In the last half century we have seen a substantial shift in our diets and the food and drink we consume. We exercise less, we eat convenience foods and the number of people with obesity has more than trebled. As a reaction to this, consumers are becoming more product savvy and critical of what they put in their bodies. This shift to healthier consumption is part of a ever growing ‘health and wellbeing’ consumer trend. It could be argued that this trend influenced McDonald’s to serve salads and introduced us to the ‘Superfood’ concept. In the last five years the beverage industry has seen the largest shift towards healthy consumption for almost a decade and a new category has emerged. This category is coconut water.

1. IDENTICA
INSIGHT
COCONUTTY ABOUT WATER
Guest Edition Issue 9
Michael Nash, Associate Creative Director

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COCONUTTY ABOUT WATER
COCONUTTY
ABOUT WATER
In the last half century we have seen a
substantial shift in our diets and the food
and drink we consume. We exercise less, we
eat convenience foods and the number of
people with obesity has more than trebled.
As a reaction to this, consumers are
becoming more product savvy and critical
of what they put in their bodies. This shift
to healthier consumption is part of a ever
growing ‘health and wellbeing’ consumer
trend. It could be argued that this trend
influenced McDonald’s to serve salads and
introduced us to the ‘Superfood’ concept.
In the last five years the beverage industry
has seen the largest shift towards healthy
consumption for almost a decade and a
new category has emerged.
This category is coconut water.

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THE CATEGORY
We can probably quite confidently say
coconut water is more than a splash in the
ocean. It is currently the biggest movement
in the beverage category since Innocent
gave us the smoothie and no other FMCG
product is growing as rapidly in the UK or
the US.
Coconut water isn’t new. It has long been
consumed in South America, Asia and the
Pacific. For those of you that have visited
any of these regions, you will have fond
memories of street vendors carving the top
off a green coconut and offering the cool
refreshing liquid in its nature-made cup
garnished with a straw.
The category as we know it was born in
2009 in the US and 2010 in the UK where
there were only a few brands available
from specialist natural food stores. By the
beginning of 2012 the amount of brands
available had increased to 36 in the UK
and US combined. As demand grew so did
distribution and availability with many
supermarket chains and high street
retailers stocking products.
Coconut water brand
launches grew in the
UK and US from
7 to 36
between 2009 to 2011

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MARKET LEADERS
Vita Coco is the brand credited with
creating the category, much the same way
Red Bull created the energy drink category.
They were and still are the market leader
in the UK and US. Vita Coco must have hit
the nail on the head in quenching the
consumer’s thirst for something new and
healthy because by the end of 2011 they
had 96% market share. Last year, Vita
Coco reported an impressive 168% increase
in UK sales.
1
Over the last year or two the category has
quite literally exploded with the UK
market tipped to being worth £100m by
2014 [The Grocer] and the US market
already valued at $350m at the end of
2011. European ($65m value 2011) retail
sales increased by 100% in 2011-12 and
the prediction for 2012-13 is even higher.
With this rapid growth, comes saturation.
Many new brands have joined the game
with larger competitors such as Coca
Cola’s Zico and PepsiCo’s O.N.E. muscling
in for a go at the coconut shy.
2
3
£100M
UK coconut industry
worth by 2014
1. Ira Liran and
Michael Kirban,
creators of the
Vita Coco brand and
coconut water category.
2. Coca Cola’s, Zico
3. PepsiCo’s, O.N.E.

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WHO’S DRINKING IT?
80% of coconut water is consumed by
females. The biggest group being women
that are 25 to 30 years of age.
Affluent, middle classed, health conscious
Westerners who can afford to buy fresh,
organic produce and superfoods.
Athletes and sports persons who want to
increase their metabolism, rehydrate after
exercise and replenish natural energy
levels.
The health conscious who drink coconut
water for its zero fat levels, low cholesterol
and low calorie benefits.
Twenty-something trend setters that are
looking for ‘the in thing’.
People from the Tropics or those whose
heritage originates from the Tropics. They
may be aware of some of the health benefits
that coconut water has but generally from
nostalgia.

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WHY HAS IT
BECOME SO POPULAR?
It’s healthy. Coconut water has natural
hydrating qualities, great nutritional
benefits and it also tastes pretty good. It is
a great source of nutrients, calcium and
magnesium, and it has the same amount of
heart healthy potassium as a banana or a
glass of orange juice.
Across the more developed markets, for the
last 10 years there has been a growing
consumer trend for products that are
natural and organic. So adoption from
consumers can be explained simply by their
demand for products that are healthier.
As populations age rapidly with the
echo-boomers (the largest consumer
segment) moving into their forties there is
ever growing awareness of health, fitness
and a balanced life style. It is estimated
that 45% of men and 33% of women in the
UK will be clinically obese within the next
few years, this data is also reflected across
Europe and more prevalently in the US.

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WHY HAS IT
BECOME SO POPULAR?
Another reason for coconut water’s
popularity could be attributed to celebrity
endorsements. Nothing seems to reassure
consumers that something is good, than
their favorite A-listers from the glossy
pages of Hello being caught on camera
slugging a Tetra-Pak of the product.
Celebrities tie-ups are common place
throughout the category with the leading
brands dishing out large sums of cash to
sign up the likes of Rihanna to an
advertising and social media deal.
Celebrities are also showing an interest in
coconut water as an investment
opportunity, for example, Madonna is
rumoured to have invested $5m into Vita
Coco in the US.
And last but by no means least. It’s exotic.
Consumers buy into the natural health
benefits of coconut water but, at the same
time, they also acquire a little piece of
magic with it.
1
1. Pop superstar
Rihanna is Vita Coco’s
primary embassador

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THE VISUAL CODES
In design terms the category is still very
young. Category colour codes are emerging,
sky blues, vibrant and natural greens,
white and brown are common throughout
the category’s packaging. Most brands have
a tropical feel and use design cues that
express optimism and vitality.
Many brands are trying to find distinction
through their pack format by using unique
shapes or substrates. The majority adopt
either a can, plastic bottle or tetra-pak.
Very few offer their product in a glass
bottle, probably because of the negative
environmental perceptions of glass.
Because the category’s visual codes are
only just emerging we are yet to see a
brand break the rules, although it probably
won’t be long before we see a brand in a
black pack!

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GLOBAL IMPACT
With ever increasing consumption of
coconut water in the developed world
comes more concern about the
environmental impact of the product.
Coconuts don’t naturally grow in the UK,
Europe and North America, which are the
markets in which the product is rapidly
becoming more popular.
Can the world sustain the environmental
cost of transporting coconut water across
the globe and are the people who farm
coconuts being paid fairly?
The coconut water boom promises little in
the way of improved livelihoods for the
farmers, many of whom grow and harvest
their own coconuts on small to medium
smallholder plantations.

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THE FUTURE
So what does the future hold? Well, we will
hang our hat on saying the market will
grow. Over the next few years we’ll see an
influx of more brands into the category,
some will be niche and some brought to us
from the larger manufacturers. The biggest
challenge will be for brands to define their
point of difference.
Consumers buy the product for its natural
qualities so why not offer them that little
bit more? Fairtrade and organic brands do
already exist in the category but they are
still very niche.
We predict there will be even more focus on
education within the category. Much the
same way we, as consumers, were informed
of the superior quality of non-concentrated
juice. Vita Coco quite proudly place a
‘never from concentrate’ line on the front of
their packaging, probably as a reaction to
the aggressive marketing and rapid growth
of Coca Cola’s Zico, which is manufactured
from a concentrate.

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THE FUTURE
There will be even more flavours.
Consumers want innovation and will look
to their trusted brands to offer them choice.
Coconut water has an acquired taste and
not everyone will like it. Flavours can be
used to mask the taste of the water and
make the product even more accessible.
We believe truly natural sports hydration
brands will start to appear. We know that
professional athletes are consuming coconut
water and there are scientific studies that
suggest coconut water is better than the
sugary isotonic drinks on the market at the
moment. A brand of coconut water could
potentially take on Gatorade and Lucozade.
Coconut water could become more occasion
orientated. Premium products could
replace bottled water at the dining table in
restaurants and cafés. We may even see a
carbonated version of the product sit along
side the still version.
And we are likely to see new smoothie and
milkshake brands that replace the base
liquid of juice or milk with coconut water.

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THANK YOU
TO FIND OUT MORE: Call +44 (0)20 3451 9700,
or email Leah Williams leah.williams@identica.com