For the past couple years, coconut water has made a steady run at being the next big thing in the sports hydration business. The pitch? All natural, rich in electrolytes and low in calories.
As yoga enthusiasts, spa goers and endurance athletes caught on, so too did the nation’s biggest beverage companies.
In 2009, Pepsi acquired Amacoco, Brazil’s largest coconut water company and late last year increased its investment in O.N.E., one of the three top selling brands in this country. Later this year, they’ll team up with GNC to do their own version called Phenom. Coca-Cola couldn’t sit on the sidelines either. They invested in coconut water brand Zico, which currently holds about a 30 percent share in the $200 million US market.
Other believers with deep pockets included Madonna, Matthew McConaghey and Demi Moore, who bought a share of Vita Coco, the third big player in the American beverage landscape.
If coconut water becomes the next big thing, it will happen in the next year as the marketplace, which has existed in the niche for roughly five years in this country, starts talking to the masses.
Knowing that’s the next big challenge, Zico has signed Boston Celtics power forward Kevin Garnett as an endorser in a deal that will pay him both cash and give him an undisclosed equity stake in the company.
“I’ve always been about bettering my body,” Garnett told CNBC. “I won’t call it magic, but it’s close. It’s light on the stomach since it has low acid and it allows me to play 34 minutes in a game with some of the young stars in the league without cramping.”
Some might be skeptical given that Garnett had a deal with Gatorade up until December, but the Celtics big man speaks like a true convert. In fact, he came to Zico, not the other way around.
Garnett says he has converted many teammates to the ritual, which involves him drinking one bottle after every massage, one bottle after practice and one bottle on ice after the game.
“I don’t mind being the face of the coconut water boom,” Garnett said. “There’s so many people who care more and more about what is going into their body and I can help grow that awareness.”
As brands like Zico go from shelves at Whole Foods to the shelves at Target, Safeway, Publix, Stop & Stop and Wegman’s, there’s one major challenge in its way: Taste.
Beverage insiders like Beverage Digest publisher John Sicher agree that the coconut water business might stay in the niche because “for many Americans, it’s very much an acquired taste.”
That’s one of the reasons why brands like Zico have added flavors to their “natural” variety including Pomberry, Passion Fruit, Mango and a soon to be added Chocolate flavor.
Zico CEO Mark Rampolla is well aware that the first sip might not seem ideal to the American palate and that’s why he wants to make sure you try his brand first. To draw your eyes in a supermarket, Zico is packaged in easy-to-drink bottles instead of the industry standard cardboard box or can.
He also says he wants influencers to be there when consumers take that first taste.
“We believe in face to face interaction,” Rampolla said. “We’re giving out 1.6 million samples at active events this year and we’ve aligned ourselves with influencers like trainers to help guide those interested in healthy lifestyles to try us out.”
Zico has the advantage of being one of the first movers into the business, but Rampolla knows he has to protect his turf.
He hasn’t just taken anyone’s money. Those who have a stake in his business also have experience in the beverage world including the founders of Nantucket Nectars, Honest Tea and a former president of Snapple. Rampolla has also locked up supply of his coconuts since like any crop they can affected with weather changes and more obviously increased demand.
The coconut water business has seen absurd growth in recent years. Zico, for example, has grown 150 percent each year for the last five years.
The biggest players in the marketplace aren’t taking any chances with the business. But those in know say that whether the standalone coconut water business explodes or starts leveling off we’ll likely know by the end of this year.
“Why drink something from guys who made it in a lab versus guys who are giving you a substance that mother nature has made,” Rampolla pitches.
It’s a fresh pitch on a drink that has been used for more than 4,000 years. Yet many Americans will take their first sip in the coming months.
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