Vita Coco recently announced a US distribution agreement to have Dr Pepper Snapple Group unload Vita Coco from their delivery trucks. This comes after O.N.E. (One Natural Experience) has partnered up with Pepsi and Zico has partnered up with Coca-Cola last year. Now the three bigger coconut water companies are aligned with one beverage company each.
Coconut water has seen explosive growth in the last 5 years, as it grew in popularity due to its natural health benefits. Coconut water contains the same amount of electrolyte balance as human blood, and also contains the sugars and vitamins that athletes needs to replenish themselves after strenuous activity. By positioning the beverage as a healthy beverage alternative to isotonic beverages, it has carved out a significant following among consumers.
Their growth was fairly limited to specialty supermarkets and high-end grocery stores because of the weaker distribution network. Now that each major player has the backing of a major beverage company, it is likely to see significant increases in availability as it becomes mainstream. However, it remains to be seen how much resources are dedicated to this new emerging category – and this may change the overall beverage landscape. Both Coca-Cola and Pepsi have key players in their portfolio for this category, and both have more resource they can allocate. Though growth is significant, the majority of each beverage company’s sales are still generated by CSDs (carbonated soft drinks) and not all of them would want to throw support to back this category. At the moment, Vita Coco (partnered with No 3 beverage distributor Dr Pepper Snapple Group) holds majority market share in the United States for coconut water sales. With the distributive muscle and support of a major beverage company, each coconut water brand has potential to grow and increase their reach in the United States, as well as Canada and other areas of the world.
Coconut water is already making an impact in the Canadian market. But in the next few months and years, there can be much more growth for them when the beverage manufacturers figure out how to take advantage of this partnership. Keep an eye out for these players!