The Vita Coco Company reported solid growth in both net sales and volume during Q4 2023 and FY 2023, as a focus on driving the company’s flagship coconut water into more occasions continues to drive profitability.
Now entering its 20th year in business, the New York-based company has found success recently by retrenching back into its core identity as the coconut water category leader (51% share), even as some of its bids to expand beyond the space (Runa, PWR Lift) have stalled.
Here’s a look at the top-line numbers:
- In Q4 2023, net sales jumped +15% ($106 million), driven by the performance of Vita Coco coconut water (+8% net sales, +3% volume), despite higher pricing.
- Gross profit was up in Q4 from $23 million to $40 million, or 37% of net sales, thanks to falling transportation costs, volume growth and higher pricing for coconut water.
- Net income was up for both Q4 ($7 million) and the full year ($47 million), with Adjusted EBITDA of $68 million coming in “at the high end of our expectations,” per CEO Martin Roper.
- For FY 2023, net sales increased 15% ($494 million), led by the performance of Vita Coco coconut water (+14% net sales, +11% volume). Gross profit was up from $103 million to $181 million, or 37% of net sales.
“Our focus and investment to expand consumption occasions of coconut water contributed to strong volume performance for the category and for our flagship Vita Coco Coconut Water brand,” said Mike Kirban, Vita Coco’s executive chairman and founder, in a statement.
Vita Coco’s private label coconut water posted more growth in net sales and volume during the quarter and is predicted to be a significant contributor to net sales growth next year. That will help offset some projected losses from its private label coconut oil business.
The company’s margins and liquidity are also improving: gross margin was 36.6% for the year (up from 24.2% in 2022), primarily due to transportation cost decreases. Full year gross margin for 2024 is projected at between 36% and 38%.
As of December 31, 2023, the company had cash and cash equivalents of $133 million, compared to $20 million at the end of 2022, and zero debt.
Net sales for 2024 are expected to be between $495 million and $505 million.
In an earnings call today, Kirban said the company intends to “double-down” on its key initiatives and strategies from last year, citing the strong performance of its core coconut water business. However, he did project a slower growth rate for net sales throughout the year.
Still, he said reaching new coconut water consumers across the U.S. and Europe remains a top priority for the company.
“Our efforts will focus on consumer education around the many usage occasions for coconut water, whether it be at the breakfast table, after a workout, in a cocktail, or after a few too many cocktails,” Kirban said. “Coconut water is one of the very few beverages that has such broad and diverse usage occasions. Expanding these occasions should be the main driver of expanding households and increased usage.”
Outside of coconut water, Kirban said the company is working to grow the presence of its isotonic protein drink brand PWR LIFT in the New York area. As well, international sales rose 17% in 2023, with the Vita Coco brand achieving an 80% market share of the coconut water category in the U.K.
According to CEO Martin Roper, the company does see some headwinds ahead. There will be some reduction in promo activity this year, citing “opportunistic” promotions last year that won’t be repeated due to higher inventory and retailer interest. However, the company is confident it will offset any drag through “core business growth,” Roper added, as well as stronger private label sales.
“It’s a little bit of a reset year for us, but we feel really good that the business is going to emerge from it stronger,” Roper said.