracting the waters straight from young, green coconuts grown in Brazil and Asia, when they are around five months old and at their optimum nutritional level.
‘Never from concentrate’ is a critical brand promise, as we live the ethos of ‘straight from the tree, not a lab’.
European retail sales exceeded £25m in 2012 versus £8.5m in 2011. Despite the fact that the competition has quadrupled, Vita Coco has grown its UK share to 94% and is now the fastest growing brand and category in total non-alcoholic beverages (across soft drinks and chilled juice) year-to-date (Source IRI).
Vita Coco occupies 94% of the UK coconut water category today and our trajectory is to grow at an even faster rate with our expansion into eight European markets.
Coconut water brands now include Zico (a Coca-Cola owned product), Cocofina, Go Coco, Chi, Biona, Cocowell, Pearl Royal and most recently Foco, among many others.
Is it expensive? How does it compare with other soft drinks?
Brook: 330ml RSP is cheaper than many other natural drinks, especially those found in chilled juice and smoothies.
What new flavours or formats can we expect?
Brook: There are six flavours in the 330ml format: Natural, Pineapple, Peach & Mango, Passion Fruit, Açai & Pomegranate, and Orange. Natural, Pineapple, Açai and Pomegranate and Orange are also in 500ml with 1-litre take-home format for the Natural and Pineapple variants. The Pineapple SKU is the UK’s first ever flavoured coconut water ?in a take-home carton.
In terms of packaging innovation, we will shortly be launching the 330ml range into the resealable Tetra Pak DreamCap, and ?1-litre is moving to Tetra Prisma to create consistency across the portfolio.
This year, in a move that demonstrates our ability to offer totally differentiated innovation, we launched Coco Cafe into the UK marketplace.
This ready-to-drink blend of coconut water, semi-skimmed milk and espresso recently won ‘Innovation of the Year’ at the Lunch! Awards, and creates a totally new category by pairing two of the fastest growing beverage sectors – coconut water and ready-to-drink coffee – for a natural drink that’s hydrating and energising at the same time.
Giles Brook is European CEO and former Innocent Drinks executive.
Claire Phoenix is FoodBev Media managing editor – magazines.
FoodBev Media Ltd 2015