Like many other brands, Vita Coco is learning from and adapting to the pandemic as it unfolds.
In Manhattan, where Vita Coco is headquartered and where the company helped build the U.S. coconut water category through the city’s bodegas and independent grocery stores in its early days, the situation is still far from normal. The city is slowly taking steps towards recovery after a devastating spring in which offices shuttered, restaurants closed down and employees shifted to working remotely. “If you look at [Vita Coco’s business in] Manhattan, it’s dead,” said Vita Coco CEO and co-founder Mike Kirban, on the phone from Long Island where he has stayed with his family for the last few months. “If you look at the New York metro area, it’s doing very well – Brooklyn, Queens and Long Island have all been super strong.”
That thin line between thriving and struggling, between surviving or not, has been acutely felt by Kirban over the course of the last several months: in the midst of a pandemic, on top of a worrying slump in the coconut water category overall, Vita Coco appears to have found its groove. Having weathered an 8% sales decline last year, the company is rebounding, growing over 16% in MULO (plus convenience) over the last 13 weeks, according to the company.
Before the pandemic gripped the U.S. in March, Kirban noted that many of the elements that have helped drive Vita Coco’s recent momentum were already in place. The brand’s 2018 expansion into PET bottles has given it a package format that can play in both the larger cold box and point-of-sale coolers in convenience and drug stores, Kirban said, while TetraPaks continue to drive traffic in club and conventional channels, where the 1 liter carton is the brand’s fastest growing SKU. Along with a brand refresh, defining each format around specific use occasions — cold on-the-go consumption for PET, multi-serve and multipacks for TetraPaks — has itself provided a path towards further retail expansion.
“Pressed really started bringing in a whole new consumer demographic, and the PET really is working in c-stores and small format stores, and in front-of-store coolers at large format retail,” he said.
Having emerged from the early years of fighting it out with brands like Zico and O.N.E., Vita Coco has solidified its place within coconut water, but the brand’s attempts to expand the category through innovation haven’t always been the strongest, Kirban acknowledged. The supply chain and margin challenges experienced with Vita Coco’s since-discontinued refrigerated products, such as coconut milk and premium bottled line Coco Community, have confirmed to Kirban that shelf-stable coconut water is “what works better for us” and will be the company’s focus moving forward. Forthcoming launches, such as the function-forward Boosted line, arriving next year as an e-commerce exclusive before expanding to retail, will emphasize coconut in both taste and nutritional content as the brand seeks to extend its stake in the broader concept of “coconut hydration.”
“With Pressed, we made coconut water taste more like coconut, and that’s been a huge success for us,” he said. “If you look at this coconut refreshment business that didn’t exist 15 years ago, that we really built along with Zico and O.N.E., look at it now between Bai’s coconut SKUs and Body Armor and everything else that’s out there. There’s clearly a demand for these types of products, so that’s why staying as close as we can to the core concept is critical.”
Along with what they want out of its products, Vita Coco has also learned what consumers expect from the brand itself. After a triple-digit sales surge in March, the company donated $1 million in incremental profits to organizations Feeding America and No Kid Hungry, which earned it a spot on Newsweek’s list of “50 Businesses That Stood Out During the Pandemic.” Coupled with its ongoing work through the Vita Coco Project, an initiative to invest in and support coconut farmers launched in 2014, the brand has established an identity that is resonating with consumers, though Kirban noted that the company didn’t believe that publicizing its philanthropic work was necessary until recently.
“We didn’t start the company to be an impact-based organization, nor did we even think about it,” he said. “As we were doing it more and more, we realized that consumers want to know more about it. So we put some stuff on our packaging and on our website, and it became the one thing that consumers kept on coming back to and wanting to learn more about and getting excited about. It seems to be what consumers are interested in these days.”
Part of those efforts have been directed specifically to the stores that helped give Vita Coco its start: Manhattan’s bodegas and independent grocers. Earlier this summer, the company launched an out-of-home marketing campaign featuring “love letters to bodegas” across New York City, while it also partnered with delivery app My Bodega Online to donate breakfast sandwiches and coconut water to 5,000 healthcare workers at city hospitals.
Yet though the company was built up and down the street, its future success may hinge on its ability to compete online. The shift in focus has come quickly: prior to March, Kirban said, Vita Coco “didn’t pay attention to” Instacart, which has since emerged as a “significant piece” of the company’s overall business. Meanwhile, he added, Amazon sales are up over 100% this year, and volume through Walmart’s online store is also increasing.
As a result, Kirban said the company’s top area for hiring and overall investment this year has been e-commerce operations and channel strategy.
“Its an area that we’ve always been in, but as a liquid beverage, there haven’t been too many examples of massive brands that ship heavy liquid,” he said. “COVID came and it was the catalyst that changed the whole thing and now people are buying their coconut water and other drinks online. It’s becoming a big business and it’s a business that we are investing heavily against.”
Coconut water may be Vita Coco’s core strength, but Kirban said parent company All Market Inc. is still pursuing further business opportunities to complement its existing portfolio, which also includes natural energy drink Runa and aluminum bottled water brand EVER&EVER.
“Whether through M&A with smaller or mid-sized brands or new brands, we want to continue to add to this portfolio because we think there’s a real opportunity to create this better-for-you beverage company that’s broader than just coconut,” he said. “That’s a continued focus and something that I’m personally very focused on right now.”