Coconut Water – the next big trend and billion dollar market in soft drinks.
Coconut water is one of the fastest growing beverage categories in the US and UK (estimated to reach $1bn soon) due to its natural hydrating qualities, great taste and nutritional benefits, not to mention the large number of celebrities (from film to music to sports) endorsing it.
We’re all aware of the sentiment behind ‘you are what you eat’ but increasingly consumers are concerned with the concept of ‘you are what you drink’. With a growing awareness of health issues most of us are thinking twice about what we put into our bodies, be it food or drink, and that’s now big business.
It is a great source of nutrients, contains calcium and magnesium, and the same amount of heart healthy potassium as a banana or a glass of orange juice. And that’s just a few of its ‘superdrink’ claims.
With a mass appeal to ethical and health conscious consumers and those leading an activity lifestyle, and some are predicting it could overtake the sales of orange juice (as has already happened in Brazil) it’s no wonder big brands like Pepsi & Coke are getting in on the act.
There are now 250 companies that have a beverage with some form of coconut water in it
Coconut water and the UK market.
The UK coconut water category has exploded in the last few years and is widely being tipped as the next big thing in the drinks category and estimated to be worth £100m by 2014 [The Grocer July ’11] and is already worth over $350 in the US.
There are now over 20 brands in the UK market (see chart at end), many small but also some significant players too.
The leading brand in the UK (and world) is Vita Coco, launched here in 2010, with sales of £8.5m in 2011 and 96% of the market. Sales between 2011-2012 have risen by 168%, and are rising still. It’s stocked in most supermarkets and health food shops.
Vita Coco is the market leader (in US and UK) and was originally founded in the US (it sources coconut water from Brazil and Asia). It is credited with creating the market (in the same fashion as what Red Bull did for energy drinks, Snapple for cold tea and Innocent did for smoothies).
The recent explosion of the coconut water category can be explained relatively simply; it meets growing consumer demands for natural, healthy products. There is a growing awareness of health & fitness issues, even though obesity is on the rise across Europe and the US – it is estimated that 45% of men and 33% of women in the UK will be obese within the next few years.
While some people manage their weight, others “offset”. Offsetting is really a token gesture, even if swapping a full fat coke for a low calorie one is a step forward, it’ll take more than a can of coconut water a day to stay healthy.
Back in 2010, there were only a handful of coconut water brands gracing the shelves of specialist food stores, but by 2012 over 20 coconut water brands have emerged, all vying for space within this rapidly growing and seemingly lucrative category. In terms of scalability, the coconut water market is huge.
“We’re seeing compelling data across all channels demonstrating the mainstream appeal of Vita Coco. In natural & health specialists, Vita Coco is their No.1 packaged drink of any non-alcoholic drinks including any water or cola brand. One of the leading supermarkets where Vita Coco 330ml pure is national distributed in all stores, Vita Coco, whether absolute revenue, units, unit or value rate of sale, is the No.2 branded Impulse line in chilled Juice & Smoothies, ahead of all other branded line apart from Tropicana orange Juice 330ml (last year for 7 weeks was ahead of Tropicana orange juice 330ml!). 1 litre is enjoying equal success and we’ve just seen two major supermarkets extend us from 200 stores to over 650 stores,’” commented Vita Coco Europe Chief Executive, Giles Brook.
With leading retailers such as Waitrose and Tesco clamouring to stock coconut water, the market is set to expand. The real battle though will be between the brands for market share.
Nothing seems to get the public following a trend faster than celebrities adopting it. From fashion to food fads and diets, eco cars (like the Prius) to technology, a hungry press soon give the habits of the rich and famous extensive coverage and rockets products and brands into mass purchases.
Celebrities including Madonna, Teri Hatcher, Audrina Partridge, Courteney Cox, Rihanna, Jessica Simpson, Demi Moore, Chris Pine, Ed Westwick, Karolina Kurkova, Anna Lynne McCord, Lady GaGa, Stephen Moyer, Anna Paquin & Vampire Bill (Vampire Diaries) have all been spotted drinking coconut water (mainly Vita Coco) with the likes of Madonna (who invested into Vita Coco in the US). Not to mention many musicians, DJs, actors and sports stars.
There are however, five distinct key consumer groups, which are most likely to consume or purchase coconut water:
• Affluent, middle classed, health conscious Westerners who can afford to buy fresh, organic produce and superfoods.
• The energy drinks market; athletes who believe that coconut water can increase metabolism, rehydrate the body, replenish natural energy levels at a much faster rate as well as help prevent cramping after exercise.
• The health conscious who seek coconut water for its zero fat, low cholesterol and low calorie benefits and sweet taste.
• The ‘fad followers’; who will purchase coconut water because it’s ‘the in thing’, however that is not to say they are not a key cog in the consumer wheel but their interest is often fleeting and should not be overestimated. They see this product as a lifestyle choice and accessory.
• Traditionalists; people from the Tropics or those whose heritage originates from the Tropics. Coconut water is an everyday part of their diet, while they may be aware of some of the health benefits the coconut may or may not contain this is not their primary reason for consuming but is more of a by-product.
• Women are the main drinks, estimated to be up to 80%. 25-29 are the main age group.
The next stage – ethical claims
As if there are not enough health claims, some brands are now adding the ethical touch. ‘Organic’ and ‘Fairtrade’ coconut waters are the next spin. ‘Not from concentrate’ is also appearing, as some brands like ZICO use concentrates. ‘No added sugar’, though few actually do, but nothing beats claiming purity. Packaging is also playing a part with various claims about recycling and sourcing of materials, though it’s uncertain if this really makes much of a difference to the majority of consumers (consumers pay a lot more lip service to ethics than actually acting on it). The leading brand that claims high ethics is O.N.E.
There has also been a growth in diversity of favourings with many brands now adding flavours such as lime, pineapple, mango, guava, pomegranate and even chocolate.
Soft drinks and health
With government pressure, directed at food & drink producers, retailers and the general public increasing, it is driving growth in healthy products across most food and drink areas.
The drinks industry is also facing another problem – rising sugar prices which are forcing many brands to look at the option of artificial sweeteners meanings, we are likely to see more ‘lite’ options in the marketplace.
Moving forward, the major players in the coconut water industry will need to concentrate on consolidating growth and defending their share of the market against other brands entering the market and own label brands.
Rockstar energy drinks has already launched a coconut water, it’s inevitable that other drinks brands will play off their brand strengths and do so too. Maybe Innocent next?
Now the market is established we will more than likely see a battle of the brands to own the biggest slice of the market. Big drink brands like Coca-Cola see it as a growth market so we can expect some big spends on TV. PR, celebrity endorsements and social media can only go so far but it is the might of TV that will secure brand dominance and retail confidence.
Celebrity endorsements from the likes of Madonna, Anthony Kiedis and Rihanna (above) have bought Vita Coco to the forefront of youth demographic. Both Madonna and Anthony Kiedis (Red Hot Chilli Peppers) are investors in the Vita Coco brand with Rihanna becoming the face and spokesperson in May 2011. A national marketing campaign ran across print, television, billboards and social media (Facebook) as well as being featured on Rihanna’s website.
While celebrities certainly help sell, not everyone is using film, TV and pop stars.
ZICO on the other hand is chasing the sports energy market and uses celebrity athletes heavily in its marketing and advertising, from NBA pro Kevin Garnett to wrestler Jacob Clark and US Paralympics wheelchair competitor Joshua George, Bryan Clay, reigning decathlon gold medalist and “World’s Greatest Athlete” title holder In the US. The NFL Players Association are also working in partnership with ZICO to give them status as ‘the official coconut water of professional football players’.
This is a big potential market and one some predict is here to stay. As mentioned, it could eclipse the orange juice market and steal sales from bottled water, plus many other soft drink options.
At present most marketing is using celebrities – it’s cheaper and in some case the celebs get paid later on results – but I expect this market to get a lot more competitive and the marketing more sophisticated with more emphasis on brand with some big advertising campaigns yet to come (Vita Coco have already launched a campaign).
To read more and see more data go to TRENDS & THINGS http://wp.me/p2vjoj-1