2nd January 2017


Twelve years ago, during a casual outing to a New York City bar, childhood friends Mike Kirban and Ira Liran met two young women from Brazil. Shortly after that night, Ira hopped on a plane to Brazil to see one of the girls and learned that the coconut water hype was real. When Mike came to visit a few months later, they got down to business with a plan to bring coconut water to the US. Vita Coco was born. The rest as they say is history.

The popularity of coconut water seems to show no signs of abating. Vita Coco’s rise has been extraordinary with sales up 78% year on year between 2011 and 2014. Today, Vita Coco remains the clear market leader in the US, with 44% market share by volume* (UK Share is 51% for 52 weeks to 03/12/16 Total Market IRI). Despite attracting plenty of competition along the way, it still outperformed the 100% juice market in 2016 with 24% growth in the UK (same data as IRI above).

*Tetrapak 100% juice index 2016

Fruit Juice Focus asks Giles Brook, CEO of Vita Coco EMEA, how they are maintaining this astonishing performance.

Fruit Juice Focus (FJF): Vita Coco started in the US market in 2004. You were recruited to the business in 2009 to launch the Vita Coco brand into the European, Middle East and African markets what were the challenges you faced back then?

Giles Brook (GB): The challenges when we first started the business in the UK in 2009 was no different from what Mike Kirban had to face in the US back in 2004. Trying to convince retailers and the consumer that coconut water was going to be next big thing in beverages and more particularly in health beverage sets was the biggest challenge.

Mike was up and down the streets of Brooklyn on roller skates selling coconut water to the retailers and the public. They had ordered their first container of coconut water from Brazil and needed to get some momentum – hence the big push in Manhatten to get the Vita Coco brand out there.

I started off with EMEA back in 2009 having the same conversations with independent retailers and potential buyers. “Coconut water – coconut what?” And this has always been one of the biggest challenges to drive education awareness of coconut water. The benefits of it as a healthy alternative to other more popular beverages. But once consumers adopt coconut water, I’ve never seen such high loyalty as what we experience on coconut water: if it’s not on the shelf, consumers will go to a different shop versus choose another beverage.

A major challenge that we recognised as being a hugely important part of securing a major competitive advantage over other brands in the market was the creation of Vita Coco’s very own dedicated supply chain network, sourced from 9 different sites across 7 different countries.

A lot of people may not realise the amount of work that went into this. Very few coconut water brands have taken this route . We’ve invested over the last ten or twelve years building an unrivalled supply chain. And that has given us a real competitive advantage. Guaranteeing consistency of quality and enabling us to secure the volume in the first place. With demand remaining very high this has given Vita Coco a huge advantage.

FJF: The brand continues to register growth – how have you achieved this?

GB: Vita Coco has been driving the consumer understanding of the benefits of coconut water for a long time now and continues to do so. To help tackle this in the early days the company did get help promoting coconut water to consumers through their association with some of their early investors who were celebrities – Madonna being one of the first who invested in the brand early on and then in 2011-12 Rhianna got involved.

This accelerated the business and awareness to a new level and with these people involved in the business it gave Vita Coco a great profile. And whilst they are continuing to be involved, the way coconut water and Vita Coco are today the focus is much more on the emotional and functional benefits of Vita Coco as a brand. We are still using those ambassadors but it’s very much more Vita Coco and coconut water now being marketed in their own right.
We have had another strong year in the category. Growth in coconut water sales in the UK for example year on year (2015-2016) is 24% and is still growing strongly. However, given the overall retail climate there is no room for complacency.

FJF: Have you made any major changes to packaging, in terms of both size and design?

GB: We built the up and down the street business through our 330ml Tetra Pak and then captured the take home opportunity through the 1 litre. We launched natural flavours which played an important role in bringing more mainstream consumers into the category. 500ml then came. We position ourselves as a lifestyle and sports brand and 500ml has been perfectly placed to meet the needs of more active consumers. We’ve then evolved into larger pack sizes such as 4 x 330ml multipacks. We now have a range of different packs for different occasions across the products. You will see further innovation on the shelves from Vita Coco this year and for us, as category leaders, we are going to make sure that we are going to bring some really powerful innovation to the market in 2017. Watch this space!

FJF: With the huge success of coconut water there comes inevitably an increase in demand for the raw materials – how do you source sustainably?

GB: Basically we have an initiative called the Vita Coco Community Project which has three parts to it
‘GIVE, GROW and GUIDE’ which is key to our sustainable sourcing.

GIVE: We give back a range of educational programmes to the community we source coconuts from that include building classrooms for children through to awarding university scholarships to students from families of local farmers and factory employees.

GROW: Utilising the whole nut and finding ways to make the Vita Coco from tree to pack process as sustainable as possible are two of our main priorities. We ensure the palm groves from which the coconuts are sourced from are continually renewed. For example we gift the farmers coconut palm seedlings, which helps boost crops now and for future generations.

GUIDE: Our people at Vita Coco work closely with the farmers to make sure they have access to the latest techniques. Two model farms are being built at the moment where farmers can learn best practices, incubate seedlings, and test next-generation farming innovations like intercropping.

Our supply chain team play a huge role in sustainable sourcing. Because we don’t buy through a consortium and don’t buy from a co-operative group like most companies – we work directly with the farmers and work directly with our production partners – this ensures that we are harvesting and growing coconuts in a sustainable way.

Obviously with the ambitious forecasts we have got going forward, coupled with the continued growth of coconut water, we are making sure that we have got plenty of supply and importantly that it doesn’t put a pressure on the infrastructure and doesn’t lead to any sort of adverse impact on the crops and on the farms themselves. This comes back to what I was saying earlier about if you are working with a dedicated supply chain they become an integral part to you. Whereas if you are another brand buying materials on the open market, this brings in different challenges. It all comes down to the big differences in how you set your business up and what’s important to you.

FJF: Do you see coconut water as a speciality juice or now as a more mainstream product?

GB: Coconut water is a huge mainstream player now. When you look at the relative rate of sale of some of the big cola, juice and water brands, we are very much holding our own – for example the Vita Coco 1 litre natural SKU is the 4th biggest selling SKU in the whole of chilled juice, first non orange SKU in the rankings. This just shows how far coconut water has come. Being the 4th biggest selling SKU after only being in the market since 2009 is something we are very very proud of. We recently launched Vita Coco nationally in a national high street chain and in here, we are outselling their water and cola branded offerings which is a huge achievement.

And there is still room for major growth for us in the mainstream market which is incredibly exciting. In the UK and US at the category level household penetration is still below 10% which means there is a really big opportunity for the business and the category. We just need to drive more consumers to the category and make them aware of the benefits. Obviously we are being hugely helped by the media who are trying to steer people into making healthier more informed choices. If we can get that household penetration up to 30/40/50/60% it’s pretty scary how big this category could be and that’s why by 2020 coconut water is tipped as being in excess of GBP4bn globally.

FJF: Which regional markets are seeing the largest growth in coconut water at present?

GB: The UK and the US are still our core markets. We’ve been in them the longest: 12-13 years in the US and 8-9 years now in the UK. They are both doing very well but with household penetration at just 10% there is a huge growth potential still.

Beyond the core regions, China, France and Spain are really now starting to come through for us. We have very strong growth in Asia and China in particular and in continental Europe. Also, if we look at the Middle East it’s becoming a key region for us. One of the things about the Middle East is yes, you’ve got the climate which is a big plus for us, secondly you’ve got a huge expat as well as local community there and thirdly you have the cultural side. In a lot of those countries there is not a lot of alcohol consumed and therefore consumers are looking for alternatives and they are trying to be healthy as well and that’s why coconut water is evolving in such a way in these markets.

FJF: Do you plan to launch any new products in 2017? What do you see as the next trend in juices and do you think Vita Coco’s successful coconut water strategy can be applied to any beverage that is seen as healthy? Or is it unique to coconut water?

GB: People ask me what’s the next big thing – and I’m a bit guarded about how I answer that for the obvious reasons! Firstly with regards new products from Vita Coco, we still believe we are scratching the surface of coconut water and that’s very much where we are focusing the business, however we want to be synonymous with all things coconut. A point demonstrated by the recent successful launch of coconut oil under the Vita Coco brand where our 250ml Oil is a Top 10 SKU in Total Oils within the UK.

To answer your wider question on other beverages, if I look at these other beverage categories, bottled waters have seen a resurgence as have smoothies with vegetable based offerings fairing particularly well. Hydration is a massively important area and I think that’s going to be a very important focus in the drinks market. In the US you see a lot about PH balance and more alkaline based waters are making a bit of noise but for me coconut water is still the one to watch.

I get asked a lot about other plant and tree based waters whether they are really going to go on the same trajectory as coconut water? The number of new products I see that market themselves as the next coconut water saying we’ve got the lowest calories or we’ve got this or that… clearly for the founders and investors I wish them the very best but I do question whether these offerings have a strong enough reference point and strong enough credentials.

One of the key aspects of coconut water is that a lot of people have touched ‘coconut’ at some point in their life, for example there are a lot of consumers originating from warmer climates and whose reference point is that they’ve been drinking coconut water for a long time. There’s the consumer who has enjoyed it on the beach somewhere and they literally have this memory of a machete taking the head off the coconut and drinking the water.

But then there is the consumer who is already enjoying coconut in another part of their lifestyle choices – in the last few years we are seeing more and more manufacturers using coconut-based ingredients as part of them providing healthy food offerings to consumers. Food and health are now inextricably linked. And the amount of coconut now being seen in health and beauty products is huge. That’s why coconut, and coconut water specifically is so successful – consumers can relate to it and it has much more relevance to their purchasing decisions.

The real challenge to these new ‘next big things’ is the relevance to the consumers and this is one of the biggest advantages that coconut water has.

FJF: What competition are you up against in the coconut water market?

GB: Given its mainstream status, I think you can argue that the competitive set extends across wider healthy beverages today, however in terms of coconut water, in the US and UK for example, we are up against the brands from the main beverage players such as Coca Cola and Pepsi and it may sound a little weird but we see this as good news for Vita Coco. They will invest in consumer marketing to help us grow the category to its potential, driving educational awareness and ultimately household penetration to the levels we know can be achieved. It is then our job to convince consumers to make Vita Coco their brand of choice and we’ve been successful to date here; however there is never a moment of complacency at Vita Coco, we are obsessed every day with making sure we give consumers reason to continue enjoying us as well as welcoming new consumers into the Vita Coco family.

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