Like kale salads and Robin Thicke, coconut water seems to have jumped from invisible to unavoidable without a pause in the realm of the vaguely familiar.
The stuff is everywhere — not just in supermarkets and convenience stores, but also on ads on buses (“Crack life open”) and bar signs (“Detox while you retox,” reads one in Manhattan, promoting a Vita Coco Arnold Palmer cocktail). It has turned up on television, as a question on “Jeopardy,” and it regularly makes cameos in glossy magazines, clutched by hydrating celebrities.
The battle for this market, worth $400 million a year and growing, now involves big players like Pepsi and Coke. But in the beginning, it looked more like a street fight between two guys. One was then a 29-year-old college dropout who rolled to Manhattan bodegas at night, on in-line skates, carrying samples in a backpack. The other was a former Peace Corps volunteer, driving a beat-up Econoline Ford van and fighting for the same turf.
Michael Kirban, who with a buddy founded Vita Coco, and Mark Rampolla, who founded its archrival Zico, happened to start selling nearly identical brands, in the same neighborhoods of New York City, at almost the same time — a week or two apart, in late 2004.
Those in the fray called it the coconut water wars. Each side quickly bulked up with sales teams and tried to win over Manhattan, one grocery store and yoga studio at a time.
The fighting quickly got ugly. It included simple acts of retail vandalism, like tossing the competition’s signs in the garbage, as well as attempts at psychological point-scoring that could charitably be described as sophomoric. Mr. Kirban sometimes placed a container of Zico beside a sleeping vagabond, took a photograph and then emailed it to Mr. Rampolla. And on more than a few occasions, the Zico sales force showed up outside Vita Coco’s offices, then near Union Square, and handed out free Zico samples.
“It was guerrilla tactics,” recalls Mr. Rampolla, talking from his home in Redondo Beach, Calif. “And not legal because you’re supposed to have permits. But if you were quick enough, no one would hassle you.”
Coconut water went from local skirmish to beverage fame despite what might seem like a major impediment: its flavor. Anyone expecting the confectioner’s version of coconut — the one you find in coconut ice cream, for instance — may be repelled. This is the juice of a green coconut, and the taste is a mix of faintly sweet and a tad salty. Some have compared it to socks, sweat and soap. And that group includes people crucial to coconut water’s success.
“When I tried it, I didn’t get it,” says Lewis Hershkowitz, the president of Big Geyser, which distributes Zico in New York City. “I thought it was disgusting.”
For many, the challenging taste is part of the appeal. Some are so smitten with the flavor they have created online forums that sound like support groups.
A decade ago, companies like Goya sold coconut water in stores catering to immigrants, and in quantities that hardly registered in market research. Today, more than 200 brands around the world sell “nature’s own sports drink,” as fans call it, and sales are rising by double-digit figures.
“This will eventually be a $1 billion-a-year category,” says John Craven, founder and chief executive of BevNet, a trade publication. “It’s the real deal. It isn’t a new flavor of Coke. It’s not Bud Light Lime-A-Rita. This has staying power. People put it in their diet and it stays there.”
The titans of the industry are on board. In 2010, PepsiCo acquired a majority stake in the distant third-place contender, O.N.E., and in 2009 Coca-Cola bought a 20 percent stake in Zico. Last year, it purchased the company outright.
Coke’s initial investment in Zico seemed like catastrophic news for Vita Coco, the only brand still controlled by its founders.
“I thought we were dead,” says Mr. Kirban of Vita Coco. “I didn’t tell anybody at the time, but I remember wondering, ‘How are we going to beat Coke?' ”
The answer would involve Madonna, Hula Hoops, a family-owned investment firm in Belgium and a former professional tennis player turned salesman named Goldy. Vita Coco now owns more than 60 percent of the coconut water market, while Zico has less than 20 percent, according to Euromonitor, a research company. Two weeks ago, Vita Coco agreed to sell a 25 percent stake of itself to Red Bull China, giving it a head start in the world’s most populous country and valuing the company at about $665 million.
How a tiny, privately held company outmaneuvered the biggest players in the world is material for a business school case study. And to tell the whole story, you need to start in 2003, at a bar on the Lower East Side of Manhattan. There, Mr. Kirban and his friend and future business partner, Ira Liran, spotted two Brazilian women.
The stuff is everywhere — not just in supermarkets and convenience stores, but also on ads on buses (“Crack life open”) and bar signs (“Detox while you retox,” reads one in Manhattan, promoting a Vita Coco Arnold Palmer cocktail). It has turned up on television, as a question on “Jeopardy,” and it regularly makes cameos in glossy magazines, clutched by hydrating celebrities.
The battle for this market, worth $400 million a year and growing, now involves big players like Pepsi and Coke. But in the beginning, it looked more like a street fight between two guys. One was then a 29-year-old college dropout who rolled to Manhattan bodegas at night, on in-line skates, carrying samples in a backpack. The other was a former Peace Corps volunteer, driving a beat-up Econoline Ford van and fighting for the same turf.Michael Kirban, who with a buddy founded Vita Coco, and Mark Rampolla, who founded its archrival Zico, happened to start selling nearly identical brands, in the same neighborhoods of New York City, at almost the same time — a week or two apart, in late 2004.
Those in the fray called it the coconut water wars. Each side quickly bulked up with sales teams and tried to win over Manhattan, one grocery store and yoga studio at a time.
The fighting quickly got ugly. It included simple acts of retail vandalism, like tossing the competition’s signs in the garbage, as well as attempts at psychological point-scoring that could charitably be described as sophomoric. Mr. Kirban sometimes placed a container of Zico beside a sleeping vagabond, took a photograph and then emailed it to Mr. Rampolla. And on more than a few occasions, the Zico sales force showed up outside Vita Coco’s offices, then near Union Square, and handed out free Zico samples.
“It was guerrilla tactics,” recalls Mr. Rampolla, talking from his home in Redondo Beach, Calif. “And not legal because you’re supposed to have permits. But if you were quick enough, no one would hassle you.”
Coconut water went from local skirmish to beverage fame despite what might seem like a major impediment: its flavor. Anyone expecting the confectioner’s version of coconut — the one you find in coconut ice cream, for instance — may be repelled. This is the juice of a green coconut, and the taste is a mix of faintly sweet and a tad salty. Some have compared it to socks, sweat and soap. And that group includes people crucial to coconut water’s success.
“When I tried it, I didn’t get it,” says Lewis Hershkowitz, the president of Big Geyser, which distributes Zico in New York City. “I thought it was disgusting.”
For many, the challenging taste is part of the appeal. Some are so smitten with the flavor they have created online forums that sound like support groups.
A decade ago, companies like Goya sold coconut water in stores catering to immigrants, and in quantities that hardly registered in market research. Today, more than 200 brands around the world sell “nature’s own sports drink,” as fans call it, and sales are rising by double-digit figures.
“This will eventually be a $1 billion-a-year category,” says John Craven, founder and chief executive of BevNet, a trade publication. “It’s the real deal. It isn’t a new flavor of Coke. It’s not Bud Light Lime-A-Rita. This has staying power. People put it in their diet and it stays there.”
The titans of the industry are on board. In 2010, PepsiCo acquired a majority stake in the distant third-place contender, O.N.E., and in 2009 Coca-Cola bought a 20 percent stake in Zico. Last year, it purchased the company outright.
Coke’s initial investment in Zico seemed like catastrophic news for Vita Coco, the only brand still controlled by its founders.
“I thought we were dead,” says Mr. Kirban of Vita Coco. “I didn’t tell anybody at the time, but I remember wondering, ‘How are we going to beat Coke?' ”
The answer would involve Madonna, Hula Hoops, a family-owned investment firm in Belgium and a former professional tennis player turned salesman named Goldy. Vita Coco now owns more than 60 percent of the coconut water market, while Zico has less than 20 percent, according to Euromonitor, a research company. Two weeks ago, Vita Coco agreed to sell a 25 percent stake of itself to Red Bull China, giving it a head start in the world’s most populous country and valuing the company at about $665 million.
How a tiny, privately held company outmaneuvered the biggest players in the world is material for a business school case study. And to tell the whole story, you need to start in 2003, at a bar on the Lower East Side of Manhattan. There, Mr. Kirban and his friend and future business partner, Ira Liran, spotted two Brazilian women.
by David Segal, NY Times | Read more:
Image: Serge Bloch
