Cracking open the coconut water market

Marcella Bidinost
March 8, 2012
The Age

Much like its natural packaging, the Australian market for coconut water is young, green and ripening with potential. But who knows if it will be a tough nut to crack?

Flash back to a year ago: had you even heard of coconut water, let alone tried it? Not coconut milk or cream (think curries for those), but coconut water, the health-laden juice of young green coconuts, which Latin Americans and Asians have been selling from roadsides, poking holes in and swigging on for years.

Following a US trend, Australian marketeers would have us think that lugging home and cracking coconuts is way too cumbersome. Peer a little closer at your local retailer’s shelves and you’ll notice coconut water is being packaged and placed in increasing clusters on supermarket shelves. In the past year, around 15 brands have hit the Australian market.

C Coconut Water.

The trend comes hot on the heels of the recent upsurge of coconut water sales in the US, where slimmers, sports nuts and superstars are riding its health craze wave. While entrepreneurs have also scrambled to release new entries in other once obscure drink categories like chia, aloe and kombucha, coconut water has cracked the market.

Selling more coconut water than milk

“In some New York convenience stores, they’re selling more coconut water than milk,” says Adam Abrams, founder of C Coconut Water, Australia’s newest addition to the coconut water scene.

Last year, Vita Coco, the biggest-selling coconut water brand in the US, won BevNET’s top product and marketing awards – pitting it above all other soft drinks, juices, flavoured milks, sports and energy drinks. Granted, Vita Coco mixed chocolate with coconut water to scoop best product and drew on recording artist Rihanna for general coconut water endorsement, but also managed to rake in $US40 million in sales while they were at it.

Star investors

With big-name investors Madonna, Matthew McConaughey and Demi Moore, Vita Coco controls 60 per cent of America’s $US350 million coconut water market (still a tiny player in the $US115 billion North American market) and is on track to more than double profits this year.

In the US, Vita Coco is up against coconut water brands backed by Coca Cola and PepsiCo; meanwhile in Australia, Schweppes is the biggest drinks company behind a coconut water label following last year’s launch of its Kokomo brand. The second biggest name is Nudie, followed by a bunch of smaller businesses giving the new drink a go.

On creating the Kokomo brand, Marshall Ward, managing director of design agency Blue Marlin, said: “Our challenge was to create a new category that excites and captivates a jaded, over-marketed, well-travelled, worldly consumer who in all likelihood has no frame of reference for a product of this type.”

Year of the coconut

Coconut water has been lingering largely unnoticed and unmarketed in Asian grocery fridges for years, but you could pretty much call 2011 Australia’s ‘year of coconut water, gone retail’.

While it’s too early to put a value on Australia’s burgeoning market, a coconut water Australia review site has landed, claiming to be publishing independent reviews and stockists for the drink.

Since launching in September, C Coconut Water has sold 300,000 units, across almost 1000 outlets. Founder Adam Abrams says being among the new breed is exciting. “We just received our first orders from South Africa, Japan and Hong Kong and we’re adding between five and 10 new customers a day.”

Abrams runs C Coconut Water with beverage expert Zac Jex and Julian Tobias, Abrams’ co-owner in Sydney’s TheClub nightclub and The Island event space on Sydney Harbour.

Global search

The trio, all in their early 30s, spent the past two years travelling on and off around the globe to find the best-tasting coconuts. They discovered Mexico, India and Indonesia’s were too salty while the Thai ones were too sweet. But the coconuts from the Mindanao island group in the Philippines were spot-on. After covering product and packaging costs, the C Coconut Water team donates seedlings for new plantations in the Philippines to local farmers and money to a local orphanage.

In Australia, a few links between coconut water and nightclubs have emerged. First, the product is hailed for its hydration value and is chock-full of electrolytes, calcium, potassium and magnesium – all stellar elements of a hangover cure. And last year Sydney nightclub owners Dave and Adam Freeman also released a coconut water brand, H2Coco, backed by radio and TV personality Kyle Sandilands. H2Coco launched just months before C Coconut Water last year and, like C Coconut Water and Kokomo, also sources the beverage from the Philippines.

Packaging the product

“When we first had the idea of launching a coconut water into Australia, no one else seemed to be on the market,” Abrams says. “We could have rushed and been among the first to market in a can, but it was really important that we wait and get our packaging right.”

The trio opted for Tetra Pak packaging over a can or clear bottle to maintain freshness, lengthen shelf life to 12 months and prevent oxidisation, which occurs when the water is exposed to light. Another aim was to package the coconut water at the source.
“There are plenty of coconuts around the world but a lot of the major companies have already sewn up supply of the world’s packaging machines,” Abrams says. “Most other brands ship their products for packaging elsewhere, but we wanted to package at the source, to avoid the need for pasteurising the coconut water before transporting it.”

Fad or forever?

While no one knows if coconut water is a fad or forever, Abrams and his team are chuffed to have brought a consumer product to market.

“It’s strange to have an idea to create a consumer product, come up with the brand, watch it packed for the first time and ultimately to be in a restaurant or café and watch someone drinking it. It’s a good feeling,” he says.

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