Coconut Water Draws Battle Line in the Cola Wars


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.[more]

Coconut also water looks to have staying power as one of the brightest stars in the better-for-you-beverage firmament. After several years of establishing awareness, Zico and competitor Vita Coco, as well as O.N.E. Enterprises, have built a critical mass of brand marketing and distribution networks that has enabled coconut-water sales to skyrocket over the last year or so.

Factors that have quickly broadened the appeal of coconut water include its discovery by the workout crowd as a great natural source of electrolytes such as potassium and magnesium, just like formulated sports drinks.

“That has really driven the increase in sales,” Kate Flores, COO of Market Connections Group, told brandchannel. Her company manages Amy & Brian’s, the leading brand of coconut water in better-for-you-only retailers such as Whole Foods Markets. “I can’t tell you how many [marketing] sponsorship requests I’ve gotten from athletes.”


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