In a revised S-1 filing you can read HERE, Vita Coco outlines plans to offer 11.5 million shares (under the symbol COCO) to the public at an expected $18-$21/share price range, 9 million of which will come from its current backers.
Keurig Dr. Pepper – its largest distributor-customer - plans to buy $20m of the available stock in a private placement from current shareholder Verlinvest, while up to 5% of IPO shares will be offered to customers of investing app Robinhood, said Vita Coco, which expects to have just under 55.5 million shares outstanding following its offering, which would value it at about $998.9m (at $18/share) to $1.2bn (at $21/share).
Net sales +17% to $334m in year to June 30, 2021
Founded in New York in 2004 by Ira Liran and Michael Kirban as a coconut water business, Vita Coco has since expanded into coconut oil and coconut milk, energy drinks (Runa), enhanced waters (Ever & Ever), protein-infused waters (PWR LIFT), and private label products, and is the market leader in the coconut water category in the US and the UK, with a presence in 20+ other countries including China, France, and Spain.
The firm - which reported net income of $23m on net sales up 17% YoY to $334m in the 12 months ended June 30, 2021 - experienced a 29% year-on-year growth spurt in US retail sales in the 13 weeks to September 5, according to IRI data, and is now looking to accelerate its growth via a public offering.
‘We won the coconut water wars…’
In a letter in the prospectus outlining his entrepreneurial journey and ambitions for the company, Kirban said Vita Coco had faced off some deep-pocketed competitors over the years, but had outgunned them all.
“In 2009, Coca-Cola and PepsiCo entered our category through acquisitions [ZICO* and O.N.E.]. Some feared that the strength of their distribution networks would lead to our demise. In fact, the opposite happened. We did what we have always done best: we out-hustled, out-innovated, and out-maneuvered the competition.
“We battled with everything we had. And we won what has been dubbed, ‘The Coconut Water Wars.’ Most importantly, we won because consumers loved our brand and stayed loyal to it.”
‘Most healthy hydration companies are small, private and just don’t have the scale to achieve their true potential’
He added: “Most healthy hydration companies are small, private and just don’t have the scale to achieve their true potential. We, on the other hand, have spent 17 years building one of the largest independently owned healthy hydration companies.
“Today’s global beverage market is controlled mainly by behemoths who generate most of their profits from products that are not necessarily healthy for people or the planet. 21st century consumers seek products and brands that are not only good for their bodies but better for society. Our values of aligning profit with purpose really resonates with our consumers.”
Coconut water in cans to launch in US next year
Kirban said he saw significant growth opportunities for the core Vita Coco brand through greater household penetration, and distribution gains, while he also plans to “create new healthy, functional beverages [in-house], and to acquire brands that fit with our values.”
The firm, which will introduce Vita Coco coconut juice in cans in the US next year, also aims to increase its penetration in convenience and foodservice channels, and build a direct-to-consumer e-commerce operation.
‘55% of our consumers are non-white’
Vita Coco “over-indexes to multi-cultural and younger consumers, and families,” claimed the company.
“55% of our consumers are non-white, with a large portion identifying as Asian or Hispanic, and 43% of our shoppers are Generation Z or Millennials, with 41% of our consumers having children at home. These are valuable shoppers who are more likely to seek natural and organic foods, prioritize healthy eating, stay up to date on health trends, care about the environment, and engage in an active lifestyle.”
Retailers, meanwhile, like Vita Coco’s brands, as they attract higher-value shoppers, claimed Vita Coco: “Shopper baskets with Vita Coco products are worth 22% more than the average water shopper’s basket over the six-month period ended July 25, 2021, according to Numerator.”
*Rival coconut water brand ZICO - which sparred with Vita Coco in the early days in New York - was sold to Coca-Cola in 2013, but was bought back by founder Mark Rampolla earlier this year via growth equity fund Powerplant Ventures after Coca-Cola announced it was focusing on top sellers and emerging brands with more 'global' potential.
- Read our Jan 2021 interview with Rampolla, who watched Vita Coco go from strength to strength over the years as ZICO failed to catch fire under Coca-Cola's umbrella: "I had come to terms with the fact that this was no longer my baby.”
- Click HERE to read our interview with Harmless Harvest CEO Ben Mand, who was speaking to FoodNavigator over the summer after DMV – Danone’s corporate venture arm – acquired a controlling stake in the coconut water brand.
‘Robust, globally diversified, protected, and scalable…’ The Vita Coco supply chain
Much of the prospectus focuses on Vita Coco’s “asset-lite” operating model (it sources coconuts from thousands of coconut farmers and contracts with 15 factories across 10 countries, but does not own any of them).
“As we do not own any of the coconut water factories that we work with, our supply chain is asset-lite, which combined with our scale, enables us to be flexible… Our supply chain has proven to be incredibly robust, globally diversified, protected, and scalable.”
Read the Vita Coco prospectus HERE.
According to SPINS data (MULO and natural enhanced channels) for the 52 weeks to May 16, 2021, US retail sales of refrigerated coconut water were up +10.97% year-on-year (compared with growth of +5.85% the previous year).
Sales of shelf-stable coconut water - a far larger market - were up 10.83% year-on-year (compared with a -3.4% decline the previous year).