Planet Money
1:50 am
Fri December 30, 2011

Coconut Water Companies Sell Image, Not Taste

Originally published on Wed January 4, 2012 3:13 pm

A couple of years ago if you wanted to drink coconut water, you had to buy your own coconut, bring it to your kitchen, and start whacking away with a knife.

Today, you can find packaged coconut water in a convenience store, Wal-Mart or your friendly neighborhood yoga studio.

"I think it was a great year for coconut water, " says Alejandra Simon, an assistant manager at the Laughing Lotus yoga studio in New York City. "I can't walk down the street without seeing someone with coconut water in their hands."

If you want to know how coconut water pulled off a marketing miracle this year, you have to come to a place like like Laughing Lotus. This yoga studio does not sell sports drinks. They only have coconut water

It's more expensive than Gatorade, but it's pure — it's straight from the coconut to the package. And Simon says it does seem to hydrate her customers after a yoga session.

But coconut water also projects a certain vibe.

"If people see me carrying around this coconut water with my yoga mat this will show that I like yoga and I'm really conscious and enlightened," says Simon.

Okay, I know it might be easy to laugh at this and call it another health food fad. But beverage consultant Tom Pirko says in 2011 projecting this vibe worked for coconut water.

"Some of the brands are up 400 percent in one year," says Pirko. "Its a phenomenon."

It's not about the taste. For people who see soda as a sugary poison and fruit juices as loaded with calories, coconuts evoke glowing healthy people, according to Pirko.

"The only thing that really counts is image," he says.

The business is still tiny compared to soda. But industry leader Vita Coco will do close to $100 million dollars in sales this year.

Pretty good for a beverage that Mike Kirban started to import in 2004. Kirban hustled Vita Coco to stores in his Brooklyn neighborhood.

He says at first the stores didn't know what he was talking about ("Coconut what?"). But eventually the stores came around, and so did the yoga studios. Then celebrities started drinking it.

The big beverage companies eventually joined in. Coca-Cola invested in Zico coconut water. Pepsi has stakes in two brands. Kirban is okay with that.

"Five shelves of coconut water, four different brands in there, all different flavors," he says. "It really helps build a category rather than a brand."

Part of a year-end series titled, It Was A Good Year For...

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

STEVE INSKEEP, HOST:

OK. So it's been a tough year for Hilary Swank and for certain dictators, and a lot of other people, frankly. But all this week, we've been profiling companies, medical advances, other things that had a banner year. And now Robert Smith of NPR's Planet Money team reports it's been a good year for a certain beverage: coconut water.

ROBERT SMITH, BYLINE: A couple of years ago, if you wanted to drink coconut water you had to buy your own coconut, bring it to your kitchen, find a knife you didn't mind destroying and start whacking.

(SOUNDBITE OF HITTING)

SMITH: Not going to happen. Luckily, though, 2011 means you can now find packaged coconut water in a convenience store, at Wal-Mart or your friendly neighborhood yoga studio.

(SOUNDBITE OF MUSIC)

ALEJANDRA SIMON: I think it was a great year for coconut water. I can't walk down the street without seeing someone with coconut water in their hands.

SMITH: Alejandra Simon is an assistant manager at the Laughing Lotus yoga studio in New York City. And if you want to know how coconut water pulled off the marketing miracle this year, you have to come to a place like this. Laughing Lotus does not sell sports drinks.

SIMON: We wouldn't dare, like, stock Gatorade or Powerade or any of those really, like, fake drinks.

SMITH: They only have coconut water. It's more expensive than Gatorade, sure, but it's pure, straight from the coconut, into the package. And Simon says it does seem to hydrate her customers after a long yoga session. But coconut water also projects a certain vibe.

SIMON: If people see me carrying around this coconut water with my yoga mat, they're going to know that I like yoga and I'm really conscious and enlightened.

(SOUNDBITE OF LAUGHTER)

SMITH: Sure, it is easy to laugh at coconut water and call it another health food fad, like pomegranate juice or green tea in everything. But beverage consultant Tom Pirko says in 2011, coconut water worked.

TOM PIRKO: Some of the brands are up 400 percent in one year. It's a phenomenon.

SMITH: And Pirko says it really isn't about what's inside the package. Coconut water has a fine taste. It's a little bit sweet, a little bit sour, plenty of potassium. But in the beverage business...

PIRKO: The only thing that really counts is image.

SMITH: And coconut water nailed it. Among a certain demographic, soda seems like sugary poison. Even fruit juices are packed with calories, but coconuts evoke healthy people relaxing on a beach, the perfect anecdote to 2011.

PIRKO: People are feeling poorly about what is going on in their lives. In our country, there's a great deal of anxiety. And they're looking for things that somehow give them, if not an edge in terms of how they perform, but something that makes them feel good.

SMITH: And although the business is still tiny compared to soda, it is lucrative. The industry leader Vita Coco will do close to $100 million dollars in sales this year. Pretty good for a beverage that Mike Kirban started to import in 2004. Kirban hustled Vita Coco to stores in his Brooklyn neighborhood.

MIKE KIRBAN: You know, it was literally, I'm selling coconut water. Coconut what? Coconut water. You mean coconut milk? No, no, no, no, very different. So there was a lot of education.

SMITH: Hence, the push to yoga studios. Then celebrities started drinking it. Then the big beverage companies got in. Coca-Cola invested in Zico coconut water. Pepsi has stakes in two different brands. And Kirban is okay with this. One kind of coconut water makes it a novelty beverage in the health food aisle. But with a bunch of big players...

KIRBAN: Five shelves of coconut water, four different brands in there, all different flavors, and it really helps build a category, as opposed to a brand.

SMITH: Then pretty soon, people forget you can just make your own coconut water in the kitchen. Kirban has a suggestion for me.

KIRBAN: The best way to open up a coconut, honestly, is with a drill.

(SOUNDBITE OF DRILL)

SMITH: See, that totally works. Coconut water comes right out.

(SOUNDBITE OF LIQUID BEING POURED)

SMITH: But until people start to bring power tools to their yoga classes, the packaged coconut water industry has very little to fear. Robert Smith, NPR News. Transcript provided by NPR, Copyright NPR.