Sugar tax: ‘There is opportunity for coconut water brands’ – C7 Brands

With sugar taxes taking hold in the UK and South Africa, and Ireland’s levy now set for next month, FoodBev caught up with the CEO of C7 Brands – the company behind coconut water range Coco Fuzion 100 – to explore how sugar legislation is affecting the coconut water category.

As Steven Barton explains, there is opportunity for coconut waters as consumer behaviour changes.

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How does coconut water fit with current consumer demand for natural, healthy, minimally processed products?

Demand for natural and healthy products has never been higher and coconut water taps into this trend perfectly as it contains naturally occurring, highly hydrating electrolytes with no added or sugar or preservatives. As a result, UK sales of coconut water are booming and forecast to quadruple to £500 million in the next five years.

Does coconut water have the staying power to endure as a long-term trend?

The coconut water story is only just beginning in the West. Known as ‘miracle water’ in the East, coconut water is a centuries-old phenomenon extolling extreme health benefits. Coconut flesh was used extensively in both world wars and we have been slow to pick up on this trend in the West due to  freely available clean tap water and the previous size of cola beverages.

What about C7 Brands in particular? How does the future look?

Coco Fuzion 100 is the UK’s first carbonated coconut water and since we launched it last year, we’ve experienced strong growth and are now listed in the likes of Sainsbury’s, TK Maxx and WH Smith as well as six other countries. With the sugar tax looming in the UK, the coconut water market is set to experience extreme growth over the next few years. We believe we have the quality product – not to mention a stellar line-up of sporting ambassadors – to win considerable market share in a growing market.

Do you think the coconut water category has been short on innovation? In terms of flavour innovation, in particular, there seems to be very little.

After a slow start, innovation in coconut water is picking up steam and generating momentum. We are now seeing a much higher level of innovation in terms of flavour and format, but also in our case, the product being carbonated. The flavour side of things is particularly important which is why we launched with four flavours: original, mango, raspberry and lime.

Do you think the sugar tax will really have that much of an impact on the soft drinks industry? Is it going to encourage serious long-term reformulation, or is it just going to force manufacturers to make the very minimum effort to fall under the threshold?

Just reading the pages of FoodBev shows us that the sugar tax is already having a profound impact on the soft drinks industry. The current drive is towards reformulation or NPD and the long-term success of these strategies will be dictated by performance in store. The challenge for existing sugar-based beverages is replicated as an enormous opportunity for the natural beverage supply base, in that the consumer is driving this. Taste, quality, traceability and trust with the consumer is where the battle will be won or lost.

Is the depth of the UK’s sugar tax, particularly the extra cost to consumers, really enough to put them off sugary drinks?

The UK won’t be the first country to introduce a sugar tax and the effect these taxes are having elsewhere in the world have been profound. In Mexico for example, the first year after the sugar tax saw a 5.5% drop in purchases, followed by a 9.7% decline in the second year. So in the UK, cost will certainly be a factor but we can’t discount the value of the clear message that the introduction of the tax is sending to the consumer. This is encouraging customers to seek less sugary alternatives, which is where the opportunity for coconut water lies.

Having a sugar tax come into force across rival beverage categories is one thing – but how does the coconut water segment take this opportunity and capitalise on it?

The opportunity is not the sugar tax, it’s the enormous adjustment by the consumer towards healthier living and more understanding of the beverages they consume. The food industry has gone through the same extreme adjustment and cycle with the vegan revolution complete testimony [to that]. The key for us relating specifically to coconut water is showcasing the extreme benefits coconut water offers, not just to the health-conscious but to everyone.

What’s next for you – do you have plans to invest, innovate, and how will you take advantage of the sugar tax to grow your brand?

It’s a hugely exciting time for us. We’re securing investment, we’re constantly innovating, we have an impressive army of sports ambassadors championing Coco Fuzion 100 and with the onset of the sugar tax, it’s going to be an explosive time for the brand.