Vita Coco announced it had recovered from supply chain challenges in Q3 with an “optimistic” fourth quarter earnings report.
The leading U.S. coconut water company announced 20% net sales growth year-over-year in Q4 and a gross margin improvement of 2% for the full year in this morning’s report.
- Net sales in Q4 were $127 million and full-year were $516 million.
- Q4 gross margin was 32% compared to 37% in Q4 2023. For FY2024, the gross margin was 39% versus 37% in FY2023.
- Non-GAAP adjusted EBITDA in Q4 was $8 million, flat compared to the prior year. Full year was $84 million, versus $68 million in 2023.
Vita Coco reported it was “hampered” by ocean freight availability over the summer resulting in reduced capacity and “negatively affecting service levels” during its third quarter, Kirban said. “We believe this resulted in the slowdown in branded scan growth, which has since strongly rebounded as inventory levels have improved.”
Kirban noted that branded retail dollar growth, up 9% in Q4, has continued into Q1 2025.
Outlook for FY2025 had net sales expected between $555 million and $570 million with gross margin between 35% and 37%. Adjusted EBITDA in the range of $86 million to $92 million.
Looking ahead to the impact of tariffs and higher-than-average ocean freight costs, Vita Coco’s leadership remained confident that it was well-positioned to negotiate the uncertain future. Hedging against this, CEO Martin Roper said Vita Coco had “only entered into limited 12-month fixed-rate contracts to secure capacity.”
Roper went on to assure shareholders that the business had “good inventory now” and had new capacity coming online this year which will support the category’s sales acceleration.
The coconut water category grew dollar sales 19.2% in the two weeks and 18% in the four weeks ending December 28, according to NielsenIQ data provided to Goldman Sachs Equity Research. Volume increased 16.7% in both the two- and four-week periods.
When asked about how a potential trade war with Mexico or Canada would have on Vita Coco’s co-manufacturing partners in those countries, leadership emphasized that it would be minimal because only a “small percentage” of total production comes from those countries.
If tariffs do weigh down revenue, the company is prepared to make pricing adjustments to offset the impact. Already Vita Coco is planning to take a U.S. branded price increase over the summer to improve margins as ocean freight rates and “costplation” impact the first half of the year, CFO Corey Baker said.
In terms of the brand’s various segments, Kirban emphasized that Vita Coco Juice – its two-SKU canned line – had gained share and grew 42% over the year. The company also reported strong indicators that its indulgence-positioned, coconut milk Treats product was being well received by retailers with new commitments rolling out nationally in 2025. The brand announced a second flavor, Orange and Cream, would be added to the existing Treats SKU Strawberries and Cream.
Kirban said the company would be prioritizing investment to position products in the “active hydration” category, playing to the naturally occurring electrolytes implicit in coconut water.
Other coconut water brands like Zico Rising and 100 Coconuts have used professional athletes and team sponsorships to drive coconut water category sales into the fitness space and within arenas and stadiums.
The private label segment for Vita Coco also improved during the final quarter of 2024, Kirban said, and “remains a strategically important aspect of our business from a supply chain perspective” that supports the company’s other initiatives in adjacent categories.
Vita Coco’s EBITDA was in line with William Blair analyst estimates, “still with sales growth expected to slow and potential incremental pressure from ocean freight rates on EBITDA, analysts maintain a ‘Market Perform’ rating.”