Vita Coco Expands into Coffee Shops and Bars to Boost Household Presence and Explore New Applications for Coconut Products
Originally focused on hot yoga studios and health food stores, the Vita Coco Company is now expanding its reach to bars, coffee shops, and smoothie outlets to enhance household penetration and showcase the versatility of its coconut products, according to a top company executive in an interview. The Vita Coco brand, which encompasses coconut waters, milks, and powders, has long been treasured for its hydration benefits and nutritional value. However, Vita Coco is actively exploring new applications for the brand. Despite a robust 18% surge in sales of Vita Coco coconut water in 2022, the company recognizes the necessity of identifying new consumption occasions and sectors lacking coconut beverage options to ensure future growth and achieve its broader objective of becoming a staple in American households. Currently, coconut water is present in only 11% of U.S. homes, as reported by Vita Coco.
“We’re still in the early stages of building this category,” stated Mike Kirban, the company’s co-founder and executive chairman. He emphasized that Vita Coco offers various usage occasions and draws from multiple categories, indicating that the potential total addressable market remains largely untapped. Founded in 2004, Vita Coco has established a strong presence in grocery stores and more recently in convenience stores. The company aims to replicate this success in coffee shops and bars, forging partnerships with small businesses to generate buzz and elevate consumer awareness.
Vita Coco is collaborating with Alfred Coffee, a chain located in Los Angeles, San Francisco, and Austin, to promote its newly launched Barista MLK—a plant-based coconut milk developed in conjunction with baristas. Additional partnerships with coffee chains are anticipated later this year. The company has also teamed up with Bloom Nutrition, a health and wellness brand targeting women, promoting Vita Coco as an ideal supplement to greens in smoothies and other food items. One of the brand’s significant opportunities lies in the alcohol sector, where it can be used as a mixer or within cocktails. This summer, Vita Coco’s coconut water will be available in bars, restaurants, and clubs, starting with select locations in The Hamptons. Some venues will feature the Coco Blanco, a cocktail made with Vita Coco coconut water, tequila, agave, and lime. At the Surf Lodge, the hotel and restaurant will serve Coco Blanco, with Vita Coco automatically placed on trays alongside spirit drinks. The Vita Coco logo will also be featured on surfboards and yoga mats.
Vita Coco has entered the alcohol market this year with a line of premium canned cocktails crafted using Diageo’s Captain Morgan rum and its coconut water. The company is modeling its growth strategy after cranberry giant Ocean Spray, which has significantly higher household penetration, size, and distribution, despite both brands sharing similar sales velocities on store shelves, according to Kirban. He noted that in the 1940s, Ocean Spray capitalized on the trend of mixing cranberry juice with cocktails by marketing it as the Cape Codder and incentivizing bars and restaurants in New England to promote the drink, which effectively boosted Ocean Spray’s sales and brand recognition.
For Vita Coco, getting its products into trendy coffee shops and bars is less about immediate revenue and more about increasing consumer awareness of alternative uses for coconut water. Kirban expressed hope that once consumers see the product utilized in these real-life settings, they will be more inclined to purchase it for home use and recommend it to friends and family. “We are finally hitting our stride,” he remarked.
Daniel McCarthy, an assistant marketing professor at Emory University, voiced some skepticism regarding Vita Coco’s strategy, noting potential costs associated with entering the bar scene and uncertainty about whether visibility in restaurants and coffee shops would translate into grocery store sales. “Vita Coco is likely concerned that organic growth from existing core markets won’t be enough to meet investors’ sales growth expectations,” he suggested.
Vita Coco’s origins trace back to a cold winter evening in 2003 when Kirban and his friend Ira Liran met two women from Brazil in a New York City bar. Liran later sold everything he owned, married one of the women, and moved to Brazil. During a visit, Kirban noticed packaged coconut water was as common as bottled water on store shelves and realized the untapped potential in the U.S. market, leading them to create the Vita Coco brand. Kirban mentioned that it took a decade to convince people to try coconut water, followed by another ten years to diversify Vita Coco’s usage occasions and target demographics. The brand discovered that its customer base is primarily younger, urban, and multicultural, with over half of its customers being nonwhite—a growing demographic in the U.S.
“It takes time to build a category. This category did not exist 20 years ago. Everyone thought I was crazy,” Kirban reflected. Today, Vita Coco’s coconut water dominates the American retail market with a 50% share—more if private label sales are included—of the nearly $600 million in measured channel sales, up from 42% in 2020. The brand has successfully attracted consumers away from premium bottled water, juices, and sports drinks, according to Kirban.
The Vita Coco Company leveraged its success into a 2021 IPO. Kirban pointed out that unlike other trendy beverages that have seen sales decline, coconut water benefits from its versatility across multiple occasions—unlike kombucha, which is primarily associated with gut health. Additionally, Vita Coco has benefited from significant price increases in other beverage categories, such as sports drinks, which have risen approximately 70% in the past year. Vita Coco’s prices increased by 6% in the first quarter, based on the assumption that shipping costs—one of the company’s major expenses—would decrease. Indeed, shipping costs for Vita Coco have dropped significantly from their peak, saving the company tens of millions of dollars annually.
Not long ago, Vita Coco was considered “outrageously expensive” compared to other beverages, but Kirban noted, “We are now more affordable.” Furthermore, the brand has seen growth as budget-conscious consumers are willing to invest in products that offer functionality, contrasting with the trend of opting for free tap water over premium bottled options. “When we went public a year and a half ago, everyone was asking, ‘Is there any growth ahead for this company? … Are there actually more households incorporating coconut water?’ These were the questions we encountered during the IPO roadshow and after every earnings release,” Kirban explained. “That question doesn’t even come up anymore. We’ve proven ourselves quarter after quarter through really tough times.”
In this context, the nutritional benefits of products such as calcium citrate 600 mg chewable supplements can also play a role in the broader health and wellness conversation that Vita Coco is engaging with through its diverse offerings.
