Kona Deep dives into full US expansion with $5.5m investment backed by Danone

By Mary Ellen Shoup contact

- Last updated on GMT

Kona Deep desalinated ocean water will be available along the US East Coast in 2018.
Kona Deep desalinated ocean water will be available along the US East Coast in 2018.
Kona Deep has secured a $5.5m investment from Danone Manifesto Ventures, Grand Crossing Capital, and local Hawaiian investors: which the premium water brand will put towards expanding US distribution as well as ramping up consumer education and marketing efforts.

Kona Deep sources its mineral and electrolyte-rich ocean water off the coast of the Big Island of Hawaii through a pipe that extends 3,000 feet into the Pacific Ocean. The pipe was built by the state in 1974 as part of HOST Park (Hawaii Ocean Science and Technology Park), a site originally built to explore renewable and ocean-based technologies.

The water is desalinated and bottled “at the source” ​in Hawaii, retaining its natural-occurring minerals and electrolytes that aid in improved consumer hydration, the company said.

State of premium water space

The premium bottled water market has become much more crowded with new brands flooding the market with global demand increasing 6% per year. The market is projected to reach $8.83bn in value in the Americas by 2021, according to Technavio. But for Kona Deep, the company believes its point of differentiation lies in its functional, performance-based benefits.

“When you look at the premium water category most brands tend to fall into one of two categories: One is natural spring water from exotic places, and consumers are usually buying those,”​ Kona Deep CEO Patrick Turpin told BeverageDaily.

The second category within premium water is performance water, according to Turpin, which is where Kona Deep believes it has an edge over brands in the market due to its naturally occurring electrolytes .

“Most performance waters tend to not come from any kind of unique source and tend to be purified water with artificially-added electrolytes,” ​he said.  

A study by the University of Arizona found that when athletes drank Kona Deep, they were hydrated twice as fast compared to the leading sports drinks and spring water brands.

“Consumers don’t have to make a choice between purity and performance,” ​Turpin said.

Broadening brand exposure

Kona Deep expanded to the US mainland along the West Coast​ in Summer 2016 and recently launched in Chicago. With the $5.5m investment, the company and said it plans to be available on the East Coast in early 2018.

Danone is the world's second largest producer of packaged water in volume terms, with sales worth €4.6bn in 2016. Its top three brands are Aqua, Bonafont and evian. 

Danone Manifesto Ventures was launched in 2016 to invest in and support innovative F&B companies. It will take a minority stake in Kona Deep.

Other investments from Danone Manifesto Ventures includes Yooji and Michel et Augustin in France, and Farmer's Fridge and AccelFoods in the US.  

Turpin added that the company’s expansion plans include adding DSD distribution “where it makes sense”​ in addition to its presence in the specialty and natural channels.

Kona Deep will also use funding to increase marketing and consumer education efforts about the science-based performance health benefits of ocean water.

Sustainability

Kona Deep said it plans to leverage Danone’s existing sustainability initiatives, which includes producing at least 75% bio-based PET plastic at a commercial scale by 2020.

Turpin added that the brand is already focused on sustainability from a sourcing and shipping perspective.

“By using this deep ocean source we’re not taking from limited fresh water supply,”​ he said.

The water also goes through a less energy-intensive desalination process requiring just one pass in the reverse osmosis phase compared to the industry standard of five to six passes for ocean water.

Due to Hawaii’s geographic isolation located 2,400 miles from the coast of California, it tends to be an import-reliant market.

“You have more containers going into Hawaii than going out so that means a lot of those containers go back empty. We’re able to leverage those backhaul containers which has a lesser environment impact when going to the mainland,”​ Turpin added.

Related topics: Manufacturers, Beverage

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