The New Coconut Water Fever

Sarah Kelzer Consumer Behavior Professor Klassen April 19, 2013

Introduction
The sentiment you are what you eat is no longer enough. Now, you are what you drink has become the modern saying and major concern. In the midst of a health-crazed nation, coconut water has surfaced, expanded and succeeded into becoming one of the fastest growing beverage categories in the world. Coconut water is not a new product. This liquid is a well-known drink that is consumed in the tropics and treated as a staple in their daily diet. However, to mainstream consumers in places such as the United States and Europe, coconut water is a new discovery offering excellent health benefits that have been tremendously capitalized on within the last eight years. Since the wellness trend, sugary soda sales have declined, and the beverage industry has been eager to adopt coconut water as a new alternative for healthier refreshment. Three major companies, Vita Coco, O.N.E. and ZICO, have launched coconut water products and marketed them as superdrinks towards affluent middle-class Westerners, the energy drinks market, health conscious consumers, fad followers and traditionalists. Consequently, coconut water companies have been working their way towards creating their own market segment to stake a claim in the rapidly rising in consumer popularity. Marketing coconut water and turning it into a well-known product around the world is far from an easy task. The following paper will look at and identify the background of coconut water, the target market, demographics, major players, marketing strategies and marketing tactics. Delving deeper, the paper will point out the emerging trends, market growth, challenges, pricing, distribution, and economic effects that producing coconut water encompasses.

Coconut Waters Background

While coconut water is presently seen as new and exciting on the shelves of the United States and Europe, it has actually been a part of the daily lifestyle for thousands of years in the Tropics. Coconuts are commonly seen on roadside stands with straws sticking straight through the fruit. Coconuts are staples in their diets, and the coconut tree is referred to as the Tree of Life because of its resourcefulness. Places such as Southeast Asia, the South Pacific, the Caribbean and South America drink coconut water because of the ease and accessibility. The coconut water is simply collected from young, green coconuts that have not yet matured. Since they grow near the sea, the roots are able to soak in a continuous supply of mineral rich sea salt. This plethora of natural vitamins and minerals has caused it to have quite the reputation of being used as both a food and as a medicine. For example, coconut water has long been held in high regard due to its ability to aid in dehydration and heatstroke. The amount of electrolytes plus its high mineral content are better at relieving dehydration and heatstroke than plain water or other fruit juices. Other beliefs about the powerful coconut water liquid in the tropics include preventing and relieving constipation, digestive disturbances, malnutrition, fatigue, boils, kidney stones, osteoporosis, urinary tract infections, sterility, dysentery, influenza, and cholera. To elaborate, cholera is known to have a high amount of death rates, and when using coconut water, survival rates jump to an astounding 97% (Fife, Bruce). Interestingly, coconut water is not new to the western world. Coconuts happen to be very versatile fruits, and in World War II coconut water was used for emergency plasma transfusions. Today, in remote regions of the world where medical technology is limited, coconut water is still being used for hydrating critically ill patients by connecting them to a coconut-water IV (Campbell-Falck, Darilyn, Tamara Thomas, Troy M Falck, Narco Tutuo, and Kathleen Clem).

Target Market and Demographics

Coconut water is seen as a healthy alternative to sports drinks since this smart alternative is filled with extra vitamins and minerals with lower sugar content. To be specific, coconut waters target market is the frequent exerciser and the health conscious between the ages of 25 and 29. Companies are working on expanding the market into a wider community. According to Caryn Coley & Chris Arnold, authors of Coconut Water: A growing new market in the UK, there are five individual coconut water consumer groups that have emerged: 1. Affluent, middle-classed, health conscious Westerners a. This consumer group tends to shop at high-end supermarkets for healthier foods. They are inclined to look for foods that display organic and natural on the label. Because of their income status, they are able to travel and experience more of the world. To the inexperienced palate, coconut water gives off a metallic taste. People who have traveled more tend to have a wider taste palate and end up enjoying the unique flavor. 2. The energy drinks market a. Athletes and frequent exercisers want a drink that is functional for the type of lifestyle they lead. Sports and energy drinks used to dominate this market, but coconut water has recently tapped into it. Coconut water has all of the ingredients athletes want, such as added potassium and electrolytes that support a strong postworkout. Therefore, coconut water is marketed as a natural sports drink. b. Furthermore, coconut water has less of unwanted ingredients, such as artificial sweeteners that energy and sports drinks are laced with. According to Mike Esterl, author of the Wall Street Journal article The Beverage War Moves to

Coconuts, A study of post-exercise rehydration carried out by the Universiti Sains Malaysia compared coconut water, sports drinks and normal water. It found coconut water was significantly sweeter, caused less nausea, fullness and no stomach upset, concluding that it was the better option for thirsty athletes than sugary sports drinks (6). 3. The health conscious a. Coconut water is 95% water, which results in being naturally low in calories and sugar. For those concerned with physical wellness, coconut water is the next best thing to pure water. By having flavor and vitamins, coconut water is very appealing. Interestingly, many of coconut waters benefits are irrelevant unless undergoing a great deal of exercise. However, the lack of preservatives, fat, cholesterol and calories are very enticing when compared with flavored waters, fruit juices and other beverages in this category (Bidinost, Marcella). 4. Fad followers a. Coconut water is still rising in popularity. There will always be groups of consumers who try products because it is new, exciting and currently in. This group does not have the highest marketing focus since this group just tends to follow the current trend. However, companies are hoping a significant portion of the fad followers who try their coconut water product will enjoy it enough to convert into regular consumers. 5. Traditionalists a. The tradionalist group has two subgroups: consumers who currently live in the tropics and consumers who are from or have family from the tropics. Tropical

places, such as Brazil, have coconuts growing natively, so it is drank and eaten daily. When people from the tropics move to places like America, they are already accustomed and drawn to it. When people visit family members in places like Brazil, they tend to acquire the taste for it and bring that new taste palate back to places such as the United States with them. When the founder of Vita Coco, Mike Kirban, was considering market entry, he specifically chose New York because of its high concentration of immigrants from countries where coconut water is already popular. In the emerging markets of coconut water, word of mouth plays a bigger and more important role in the decision process than in already developed markets (Atsmon, Yuval, Jean-Frederic Kuentz, and Jeongmin Seong). Therefore, the traditionalist group is a big opportunity to positively spread coconut water awareness.

Major Players
There are over 250 companies that offer a coconut-related beverage in 20,000 stores around the world. The coconut water category has exploded in the last few years, and is expected to be the next big beverage category. Since 2005, this new category has roughly doubled in size every year. The coconut water category is already worth $400 million in the United States alone, and is expected to be a $1 billion industry by 2014 (Demystifying Supply Strategy for Coconut Water). Remarkably, only three companies rise above the rest and control the coconut water trade: Vita Coco, ZICO and O.N.E. Vita Coco

Vita Coco and ZICO both started in 2004, near the beginning of the yoga craze. However, Vita Coco rose above and is the present-day market leader and number one seller. The company possesses 60% of Americas coconut water market. This has to be taken with a grain of salt since the global market is estimated to be worth about $115 billion. Vita Coco is on the right tack though, since their sales from 2011 to 2012 rose by 168% and are still rising (Coley, Caryn, and Chris Arnold). Originally founded in the United States by Michael Kirban, Vita Coco met the demand for a healthy and natural beverage after he learned about the importance that people from the tropics placed on coconut water. His wife, a Brazilian native, raved about it and spoke about how much she missed it when she moved to the United States. According to Jessica Jacobsen, author of Hydrating a Growing Culture, Vita Coco is credited with creating the (coconut water) market in the same fashion as what Red Bull did for energy drinks, Snapple for cold tea and Innocent did for smoothies (4). In 2011, Vita Coco won BevNETs (the leading beverage-oriented media company) product and marketing award. The award meant that Vita Cocos coconut water products beat out all other juices, soft drinks, flavored milks and even sports and energy drinks. This honorable award was given during the year of their highest profit to date, which was $40 million. ZICO The number two best seller of coconut water is ZICO, earning 30% of the US market share. Founder Mark Rampola took the opportunity to turn coconut water into a business after he volunteered in Central America for the Peace Corps. He became infatuated with the native treat and decided to capitalize on it in the United States. In 2005, their distribution began to work with Big Geyser in New York. Business escalated from 500 cases a month to more than 50,000 cases

a month. Coca-Colas Venturing and Emerging Brands business unit took notice in 2009 and invested over $15 million in ZICO. O.N.E In 2005, one year later after the launch of Vita Coco and ZICO, O.N.E. joined the competition. O.N.E. is currently the number three coconut water brand and was started by MBA students Sao Paulo and Rodrigo Veloso. After taking first place at the Latin American Business Plan Competition, they turned their idea into a full-fledged business. Their goal was to launch a healthy, natural beverage that was new to US consumers. The partners were convinced that coconut water could become a new and successful category, despite most US consumers never even hearing about coconut water before. To start out, O.N.E. began by debuting at Whole Foods Markets in 2006. Since then, they have partnered with companies such as Starbucks and PepsiCo Inc. Joining the market is the General Nutrition Center (GNC), which has partnered with O.N.E. to launch PHNOM a superdrink with even more added vitamins and minerals than plain coconut water. Currently, O.N.E. is working on global expansion by focusing on regions such as Europe, Canada and Southeast Asia.

Marketing Strategies and Tactics

The coconut company has been fortunate enough to experience rapid success. This success is owed to three main marketing strategies and tactics: new category creation, promotional strategies and marketing perceived qualities and benefits. Category Placement and New Category Creation

A significant marketing technique has been to place coconut water in the superfoods section. Superfoods provide detoxifying agents and help balance a healthy diet. By tagging certain products as superfoods, their marketability, and in turn profitability, can often increase tenfold (Lunn, J). Labeling a product a superfood also creates universal consumer appeal. Consumers associate natural with pure, and therefore, associate pure with healthy. The biggest trend in the food and beverage industry connects to being natural. It is a worldwide occurrence that offers great opportunities for coconut water. Since natural is generally defined as having fewer, simpler ingredients and being organically functional coconut water connects to both. Within the superfoods category is coconut water, a new sub category. Creating a new category is one of the most successful types of strategies in health and nutrition. Almost every major success in the last 15 years, from super-fruit drinks to yogurts for digestive health, has been an example of a new category creation. When brands create a new category, most aim for somewhere between basic goods and luxury goods (Research and Markets Adds Report: Coconut Water 2012: Innovation and Natural health Benefits Drive a New Category). Coconut water is marketed as being new while providing fresh and exotic benefits, creating a new category with exotic appeal that is relatively affordable. Promotional Strategies Vita Coco, ZICO and O.N.E. utilize varying promotional strategies. The combination of large soft drink company investments, being known as a natural and functional product and using celebrity endorsements has launched coconut water into mainstream success. Vita Coco In the beginning, Vita toured the streets of New York and Los Angeles. DJs and bikiniclad girls would jump out with hula hoops and start dancing. Their pitch was that Vita Cocos

coconut water was a hydration vacation and that bikinis were optional. The company was aiming their marketing tactics at hipsters, who wanted a fun drink without having a serious tone attached to the brand. Vita Coco also used celebrities in their promotional strategies. Celebrities are known for creating fads and launching products simply by being seen with the product in public. Coconut water is no different and owes much of its success to celebrity endorsement and good publicity. Stars such as Rhianna, Madonna, Courtney Cox, Demi Moore, Jessica Simpson, Karolina Kurkova, Anna Lynne McCord, Lady Gaga, Chris Pine and many more endorse coconut water. In 2011, Rhianna, an R&B singer, became the face and spokesperson for Vita Coco. She is originally from the tropical island of Barbados, and was already used to drinking coconut water. She eagerly began her national marketing campaign about hydrating naturally from a tree, not a lab that was featured on print, television, billboards and social media outlets, including Rhiannas personal website. Most of the stars who endorse coconut water are women. Notably, 80% of the consumers are also women. For example, Madonna believed in Vita Cocos growth potential so much that she invested $1.5 million in it and drank it in 32 countries on her Sticky and Sweet world tour that began in 2008. Madonnas manager then highly encouraged other celebrities to invest. As a whole, the celebrity cluster has invested $10 million into Vita Coco - now worth over $140 million (Coconut Water Case Study). Even though Vita Coco is not actively using the investing celebrities for campaign purposes, they are still getting free publicity. Vita Coco has had to be careful with this publicity because according to Patrick Patel, author of Impact of Celebrity Endorsement on Brand Acceptance, consumers are increasingly likely to critique marketing messages and product

positioning, and a degree of jaded overexposure to celebrity marketing makes it essential that any celebrity based strategies be tailored carefully to fit the product, its message and the target demographic, (34). As of now, the media interest generated by their investment is enough to boost the brands image in the minds of the consumers as a juice worth looking into. ZICO ZICO was able to create perhaps the most devoted followers: sports enthusiasts yoga lovers in particular. In the beginning, Mark Rampolla, the founder, did a grassroots efforts campaign. He spent two years passing out samples and doing demonstrations in yoga studios. He built his way up and now major yoga studios endorse and sell his ZICO. The earliest adopters of coconut water were in fact yoga and pilates fanatics who knew the importance of electrolytes, but didnt want the sugar and preservatives of sports drinks (Stevenson, Seth). Soon, they expanded into targeting other athletes, like runners. Athletes know the importance of health and hydration, and ZICO used that to their advantage. ZICO also used celebrity endorsement as a promotional strategy, but in a different way than Vita Coco. Instead of focusing on the health conscious like Vita Coco, ZICO focuses on the sports energy market and targets their marketing efforts towards athletes, which is a mostly male demographic. This is ironic since Rampolla started out in female heavy yoga studies. Furthermore, the average age changes and rises to between 25 and 39. ZICO uses celebrity athletes heavily in their marketing and advertising campaigns. In past campaigns, they have used athletes such as professional wrestler and basketball players. They have even featured Joshua George, a Paralympian wheelchair athlete from the United States who races in sprints and marathons, in their campaigns. ZICO has an entire web page dedicated to featuring high profile athletes who rely on ZICO Coconut Water before, after and during their workouts. Their No

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Lies campaign featured athletes on advertisements that said Dont Swallow a Lie. Their intention was to point out the harmful elements that soda beverages can have, and to encourage them to instead drink a naturally found beverage, like coconut water. Lately, ZICO went a step further with celebrity endorsement and held an I am Natural contest. The winner was Amanda Russell, an AFTA Certified Trainer, triathlon winner and creator of The AR Program. She is a hard-worker who relates to athletes everywhere. For future campaigns, ZICO is currently working with the NFL Players Association to become the official coconut water of professional football players. O.N.E. O.N.E. is the number three coconut water brand. Their marketing tactics in the beginning of their campaign focused on moms and later extended to children. O.N.E continuously advertised that part of their proceeds went to charities. For example, they give proceeds to help provide clean water sources to children in Brazil. Also, they teamed up with Healthy Child Healthy World, a nonprofit organization that is dedicated to preventing children from being exposed to harmful chemicals. The project focused on campaigning to families with children and involved family charities by advertising to moms specifically. O.N.E has been able to market towards kids and the entire family unit. This, in turn, has made them the most accessible drink, with the most variety of flavors. Despite having specific niches, each brand is trying to expand into getting a share of each others markets. For example, ONE started sponsoring marathons (ZICOs territory). ZICO started spreading their marketing campaigns in the Hamptons, hoping for a more flashy audience (Vita Cocos territory). Vita Coco started partnering with yoga boot camps (ONEs territory) (Burkitt, Laurie).

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Perceived Quality and Benefits

Unlike coconut milk, which takes up to 14 more weeks to ripen, coconut water is collected from young, green coconuts that have not yet matured. Coconut milk is very fatty and is actually the meat of the fruit. Coconut water, on the other hand, is rich in health benefits. The alleged benefits of coconut water are said to naturally boost the immune system, increase metabolism and weight loss, detoxify and fight viruses, prevent hypertension, aid in circulation, treat kidney stones, improve intestinal health, balance body PH, stop fatigue, control diabetes, reduce cancer risk and ease stomach pain, vomiting and more (Coconut Water Case Study). Most of the health claims have not yet been proven, and therefore the marketing department has to be careful of false claims.

Market Growth
Coconut water is a 100% growth market around the world, including the United States. In some New York convenience stores, coconut water is selling even faster than milk. The coconut water market also grew by 100% in Europe. The number of coconut water beverage launches quintupled from 2009 to 2011 (Brennan, Ross, Stephan Dahl, and Lynne Eagle). In the past year alone, about 15 new brands have appeared on the Australian market. In 2010, coconut water accounted for 67% of all juice sales. In the UK, coconut water (specifically Vita Coco) is the number one non-alcoholic drink bought, including any water or cola brand. Within the last two years, it went from selling in 200 stores to 650. Brazil is currently the largest market for coconut water. The success there indicates that the coconut water market could grow and expand beyond its native home. However, coconuts 12

grow wild in Brazil. Coconuts are mostly drank fresh, not packaged. As these places advance and become more market sophisticated, there will be a greater opportunity to sell. In 2010, only a handful of coconut water brands existed. Just two short years later, there are over 20. Each brand is competing for their share of the market in this rapidly growing and seemingly profitable beverage category. Coconut water is already being innovated, which shows great market growth. For example, young consumers have already begun using it as a hangover remedy because of the excess electrolytes and potassium it contains. Therefore, in terms of scalability, the coconut water market is huge (Fife, Bruce).

Emerging Trends
Current trends and changing consumer needs are giving ample opportunity for innovated products. Consumers are more willing to accept coconut water as a regular beverage because of how brands have marketed it as functional drink and how it has intertwined with the wellness and exotic trends. Marketing Functionality Looking at all of the health benefits, coconut water can be categorized under hydration, nutrition and functionality. The most important label is arguably the functionality affect. The term functional foods began in Japan in the 1980s. Since then, there has yet to be a solid definition and there are still no government regulations when it comes to marketing. However, in the United States, the American Dietetic Association termed functional foods that are consumed on a regular basis as having more health benefits that go beyond basic nutrition (SunWaterhouse, Dongxiao). Health foods that go beyond basic nutrition are now in higher demand than ever. Being able to market a food as functional also means a greater gross profit for the 13

company. The price differentiation to comparable non-functional foods is between 30% and 500% (Sun-Waterhouse, Dongxiao). Furthermore, the most successful functional foods are those that resemble their natural form. Since coconut water can be found in nature, the companies have ultimately been successful by meeting these new consumer criteria. The Wellness Trend The reason that marketing a drink by its functionality is increasingly emerging is because of the growing self-wellness trend. Studies suggest that increasing the consumption of fruits into the daily diet can help fight weight gain, promote general health and reduce the risk of chronic diseases (Brennan, Ross, Stephan Dahl, and Lynne Eagle). Therefore, new products that advertise health benefits are being picked off the shelves and brought into the market faster than ever before. Health challenges are more prominent than in previous years because of the changing population demographics (i.e. the ageing population), increases in life-style related diseases, mounting health care costs and lack of awareness. Countries as a whole are growing more concerned about the health of the nation. An emerging trend that is growing is the knowledge that consumers have about the relationships between diet and disease (Parr-Vasquex, Charity, and Rickey Yada). This increased knowledge about health has had a profound effect on which foods are being consumed, and which brands are being accepted. This has provided various and optimal opportunities for the marketing of coconut water. The wellness trend does not mean that everyone is deciding to get in shape and to exercise regularly. Well over 50% of the US population does not partake in moderate to vigorous exercise like health guidelines encourage. Here is an example of attitude versus behavior. More and more consumers are knowledgeable about what they should do, but still do not do it

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(Sabiston, Catherine, Jennifer Brunet, Kent Kowalski, Philip Wilson, Diane Mack, and Peter R. Crocker). Instead of being active to the point of exhaustion, coconut water has been able to market to those who want to be healthy, but not whole-heartedly live by it. The wellness trend is not yet universal, so coconut water can still use the convenience factor of simply and easily drinking a healthy beverage during this trend.

Lawsuits
Coconut water is marketed as a super-health drink, but buyers beware. Vita Coco, ZICO, and O.N.E. each got served with class-action lawsuits, which are in various stages of being resolved. A small class-action lawsuit was filed in 2011 due to false advertisement. The lawsuits happened because the science around coconut water can be a bit blurry. A Malaysian study done on coconut water concluded that it was an effective hydrating beverage. After the results came out, a US study was conducted. The US study found that Vita Coco and O.N.E. had significantly less sodium than they advertised. The coconut water even had less sodium than its competitor, Gatorade. Since sodium is an important electrolyte that is lost through sweat, the US study concluded that it was false advertisement (Conis, Elena). In the end, Vita Coco agreed to pay $10 million, but claimed that they still did not do anything wrong. They adjusted their labeling to comply with the US study. Lawsuits for companies in the past have been known to break down consumers confidence in the product, making them less eager to buy. Fortunately, the class-action suit had no effect on sales or its projected market growth.

Distribution and Pricing

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The pricing and distribution of coconut water is not without hurdles. Once the water of a young, green coconut is exposed to air, it deteriorates very quickly and needs to be pasteurized and bottled. This process is costly and results in a loss of nutrients. According to Laura Wood, author of Research and Markets: Coconut Water Case Study: Consolidating Growth in a Burgeoning Segment, to counteract this, the Food and Agriculture Organization created a cold preservation process that helps to protect the natural flavor and shelf life. Through filtration, bottling and rigorous temperature control, coconut water can be stored fresh from ten to three weeks. This in turn helps to commercialize coconut water by being more appealing to retailers (48). In the beginning, coconut water began by being distributed to independent food markets and delis. This provided the owners to do a store-by-store sale approach. The frustrating and slow process eventually paid off. Coconut water gathered momentum in these smaller stores and won over consumer sales. A big part of this strategy was the fact that many coconut water companies entered the market at about the same time. This made it easier to gain credibility with store owners and distributors. The pricing of coconut water can be an inhibiting factor when trying to expand market growth. Consumers are slow to try products that have a reputation for tasting bad, especially when they may have to pay twice as much. Coconut waters competitors, such as sports drinks, flavored water and juices, cost significantly less. Buying coconut water in smaller, more convenient packages is even more expensive. This is particularly inhibiting in the United States, where the nation is still recovering from a slow-economic recession.

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Economic Effects
The economic effects of a new, growing market can be both positive and negative. Unlike coconut milk, which needs 14 more weeks to ripen, coconut water needs much less time to mature. Harvesting the coconut early means that supply may not be able to keep up with demand as the fields will need a longer period of time before coconut seeds can be replanted. Since the coconut market has had an abrupt uprising, the countries that produce the coconuts will have economic and individual effects. Developing nations like Brazil, which is the largest market, can have positive outcomes from the investments and export boost, such as an increase in job opportunities. However, Brazilian coconut farmers sell their harvest to middlemen. In many places, middlemen are paid 25% to 50% more per coconut than what farmers are paid. The rapid success of coconut water hitting the mainstream has not yet trickled down to the farmers or increased their income. The growing market will continue to demand more. If the coconut water industry is a fad, the nations income will dry up. If the coconut water industry is not a fad, there is the question about what will happen when the country cannot keep up with the weight of demand. Developing nations do not have the workers rights laws that the United States does. It is possible that the nations will be taken for granted for and inevitably exploited. The conclusion is that the coconut water industry will require careful management.

Future
Challenges Ahead It is foreshadowed that coconut water has not yet reached its peak. However, to keep moving forward, the companies will have to face some major issues. Changing consumer perceptions and 17

food choices will need constant innovation and upkeep. There are still issues with taste, promotional strategies, high prices, availability, quality, perishability, distribution and expanding out of the native tropics. Coconut waters future growth is based on their ability to get over these many hurdles. Celebrity Endorsement Celebrity endorsement is used as a frequent market technique for product marketing and brand building for coconut water. The practice is used due to the quick saliency, quick connect, quick shorthand for brand values, quick means of brand differentiation and almost guarantee (Atsmon, Yuval, Jean-Frederic Kuentz, and Jeongmin Seong). Keep in mind, celebrity endorsement is not without risks. The potential to get instant brand acceptance by adding a famous face to get it publicized to a larger audience and seen with a positive perspective is enticing. However, because the objective is to build up the brand and not the celebrity in the public eye, using celebrity endorsement can become complicated. Celebrities can advocate a product all they want, but unless brand can establish a strong, positive association between the brand and celebrity, controversy can occur and the celebritys overall career could be in jeopardy (Patel, Pratik). Taste Ageing adults have a weaker taste palette, as opposed to a kids very strong taste palette. Therefore, even though older adults would enjoy coconut water for its less flavored taste, many young adults, no matter how much consumers want the beneficial health qualities of coconut water, are still put off by the taste. Taste is a key factor that is prohibiting growth for a number of reasons. A problem that the coconut water companies are running in to is that when trying to make their product taste better, they add a variety of other flavors. Adding ingredients to coconut

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water undermines their main marketing ploy: being 100% natural and pure. Adding ingredients adds sugar and calories and takes away from being a natural fruit found in nature (Sela, Aner, and Jonah Berger). So far, companies have been using coconut water as an additive to smoothies and other fruit drink. This allows coconut water to claim its 100% purity while overcoming the taste issue. A possible solution is to market against soft drinks instead of sports drinks or water. That way, coconut water can expand consumption occasions by being perceived as obviously being the healthier alterative to a sugary soda. More Challenges Despite current success, coconut water has only penetrated 3% of the households in the United States (Stevenson, Seth). To become more than a niche product, they will need to move beyond sports. Vita Coco has already begun the process by using nonathletic celebrities in their endorsements. The major players in the coconut water industry will need to work on keeping their share of the market and defending their market percentage against incoming sellers. For example, Rockstar, the leading energy drink brand, has already introduced a new coconut water to get in on the action. It is only a matter of time before other beverage companies begin to work harder to capitalize in on the coconut water movement. A major challenge ahead concerns sourcing and distribution strategies. There is currently plenty of fruit now, but with instant success comes instant hurdles. Coconut farmers are worried that the demand may soon exceed supply, killing the existing supply, deeming the future supply unreliable and thus killing the coconut water industry. For example, Vita Coco, the number one coconut water seller, used to buy their coconuts from Brazil only. However, because Brazil was

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their only source, demand exceeded supply. Vita Coco ended up having to terminate major retail partnerships. Coconut waters largest market is in Brazil, where coconuts are native. A challenge will be to expand further into countries where coconut water is not local. An advantage to this situation is that coconut water seems wonderfully exotic to consumers, such as in the US. However, the more that big investors take interest in coconut water, the more that it will start to lose its novelty status over time.

Conclusion
Coconut waters fame is on the rise; growing and prospering in the international health craze. The new consumer tendencies to shop for healthier products and their willingness to pay for the higher end merchandise have created a great opportunity for coconut water to flourish. Over time, coconut water awareness will grow and the new category will strengthen in the market. Vita Coco, ZICO and O.N.E. have all had major outside investors. The fact that major beverage companies are interested in the coconut water companies shows that there is great hope for the future. Giant beverage companies are fast-tracking coconut water to the mainstream. The combination of investors, celebrity endorsement, greater capital, access to greater distribution channels have led to rapid success. The success that coconut water has experienced in tropical places such as Brazil is positively perceived. If other countries can take to coconut water like Brazil has, the market growth potential is great with many major opportunities.

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Works Cited
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