Scanning the news headlines the past few days, I found an interesting article saying that ZICO will be the only coconut water sold in Target stores (link here). This has interesting implications for the natural health beverage in Canada for the coming years, as last month the news reported that Target will be entering Canada by taking over Zellers locations. With roughly 1,700 US locations and 200 future Canadian locations, Target will make a strong impact for ZICO as well as many other products.
What’s also interesting is that ZICO is part of Coca-Cola’s portfolio of products through an investment deal. Coca-Cola has a business unit that searches for emerging drinks and invests these beverages. They pour financing into them and further develop the beverage through a separate distribution network, until it gains critical mass and warrant distribution off of their own distribution network. Currently, ZICO coconut water is not delivered off of their trucks, but with the beverage’s acceptance into Target critical mass may have been achieved and warrant retailer distribution through Coca-Cola’s delivery trucks.
Though mainly in the United States for now, once Target enters Canada I’d expect the product offerings that Target has in the U.S. would be carried north of the border as well. The question then becomes how the other two main players Vita Coco (owned by Dr. Pepper Snapple Group) and O.N.E. (owned by PepsiCo) would react to this news. If there is no exclusivity agreement with Target, will the other two companies seek to gain distribution through the retailer as well? If there is exclusivity, will these coconut water companies then seek a partnership agreement with other retailers (Whole Foods, Loblaws, etc) as their sole provider for coconut water?