Despite waning popularity of the beverage, Vita Coco is launching an IPO, while Zico is finding its way back into stores after being discontinued by Coca-Cola.
Stumbling along Ipanema Beach after a red-eye flight to Rio de Janeiro in 2013, I had my first sip of coconut water. It was sold at a roadside stand, still in a green coconut hacked down from a palm tree across the street. I drank from a straw poked through a hole in the top, and felt immediately revived by the subtly sweet, nutrient-packed liquid.
Little wonder that U.S. demand for coconut water was booming at the time, rising from nothing in the early 2000s to about $600 million in 2013, according to research firm Euromonitor. In the U.S., coconut water brands like Zico, ONE and Vita Coco were becoming household names, and appearing on store shelves across the country.
Since then, popularity has faded. Specialty waters, seltzers, kombuchas, and other soft-drink alternatives have proliferated. Consumers have started to lose their taste for coconut water, as well as question its purported health benefits. (No one disputes that the fresh stuff, straight from unripened fruit, is loaded with electrolytes and minerals. Nutrition experts are skeptical of some processed and packaged varieties, however.)
After hitting a peak in 2016, coconut water sales in the U.S. have dropped 16%, with declines accelerating each year, according to Euromonitor. Coca-Cola, which purchased Zico in 2013, discontinued the brand last year. Pepsi Co. also dropped the ONE coconut water brand, which it took over in 2017.
Yet the story isn’t over for coconut water. Zico founder Mark Rampolla bought his brand back from Coke early this year, renaming it Zico Rising. The product has been creeping its way back into retail chains, including Walmart. On its Twitter profile, the Long Beach, California-based brand cheerfully proclaims, “We’re baaaack! With nuttin’ but love.”
Meanwhile Vita Coco is positioned to make an even bigger splash — through an initial public offering. The company today disclosed the terms of the upcoming deal, which would raise $224 million and value the company at as much as $1.1 billion. The New York-based beverage business, which now has a 46% share of the coconut water market, has applied to the Nasdaq to trade under the symbol COCO.
Along with that effort, Vita Coco has been trying to stir attention on social media by taking a quirky and humorous approach. “I know not everyone likes coconut water, but I’m just hoping you’ll like me for my personality,” the brand says in its Twitter bio.
“Since it is the First Day of Fall, we will now be switching from Coconuts to Pumpkins. What are your thoughts on Pumpkin Water?” the company tweeted on Sept. 22, later adding: “For legal reasons, this is a joke.”
What’s behind this continued enthusiasm for what, at least currently, appears to be a shrinking market? Both Zico founder Rampolla and the founders of Vita Coco, Michael Kirban and Ira Liran, have compelling stories behind their companies which have likely served to convince them that coconut water is a beverage they can bank on.
Rampolla first discovered the replenishing properties of coconut water when he was serving as a Peace Corps volunteer in Central America. He found it worked better than sports drinks for overcoming a hangover or rehydrating oneself after a strenuous workout.
Kirban and Liran, who were good friends, came up with the idea for Vita Coco after meeting two Brazilian women in a Manhattan bar, and hearing them rave about coconut water. (Liran eventually married one of the women.) The labor of love attracted initial investments and endorsements from celebrities such as Madonna, Demi Moore and Rihanna.
We can’t say for sure whether coconut water will reclaim its lost luster, or if a comeback is too tough a nut to crack. But the commitment of brand founders and the product’s cult following may ensure it will be with us for the long haul.
Correction: This story previously provided an incorrect number for market size in 2013. The number has been corrected.
Originally posted on October 12, 2021 – Why Vita Coco and Zico Founders Are Betting On Coconut Water’s Comeback
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