Retailers' Shelves Make Room For Coconut Water
RENEE MONTAGNE, host:
And a couple of entrepreneurs in New York have spent the last five years trying to get New Yorkers hooked on a new drink: coconut water. They seem to be having some success - enough, at least, to get Pepsi and Coke to buy in.
Ilya Marritz of member station WNYC reports.
ILYA MARRITZ: You could compare coconut water to the soccer World Cup, a huge deal in Latin America, Africa and Asia. In the U.S., not so much. But that's changing. Mike Kirban co-founded Vita Coco in 2004.
Mr. MIKE KIRBAN (Co-founder, Vita Coco): What we're trying to do is take the most popular beverage in the tropics and share it with everybody north of the tropics.
MARRITZ: Last month, Merrill Lynch released its first ever analysis of the coconut water market. The paper noted that annual sales have grown from near zero five years ago to 30 to $35 million today. Kirban says when he first tasted the juice of young coconuts while on a vacation in Brazil, he didn't think much of it.
Mr. KIRBAN: My first sip was really - I was unsure of what it was. It's like water with a little bit of a taste and a little bit of a texture and a little bit of a sweetness.
MARRITZ: And not particularly coconuty(ph), a tough sell for American palettes, Kirban admits. But when he learned that coconut water contains lots of electrolytes, like Gatorade, he and a partner decided to test the American market. They chose New York for its high concentration of fitness-conscious people and immigrants from countries where coconut water is popular.
Mr. KIRBAN: And the week we launched the brand, Zico came out on the market at the same exact time.
MARRITZ: Vita Coco's rival for the past five years has been Zico, another coconut water. Both brands use Brazilian coconuts, and both come in Tetra Pak juice boxes. Now they're battling for dominance in delis and supermarkets.
Zico founder Mark Rampolla says it's actually a good thing he had a competitor from day one.
Mr. MARK RAMPOLLA (Founder, Zico): Helped both of us gain credibility with retailers, with distributors, with investors, with sales people, in, you know, figuring, hey, if there are multiple brands that are being successful in a category, it must be legitimate.
MARRITZ: One of the first to take a chance on coconut water was Brooklyn deli owner Ralph Jawad. For a while, it sold slowly, maybe a case a week.
Mr. RALPH JAWAD (Deli Owner): Then, all of a sudden, they're selling like 10, 15 cases a week. And it's so good, and every time people came in, they would just come and ask for coconut water.
MARRITZ: Now, Jawad is constantly getting visits from coconut water distributors. He's found he can cut deals with them in exchange for valuable space on his refrigerator shelf.
Mr. JAWAD: Like, the salesman will come in and he'll be like, I'll give you a case next month on me.
MARRITZ: Gerry Khermouch of Beverage Business Insights says these informal relationships between entrepreneurs, distributors and stores owners are the yeast that allows new drinks to develop before they hit hard to crack chains like 7-Eleven.
Mr. GERRY KHERMOUCH (Editor, Beverage Business Insights): It's kind of like a thriving little eco system. They spot these brands, they get them out there, and then soon enough, they're snatched away by a big company like Coke or Pepsi.
MARRITZ: Beverage entrepreneurs everywhere are chasing a dream from when the market was hot: Coco-Cola's 2007 purchase of Vitamin Water for $4 billion. Times have changed, but Coke and Pepsi are still looking for the next big thing. In August, Pepsi bought Brazil's largest coconut water producer, Amacoco, and last week, Coca-Cola took a minority stake in Zico for $15 million.
For NPR News, I'm Ilya Marritz.