How coconut water became the 'it' drink

Yahoo Finance

Coconut water has become the latest trendy drink in the global beverage market. Sales of the nutty-tasting drink reached nearly $400 million in 2013 according to Euromonitor and will come close to $1 billion this year, says Michael Kirban, co-founder of Vita CoCo, the top-selling coconut water brand in the U.S.

Vita Coco controls 40% of the coconut market worldwide and is rapidly expanding. This week the New York-based company sold 25% of its business to China’s Reignwood Group — the parent company of Red Bull China — a deal that values the coconut water purveyor at $665 million. Vita Coco will also be entering the Australian and New Zealand retail markets this year and has an enviable footprint in Europe. Sales in London outpace demand in New York and volume per store in Holland “is greater than anywhere else in the world,” notes Kirban. He vehemently rejects the idea that demand for coconut water could fade as quickly as it arrived on store shelves.

Coconut water has been consumed "in every tropical country in the world for generations,” he tells Yahoo Finance. “We are the best positioned to own the category.”

Coconut water’s popularity with consumers has a lot to do with its nutritional perks: it has more potassium than a banana per serving and is “loaded” with electrolytes, says Kirban. Athletes are often seen guzzling the drink after games or races because it has fewer calories and less sodium than traditional sports drinks (water also provides lots of hydration and is calorie-free).

Vita CoCo’s coconuts are sourced in five counties — Brazil, Malaysia, the Philippines, Indonesia, Sri Lanka and Mexico — and the company operates eight processing plants in these locations. One 16-ounce container of Vita CoCo contains a little more than one coconut; Vita CoCo cracks 1.5 million a day during production.

Vita CoCo will unveil its latest product before the end of the month: coconut oil. It will be sold in the cooking aisle of the grocery store, next to the olive and canola oils.

Beverage giants Coca-Cola Co. (KO) and PepsiCo (PEP) have also entered the competitive coconut water market. Last November Coca-Cola acquired Zico, the No. 2 coconut water brand by sales in the U.S. PepsiCo bought a majority stake in O.N.E., the No. 3 brand, for an undisclosed sum in 2010, reports The Wall Street Journal.

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