Coconut Water – The Multi Million Dollar Beverage For Investors

Coconut Water – The Multi Million Dollar Beverage For Investors

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Rihanna-Vita-Coconut Water


By now, you’ve probably noticed that Vita Coco, Zico and O.N.E. are on the shelves of grocery and health food stores across the U.S. Coconut water has taken on the status of a “super-hydrating” miracle drink, and the major brands have celebrities like Rihanna, Katy Perry and Madonna promoting coconut water.

In only 5 years this beverage has turned into a Multi Million Dollar product for its producers, lets take a look into the coconut water trend, as popularity grows this here may be a beverage to invest in.

For thousands of years, farmers, hunters, warriors and general laborers of the tropics have known of the coconut’s hydration abilities:

For thousands of years, farmers, hunters, warriors and general laborers of the tropics have known of the coconut's hydration abilities

Coconut juice contains the electrolytes — potassium, magnesium, sodium, calcium, and phosphorous — needed for proper hydration.

The juice has also been used for medical purposes: doctors in the tropics used coconut water as IV fluid when saline wasn’t available.

 

A few centuries later, Vita Coco’s founders got the idea for coconut water after meeting two Brazilian women in a Manhattan bar

A few centuries later, Vita Coco's founders got the idea for coconut water after meeting two Brazilian women in a Manhattan bar

Vita Coco founders Ira Liran and Michael Kirban asked the women what they missed about home, the Brazilians replied “coconut water.”

That was in February 2003. When Kirban went to visit his now-wife in Brazil a few months later, he did some research on coconut water.

Vita Coco officially launched in 2004 and is one of the most dominant market players, with products in 17,000 stores nationally.

 

Vita Coco chose New York’s immigrant-heavy population as the drink’s entry point

Vita Coco chose New York's immigrant-heavy population as the drink's entry point

Liran and Kirban visited Brazil several times to map out their strategy to bring Vita Coco to New York.

They also capitalized on the growing interest in “functional beverages” — drinks that do something positive for you.

 

Zico, and later O.N.E., emerged as the two biggest competitors to Vita Coco, and now all three help each other while they jockey for market share

Zico, and later O.N.E., emerged as the two biggest competitors to Vita Coco, and now all three help each other while they jockey for market share

The three brands have all created a demand for coconut water.

O.N.E. founder Rodrigo Velso grew up drinking coconut water in Brazil and launched his product via Whole Foods in 2006. Zico founder Mark Rampolla got hooked on coconut juice while serving in the Peace Corps in Central America. He brought his product to market in 2004.

 

And the trend is still catching on: Naked came out with its own version of coconut water in 2010. 


Coconut water makers say it’s better for you than energy drinks

Coconut water makers say it's better for you than energy drinks

Plenty of sports drinks, like Gatorade, are loaded with electrolytes. What gives coconut water a natural advantage is that it’s fat-free, cholesterol-free, and low in calories. Its electrolyte levels are through the roof (in fact, Vita Coco claims to have “15 times the electrolytes found in sports drinks”), with a potassium level equal to more than two bananas per 11-ounce serving. And yet coconut water is still just 95 percent water.

This makes coconut water a “more natural” alternative to sports drinks, energy drinks, and sodas.

 

Another key selling point for the product is that it keeps you young

Another key selling point for the product is that it keeps you young

Coconut water is expensive: it’s $2 per bottle. Manufacturers justify the cost by claiming that the electrolytes and vitamins found in coconut water improve circulation, slow the ageing process, fight viruses, boost immunity and reduce the risk of stroke, heart disease and cancer.

 

It only took five years for coconut water to establish itself as a multi-million-dollar industry

It only took five years for coconut water to establish itself as a multi-million-dollar industry

A Merill Lynch analysis in 2009 showed that coconut water went from virtually zero sales in 2004 to $30 to $35 million annually in five years.

 

The coconut water trend is part of a broader movement toward “naturally healthy” products — which is why Pepsi and Coca Cola bought stakes in O.N.E. and Zico

The coconut water trend is part of a broader movement toward "naturally healthy" products -- which is why Pepsi and Coca Cola bought stakes in O.N.E. and Zico

“Naturally healthy” products raked in $223 billion in global sales in 2009, with naturally healthy beverages (like Naked Juice) making up 63% of that category.

In 2010, PepsiCo bought out a majority stake in O.N.E., the Brazilian-based company, while Coca-Cola took a stake in Zico, based in California. These investments will helped coconut water move from warehouse distribution to direct store delivery, a huge step in becoming a major player in the U.S. beverage market.

 

Celebrities like Rihanna have promoted or invested in the major coconut water brands

Celebrities like Rihanna have promoted or invested in the major coconut water brands

The list of celebrity spokesmen, investors or simply public drinkers is a long one: Madonna, Matthew McConaughey, and Demi Moore are Vita Coco investors, Rihanna is a Vita Coco spokesperson, Molly Sims works for Zico and celebrities like Kim Kardashian, Anne Hathaway, Nicole Scherzinger, Nick Cannon and Brooke Shields have all been seen with a coconut water drink around town.

 

Although recently, fitness experts have started backing away from the product

Although recently, fitness experts have started backing away from the product

Despite its popularity, fitness experts and enthusiasts are realizing that the most important element in a sports drink — protein — is noticeably absent from coconut water, which only has a couple grams per serving when 15 to 17 grams would be optimal. A sufficient amount of sodium is also lacking.

 

In fact, Vita Coco and O.N.E. are now under fire for lying about the nutritional value of their product

In fact, Vita Coco and O.N.E. are now under fire for lying about the nutritional value of their product

Vita Coco manufacturers face a $5 million class action lawsuit filed last month from consumers who claim the products “super-hydrating” benefits are false. A false advertising suit was also brought against O.N.E.

According to Thomson Reuters:
“The lawsuits, brought by Kevin Shenkman on behalf of coconut water consumers, were spurred by a new study by ConsumerLab.com that tested the contents of three brands of coconut water: Vita Coco, O.N.E. and Zico. Only one of the drinks, Zico, delivered on its nutritional claims in the study. The other two had “far fewer” electrolytes than claimed, according to the report issued last week, with considerably less sodium and magnesium than the amounts listed on their nutrition labels.”

While coconut water may not be a miracle drink, it still fills grocery shelves nationwide

While coconut water may not be a miracle drink, it still fills grocery shelves nationwide

As is the case with many health food products, coconut water is likely no more nutritious than fresh fruit and water.

But with continued aggressive branding and investment by big-name companies, expect coconut water to gain global market share in the coming years.

Article By: Eric Goldschein and Aimee Groth

I am the the Founder of Addicted2Success.com and I am so grateful you're here to be part of this awesome community. I love connecting with people who have a passion for Entrepreneurship, Self Development & Achieving Success. I started this website with the intention of educating and inspiring likeminded people to always strive for success no matter what their circumstances. I'm proud to say through my podcast and through this website we have impacted over 60 million lives in the last 4 and a half years.

2 COMMENTS

  1. If you really want a boost, just drink fresh green coconuts and not the ones with the green husk removed. Anyone interested to work with a real fresh, unprocessed coconut water company, call Noelani Beverage & Coconut Water Company. Noelani in Hawaiian means “dew from the Heavens.” Aloha, Ed

  2. I grew up in a Caribbean country and know first hand the nutritional value of coconut water. We picked it off the trees or got it from vendors in the market. It was and is considered a powerful kidney cleansing agent and certainly was more nutritional than drinking sodas or other beverages high in sugar.

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