Vita Coco water.
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For nearly two decades, Long live Coco has been selling coconut water to health-conscious consumers as a fresh way to hydrate. This year, change the pitch.
The beverage company is pushing its name brand into new use cases and events, collaborating Diageo in canned cocktails and marketing the drink as a hangover aid.
Co-founder Mike Kirban compared Vita Coco’s transformation to Ocean Spray, an agricultural cooperative that sells cranberry products.
“Ocean Spray is a brand four times its size, all based on one ingredient,” the company’s chief executive told CNBC. “And we need to be bigger than Ocean Spray quickly, because I think coconuts are cooler than cranberries.”
Founded in 2004, Vita Coco started as a coconut water brand but has since expanded into other beverage categories, such as energy drinks and water. Its name brand still accounts for three-quarters of the company’s revenue, which reached $335.8 million in the first nine months of 2022.
The company goes public in October 2021, before the market for initial public offerings dries up as inflation, the war in Ukraine and economic uncertainty drive investors away.
Vita Coco’s stock is up less than 1% since its IPO, but it’s outperforming many other consumer companies that have gone public at the same time, such as Sweet green and All the birds.
In May, Kirban transitioned from co-CEO in the company to his current role, leaving Boston beer veteran Martin Roper is the sole executive – another step in the evolution of Vita Coco.
lose Coke and Pepsi, gain Vita Coco
Just a month before Vita Coco’s IPO, both Coca Cola and PepsiCo coconut water out. Coke sold Zico back to its founders as it slimmed down its portfolio, and Pepsi offloaded ONE as part of a $3.3 billion sale of its juice business.
Despite the beverage giant’s size, it can’t compete with Vita Coco, which is credited with bringing coconut water to the US and still has 50% of the market, excluding its private label business.
The exit from the segment opens new distribution avenues for Vita Coca. While Coke and Pepsi were in the coconut water business, contracts with venues ranging from stadiums to campuses closed Vita Coco.
With the momentum of new growth opportunities, Vita Coco is now pushing into bars and restaurants. Step one of the plan is to collaborate with Diageo for three canned cocktails mixing Captain Morgan rum and Vita Coco coconut water: mojito, piña colada and strawberry daiquiri.
“If you go to Brazil or Southeast Asia, coconut water mixed with cocktails,” says Kirban. “The idea is to start making regular consumers drink coconut water cocktails ready to drink with the Diageo partnership.”
Kirban said Vita Coco will partner with spirits companies for expansion plans in a wider space, but declined to name the partners.
In recent years, alcohol and non-alcoholic beverage companies have partnered, relying on each other’s brand equity and expertise to gain what they call “share of throat.” For example, Captain Morgan was able to introduce itself to Vita Coco’s younger health-conscious consumers, while Vita Coco benefited from rum’s mass market appeal.
The morning after
Vita Coco also has a reputation as a hangover “cure”.
Since the end of 2019, the brand has used New Year’s Day as a way to set up hangover recovery kits and subscriptions featuring products in collaboration with Postmates, Lyft and Reef Kitchens.
This year in partnership with DoorDash to promote the Saturday morning after the Super Bowl.
The marketing strategy is a reversal, after years of denying the association.
“With our council, there’s always a discussion,” Kirban said. “When you talk about marketing, do we want to talk about hangovers? Is that OK for us to talk about?”
And it doesn’t end there. After the hangover subsides, Vita Coco wants to be non-dairy milk in your coffee.
In late January, the brand announced a partnership with Alfred Coffee, a high-end chain with locations in California and Texas, to create non-dairy coconut milk for baristas to use.
Vita Coco plans to expand products designed specifically for coffee – separate from the coconut milk sold in supermarkets nationwide – to other coffee shops and eventually to store shelves.