Touted as “nature’s sports drink”, coconut water rose to popularity about 10 years ago and has now become a staple in grocery stores and households.
Vita Coco, widely viewed as the leading coconut water brand, started in 2004 in New York. Since then, the brand has grown into a household name, backed by celebrities and recently announced plans for going public with an estimated IPO of over $2 billion, according to Bloomberg (June 16).
While there was a slight decline in the U.S. coconut water market in 2020, a Technavio report stated that the U.S. coconut water market is anticipated to grow at a compound annual growth rate (CAGR) of approximately 22% from 2021-2025.
Key Factors Impacting Growth
Coconut water, of course, is the clear liquid inside a young coconut and is a low-sugar beverage when compared to other fruit juices. It also naturally contains essential vitamins and minerals, such as potassium, calcium, magnesium, and vitamin C.
Due to such properties, coconut water has gained a powerful health halo, and much of its growth is driven by the global wellness market that’s already worth more than $1.5 trillion and is set to grow by 5 to 10% annually according to McKinsey & Co.
The rise of obesity and increased trend towards natural, whole foods is another key factor triggering the growth of functional beverages from natural sources (such as coconut water), because customers are looking for healthier alternatives.
Competition in the Market
In 2020, Coco Vita dominated with 60% of the coconut water market share, according to Inc., but more and more competition is entering the market. Some of the other players include:
- Pepsico (O.N.E)
- Zico Rising
- Taste Nirvana
- C2O Pure Coconut Water
- Green Coco Europe
Along with pure coconut water, companies have experimented with adding different fruit flavors, carbonation, or adding protein. For example, at the beginning of the year, Coco Vita debuted Vita Coco Boosted, which is a caffeinated coconut water drink with B-vitamins and a dash of coconut cream.
Innovations and differentiating through selling format or price point will likely be key to entering this market that has a clear leader.