At the ICR conference last week, co-founder Michael Kirban and CEO Martin Roper sat down to discuss the evolution of Vita Coco from startup to publicly traded company, sharing with the audience its vision for the future, and the brand’s hope to make coconut water a household essential.
Coconut water category takes root in the US
While Vita Coco has grown to become a widely known brand, Kirban reminded people just how far the category and the Vita Coco brand have come in the US.
"Throughout the tropical world, coconut water is just one of the highest consumed beverages. I mean ... household penetration is north of 50% in many of these large tropical countries, and it didn't exist in the US."
But over the last couple of decades, coconut water has become more of a household staple in the US, and "it's something consumers use in all different parts of their day" from a morning beverage to a post-workout drink, Kirban said.
But while we’ve seen more coconut water today, Kirban believes we’re just getting started, and in the future, we’ll see coconut water in more places and homes. "You will start to see like you do in Brazil ... coconut water in everybody's home," he said.
Expanding Vita Coco’s product line, tapping the food service market
To help support Vita Coco’s growing business, Roper joined the company in 2019 as the president and was appointed CEO in 2022, Kirban said. Part of Vita Coco’s growth strategy will be to tap into categories that the brand hasn't competed in and find new occasions for consumers to use coconut water in ways they might not have previously considered, the two executives shared.
When it comes to finding new areas of opportunities to grow in the grocery store, Roper noted that Vita Coco didn't have a canned offering until last year, and "a juiced product is designed to go after that segment of the category." To this end, the brand released a juice product in an Original with Pulp or Mango versions in June of last year. Elsewhere in the grocery store, Vita Coco doesn't "currently play in the ... cold section of the store," which can be an opportunity for the brand, he added.
Outside grocery stores, Roper also sees an opportunity in the foodservice space, which "Coke and Pepsi sort of monopolized." However, as Roper pointed out, Coca Cola and PepsiCo have divested their coconut water brands, so Vita Coco "has opportunities to open that up as well."
Another area where Vita Coco has seen growth is in its private label business. While noting “private label hasn't been growing as fast as branded,” Vita Coco "made a decision to participate" in the private label space and expects to see this area grow, as the broader private labeled coconut water space grows. Given its relationships with coconut factories in Asia, "it was logical that we would ... compete for that private label business," which gives the brand the benefit of scale.
Coconut water mixes it up
In terms of new occasions and uses, Kirban sees an opportunity for coconut water to be used as a cocktail mixer.
"Coconut water as a mixer with cocktails is quite prevalent throughout the countries where coconut has grown... We've really worked hard to get consumers in America [to put] coconut water in their smoothies and after-workout occasions. This is a whole new occasion that we haven't focused on yet."
One way Vita Coco has worked to expand in the overall alcohol space is with a partnership with alcohol brand Diago last year on Vita Coco Spiked with Captain Morgan, which will launch soon in Pina Colada, Strawberry Daiquiri, and Lime Mojito flavors. This represents "a whole new distribution opportunity for the core brand," Kirban added.
Making the Ocean Spray comparison
Beyond individual product types and uses of coconut water, Vita Coco has also started to offer its product in different sizes and formats to boost household penetration, Kirban shared. In sharing what he hopes to do with the brand, he turned to another section of the beverage aisle and a different category leader — Ocean Spray.
"You see this massive shelf space of Ocean Spray. It's a very similar story, right?” Kirban said. “They've taken a specific fruit, the cranberry, ... and they have built a business that is four times our size off of the Ocean Spray business."
One way Ocean Spray has been able to build its business is through distribution, which equates to more people drinking the product. To address this difference in distribution, Vita Coco has started to offer 12-packs, multi-packs, and coconut waters in a variety of formats and sizes.