PepsiCo’s purchase of Amacoco good for coconut water

PepsiCo announced its intention Wednesday to purchase Brazilian coconut water giant Amacoco, and American coconut water marketers praised the move as lending validity to their chosen category – though it could create a difficult competitor in the future.

“I think the best of my initial response is that it was inevitable,” said One Natural Experience (O.N.E.) co-founder Rodrigo Veloso. Amacoco, said the Brazil native, had grown too large selling a single product to remain independent.

Veloso said his company sources product through Amacoco, as does its competitor Zico, though Vita Coco, a third player in RTD coconut water, does not. But Veloso’s not concerned about PepsiCo’s purchase fouling his supply chain. O.N.E. has already started diversifying its sources, he noted, recently adding coconut water from Asia.

Huw Gilbert, a spokesman for PepsiCo’s international operations, couldn’t say how the pending purchase may affect Amacoco’s co-packing agreements because his company’s deal with Amacoco has yet to be finalized.

PepsiCo’s immediate focus, Gilbert said, will be the Brazilian market, with an eye on the U.S. and other markets in the future. He said PepsiCo is looking at coconut water from the standpoint of its overall beverage portfolio, which, he noted, has increasingly included products that are “good for you.”

That could eventually pit rising, independent American coconut water brands against not only PepsiCo, but – in the case of Zico and O.N.E. – against their former co-packer.

Veloso said his company is already discussing strategies for dealing with that potential development, but will wait to see “what is truly going to materialize” before acting. Neither he nor Vita Coco co-founder Mike Kirban, though, are concerned with grappling with PepsiCo in the near future.

“They move a little slowly. They’re Pepsi,” Kirban said.

In the mean time, both entrepreneurs are taking the purchase as validation of their choice of business. Veloso said he thinks the purchase will cause world businesses to notice coconut water, and Kirban said he thinks it “legitimizes the category even more.”