During its ICR conference session on Tuesday, The Vita Coco Company discussed how the strength of its supply chain has allowed it to innovate beyond just coconut water while remaining a category leader despite increased competition.
In a fireside chat, Vita Coco co-founder Michael Kirban told attendees the brand’s success is founded in a strong supply chain that was built early on. Kirban recalled seeing an abundance of coconut water byproduct while touring a major Filipino coconut manufacturer’s processing plant, an influential moment in the company’s growth.
“Think [of] Willy Wonka’s chocolate river,” Kirban said. “You get to the end of the factory [and] there’s a waterfall.”
Vita Coco eventually partnered with the aforementioned processor, building a Tetra Pak bottling plant next door. In exchange, Vita Coco got a long-term exclusive supply contract which led the company to replicate the model in “eight of the 10 largest largest coconut manufacturers in the world” creating a “moat around the business,” Kirban reported.
This supply chain strength has allowed Vita Coco to scale through private label manufacturing, which now makes up about 20% of the business. Control of the supply chain has also allowed the brand to expand into new categories and channels, Kirban said.
The brand is now preparing to launch its three-SKU line of Vita Coco Spiked with Captain Morgan nationally in coming weeks. The partnership opens up a whole new avenue of foodservice for the core brand.
“Vita Coco is available in most grocery stores, most corner stores, delis, bodegas, whatever it is, but it’s not in any restaurants, bars. nightclubs, and so on,” Kirban said. “That’s a whole new distribution opportunity and it’s a whole new usage occasion, both on premise and in people’s homes off premise.”
CEO Martin Roper – who was brought onboard as president in 2019 after 18 years at The Boston Beer Company – pointed out that for a long time former coconut water competitors Zico (Coca-Cola) and O.N.E. (PepsiCo) dominated foodservice, essentially locking Vita Coco out of the lucrative channel. Now that both strategics have exited the space, Vita Coco sees opportunity in moving into the gaps left behind.
In retail, the brand launched its first canned product last year to help it compete in the juice segment and has plans to get into the cold section as well. The company plans to continue to build a portfolio of complementary brands through internal development and M&A – see energy drink Runa, protein water PWR LIFT and bottled water Ever&Ever – that go through the same distribution channels that help build it into a major competitor in beverage.
Vita Coco’s strength has always been rooted in the “long term, familial” relationships it has made with the communities where it sources its coconut water, Roper said.
“We break bread, we get drunk on the beaches of the islands. It’s that sort of relationship,” he said.