Vita Coco: My Billion-Dollar Coconut Water Company

Once upon a time, the only way to drink pure coconut water was with a machete in a tropical location. Today, the global coconut water market is valued at $6.64 billion and is expected to reach $20 billion by 2030. You can thank, in part, this man. People in Brazil were drinking it for everything. They were drinking it at the breakfast table, drinking it on the beach, after a workout, in their smoothies, with their cocktails, for their hangovers. We started to think there's got to be a market in North America for coconut water. This is Michael Curban, co-founder and executive chairman of the Vida Coco Company. Along with his friend Ira, the two started the sports drink alternative company shortly after a chance encounter with two Brazilian women in a bar. The company, which celebrates its 20th year this year, is valued today at over a billion dollars. Coconut water today is the fastest growing category in the beverage aisle in North America. It's one of the most common consumed beverages in the entire tropical world. In the past few years, revenues and profits have overall increased, with $39 million in profit for 2023 as of Q3. There are three numbers to look out for in this story. $75,000, the cost of the very first shipments of coconut water from Brazil, 51%, the market share percentage Vida Coco has in the United States today, and over $380 million, the company's 2023 revenue as of Q3. It tastes great, it's incredibly hydrating. Luckily, we were right. It's taken 20 years to really ingrain the culture of drinking coconut water into the American consumer's mindset, but it's coming along and it's really mainstream. This is the story of how two friends helped introduce the American consumer en masse to coconut water. This is Founder Effect. I always knew I was going to be an entrepreneur. I always knew I was going to have my own business. I went to the University of Alabama for a year and then dropped out, middle of an economics course and a big lecture hall, and I realized college wasn't for me. I started several businesses, including a computer software company, which I still have today. I love consumer goods. I love being able to make something and then see people enjoy it and use it in their daily life. Through a random acquaintance, Mike met Ira. The two connected immediately. We were friends right away. We actually opened an event space in New York together. We were throwing parties as a business. On a freezing cold night in 2003, Mike and Ira were at a bar in Manhattan when they saw two Brazilian women. They're putting their coats on and walking out of the bar. They're leaving. And he's like, I'm going to go get them. I'm going to go bring them back. And they come back into the bar and we talked for about an hour, two hours, just about all sorts of things. The women tell Mike and Ira that one of the things they miss most about home is coconut water, a product they just couldn't really find in the United States. Absolutely smitten with one of the two women, Ira would go on to sell all of his belongings and move to Brazil to be with her. I went down to visit a few months later. We were in Rio, sitting on a beach, drinking out of a coconut, talking about different business opportunities. And coconut water was only one of the ideas. But as we're drinking out of a coconut on the beach, coconut water sounded super interesting and fun. It was that idea that I got excited about. And then from there, we started a business. It wasn't long before the two started creating a coconut water beverage company. Mike and Ira noticed a big glaring opening in the United States market for the beverage. When we started Vitacoco in 2004, there were no other real coconut water companies in the United States. There were some ethnic food brands that had canned coconut water, but they weren't readily available in general trade. Before long, Mike put together $75,000, money he had gathered from a software company for the first shipment. Part of that was money that I put in. I had some money that I made in the computer software business, which was doing well. And then, yeah, we started maxing out credit cards on top of that to operate the business. We raised money starting in 2007 from a key investor that has been with us ever since. We raised money a couple of other times in those early days. And then we were basically profitable and cash-generative from around 2010, 2011. A large part of Vitacoco's success can be linked to its look. The packaging container itself, known as the Tetra Pak, would become synonymous with the product. The 330-milliliter debuted in 2004 with the 500-milliliter and the 1-liter packages to follow in the years to come. So this is our iconic package. It's kind of this odd square box. You don't see a lot of beverages in this type of packaging. And it's the way coconut water was packaged in Brazil at the time. It came in this Tetra Pak, because they had taken the same technology that they use for packaging shelf-stable milk, and applied it to coconut water, because coconut water oxidizes very quickly. And Tetra Pak keeps it from oxidizing. A few months after launching the original coconut water, Mike and Ira felt they needed different flavors for continued success. When we started Vitacoco, we only had one item. And it was a 330-ml regular Vitacoco. Blue one. Looks like this. And then quickly we realized we were sitting there with one little facing on the shelf, and we needed more. So we came up with two new items. Which was the peach mango and the pineapple. And now, instead of having one item on the shelf, we'd have three. And we'd have these bright colors. You start to create a billboard effect, which has been amazing for us. Right around the same time Vitacoco launched, rival coconut water company Zico was starting as well. Mike caught wind of it the very first week he was out selling his product to local bodegas in New York. The same week that we launched in 2004, another guy, on his own, launches another coconut water. The same concept. Same color packaging. In the same city. At the same time. I knew I had to be there. I couldn't have happened to me in other stores what happened to me in that first store where I discovered Zico. The great coconut water war had begun. In the beginning, it was me against Mark. And we were just fighting it out in the streets. And then as I started to hire people, everybody had the same mentality. It was like, we're going to crush Zico. And that's what drove us. The first thing on our mind was, how do we crush Zico? And that's all we did. So it actually forced us to move faster. It forced us to go broader. It forced us to do more than I think we would have done if we didn't have the company. Coca-Cola would go on to acquire Zico in 2013. PepsiCo would also enter the fight. Investing in coconut water brand won. However, Vitacoco would soundly beat it as well. Eventually, in 2021, Coke sold Zico back to its founder. And PepsiCo divested one. Today, Vitacoco holds a 51% market share in the United States. You've got to always focus on your consumer because in the end, that's who's buying your product. That's who you need to cater to. But if you focus on your competitor, you move faster. And you become more aggressive. And you want to win more. And you want to do it before the other guy does it. And I think it's quite beneficial to have a strong competitor when you're starting a business. As the company grew, Vitacoco couldn't solely rely on Brazilian coconuts anymore. Looking to expand, Vitacoco would begin sourcing coconuts from other countries, starting in the Philippines, and later in Sri Lanka, Indonesia, Malaysia, and Thailand. The company approached suppliers and offered them the right equipment for long-term supply agreements. Today, the global network sources from thousands of farms across 10 countries and 19 factories, with their signature coconut water sold in more than 30 countries. Mike attributes two major components to the company's success over the next decade, getting into Whole Foods in 2006 and celebrity endorsements. We sold part of the company to a group of celebrities, Madonna, Matthew McConaughey, Anthony Kiedis. They invested in the business. And then they started talking about the category and the brand in interviews, on stage, all of these type of things, which helped really put coconut water on the map. And then the next big moment for us was Rihanna. We created a partnership with Rihanna in, I believe, 2009, right as she was exploding. The timing was perfect, and we actually used her in advertising. We had billboards, we had media. In 2012, a class-action lawsuit regarding Vitacoco's marketing began, citing misleading health claims and false advertising. In the early days, we had marketing claims, like we would say it's nature's Gatorade, or we would say it's got more potassium than two bananas. And then the question is, how big is the banana? And that became an issue for us. So now we say more potassium than one banana. So these type of things are very complicated. The company is committed to having a positive impact on the farming communities where it sources ingredients. In 2014, it launched its social impact program, the Vitacoco Project, with which 12,000 farmers have partnered. The project has donated $15 million worth of product, built 36 schools and classrooms, and distributed over half a million coconut seedlings across the world. In 2022, the Vitacoco Company announced their B Corp certification. In the past few years, revenues and profits have overall increased, with $380 million in revenue and $39 million in profit for 2023 as of Q3. Vitacoco is our core business, but at the Vitacoco Company, we're looking to, over time, create a portfolio of healthy beverage brands. Although coconut water accounts for 91% of overall sales, the Vitacoco Company brand family has expanded over the years to include coconut milk, juice, oil, and cream as well. Aluminum Canned Water Ever & Ever and Protein Infused Water Power Lift have also recently been added to the company's catalog. In October of 2021, Mike and Ira rang the opening bell at NASDAQ when their company went public. To ring the opening bell, it was just an incredible feeling. It was a moment to stop and think, recognize what we had achieved, but then focus on the next objective. And that's exactly what we've done. The company hit a significant milestone in 2023. In a single year, across their thousands of coconut farms in over 30 countries, at a rate of about three million a day, one billion coconuts were cracked to meet the demand for their consumer goods. Everybody would tell me in the early days, it's a fad, you're never going to be successful. We've grown the business tremendously since the IPO. And I think we're in the process of creating an incredible company. We're really excited about expanding further into a lot of the countries that we're in. And so we see a big opportunity to continue to expand across the globe to provide a good growth.