Many argue that Coca-Cola overpaid substantially for a better-for-you beverage line when it bought Glaceau, and its Vitaminwater brand, for $4 billion in 2007. Yet the share of the bottled-water market enjoyed by Vitaminwater and its siblling Smartwater brand continues to grow in a category that has flattened out.

Coke would probably settle for a similar outcome as it moves to exercise its option to acquire a majority stake in Zico, the no. 2 brand of coconut water in the United States by sales, after purchasing a minority holding in the start-up for less than $15 million in 2009. Coke won't disclose the price of the option, but it probably isn't $4 billion.

Coconut water is emerging as another important front in the "cola wars" between PepsiCo and Coke, because just as Coke is moving in on Zico, PepsiCo is rolling out nationwide distribution of the No. 3 brand, O.N.E., after taking a majority stake in the brand in 2010.

Vita Coco, the No. 1-selling U.S. coconut water brand, has attracted celebrity endorsements by Rihanna, Madonna and the New York Yankees' Alex Rodriguez. It's controlled by founder Michael Kirban and Verlinvest, a Belgian investment firm, and more than doubled its revenue last year to nearly $100 million. That figure indicates a continued acceleration in growth of coconut-water sales because near the middle of that high-growth year, for the 52 weeks ended September 3rd, sales for the entire coconut-water segment in the U.S. were about $110 million — more than double the year-earlier figure of $54 million — according to SPINS, which provides sales data on nutritional and better-for-you foods.Continue reading...

When a person invests heavily in something, they generally are expecting to make their money back — and then some. But New York Yankees third baseman Alex Rodriguez seems to be working some new business angle that hasn’t been discovered before: investing in one product while endorsing its competitor.

Coconut water has been "the next big thing" for a while now, with ABC News and other trend-watchers picking up on the trend more than a year ago, as consumers started ditching their sports drinks and vitamin-infused water for a more "natural" thirst-quencher.

Rodriguez has been a longtime investor in coconut-water maker Zico. But Zico’s main competitor for the top spot in what CNBC calls a $200 million industry, Vita Coco, just announced that Rodriguez was endorsing their product, which brought in $0 million in 2010.Continue reading...