Vita Coco Coconut Water Sells 25 Percent Stake to Red Bull China

vita coco 480All Market Inc., owner of Vita Coco, the top-selling coconut water in the U.S., announced Monday that it has sold 25 percent of its stake to the Reignwood Group, the parent company of Red Bull China, for $165 million. The investment has a valuation of $665 million. The agreement includes distribution of the brand’s portfolio throughout mainland China.

Michael Kirban, CEO and co-founder of Vita Coco, said that his company wasn’t shopping the brand or looking for the highest figure. Rather, he sought a partnership that gave shareholders liquidity and kept them aligned with the company on a global level.

“We’re not looking to sell the whole business until we’re able to prove what this business is really capable of,” Kirban said.

He added that All Market Inc. has had previous opportunities for shareholders to take money off the table; however, the agreement with the Reignwood Group represents the company’s first major sale of equity.

Red Bull China has taken the energy drink brand from its entry in the market to its current state: a $3 billion revenue business (about half of Red Bull’s global business) that covers all major cities in mainland China through about 4 million stores, Kirban said. These credentials align with Kirban’s global vision – one that includes the vast market potential of China.

He approximated that Vita Coco is available in 100,000 stores in the U.S, with Walmart and Kroger serving as some of the top-performing accounts. In China, through Vita Coco’s own feet on the street along with the approximately 2,000 employees of Red Bull China, the brand will launch about 130,000 stores in the first quarter alone.

“Like Tropicana owns orange, like Gatorade owns sports, like Red Bull owns energy globally, we feel Vita Coco will own coconut water globally,” Kirban said.

Vita Coco is currently sold throughout the U.S., Japan (which launched last year), Europe and the United Kingdom. Kirban said that London is the brand’s best performing market in the world, recently surpassing New York volume with approximately 120 percent growth. Revenue from this sale will contribute to the brand’s continued global expansion; it will launch in the Philippines, New Zealand and Singapore later this year and will add other Southeast Asian markets and Australia next year.

Kirban said that the Vita Coco team will work closely with Red Bull China to execute detailed business and distribution models in the country. He said that the arrangement will be very similar to a standard distribution agreement. He will continue to act as CEO and run the business at a global level, and board members Kirban, co-founder Ira Liran, beverage industry veteran Ken Sadowsky and Verlinvest will maintain their role in overseeing key decisions while adding a seat for the Reignwood Group. Meanwhile, Red Bull China will manage the brand with its existing accounts.

Kirban said that when Vita Coco first entered Europe, people told him that nobody knew coconut water. They said it’d be hard to break into that market. But he saw parallels with that market and the U.S., where it was already selling well. Then coconut water caught fire and Kirban knew that the brand could go farther.

“People want this category…I know that coconut water will be a massive global category,” he said.

Very few brands outside of Coca-Cola and PepsiCo have been able to establish a beverage brand at a global level, he said. What’s one exception of an independent brand? Red Bull.

“They’ve been able to really conquer the world with that brand,” Kirban said, “and we want to kind of do the same thing.”