Within ‘CoconutWater 2012: Innovation and Natural Health Benefits Drive a New Category’, author Julian Mellentin quoted SPINS market research data showing coconut water’s US sales success.
Propelled by the success of the VitaCoco brand, the US market is estimated to be worth $110m (€84.57m) in 2011, while the European market is worth $65m led by leading brand Green Coco.
Beyond the hype, the consumer appeal of coconut water was its “‘all-natural’ health benefit”, according to the report, with the beverage fitting a wider trend (that also affects food) towards ‘naturality’.
The beverage has long been consumed in Brazil, Asia and the Pacific, Mellentin said, where coconut water had the advantage that it could be packaged and sold without adding any ingredients.
‘Natural isotonic beverage’
Mellentin, a food and beverage industry analyst who is also the director of New Nutrition Business, told BeverageDaily.com: “In our industry we are all concerned because of pressure from consumers to deliver the foods and beverages that are as natural as possible.”
Since coconut water – sourced from green coconuts aged six months or less – was a product high in potassium, naturally sweet and low in calories, it fitted the bill, Mellentin added.
Unusually for a high-growth market, the coconut water category was created by entrepreneurial start-ups, he said, with Vita Coco holding a 62% US market share and major brands such as PepsiCo (despite its 50% stake in number two US brand ONE) yet to drive market direction.
Mellentin also noted that the UN Food and Agriculture Organisation (FAO) had described coconut water as a “natural isotonic beverage…the fluid of life”, and Mellentin added that the drink had independent scientific validation of its positive nutritional profile.
However, Mellentin said that it was only when Tetra Pak’s aseptic packaging innovations came to market that coconut water could be stored for long periods, and packaged without altering its naturalness.
“This technological change made the innovation possible, and made the market possible. But the growth is driven solely by consumers ‘enthusiasm for something which is natural,” he said.
Digging beneath the hype…
Given rapid growth in coconut water sales in recent years on the back of very little advertising (VitaCoco increased sales by 90% without any advertising) Mellentin suggested that coconut water was a trend that was here to stay.
“It’s not a fad because the number one trend on the food industry worldwide is naturality. That said, I find it hard to imagine this ever becoming a mass product, because we live in a world of niches,” Mellentin said.
Control of the supply chain was key to future growth in the segment, Mellentin explained, with principal coconut supplies sourced from Brazil, but shortages in Latin America that set brands back in 2010-11 forced them to look to Asia for alternative supplies.
Coconut water also held potential as a ‘health halo’ ingredient, Mellentin said, in combination with (for instance) fruit juice.
He said:“In these cases it is usually a minor percentage of the final product and it is there to provide a cool image and halo of health (in the same way that brands use blends of superfruits such as pomegranates and acai).
“Nestlé has even tried coconut water in combination with whey and fruit juice, a brand called Nesfluid, which was marketed unsuccessfully in France,” he added.