Export possibilities for coconut water

Export possibilities for coconut water

The domestic bottled coconut water market is a tough one, but producers can leverage their products abroad, where Thai provenance is becoming a buzz phrase denoting quality organic products, local players say.

The coconut water production line at Family Garden Coco, the maker of Deli Harvest.

In Thailand, local bottled coconut water producers face strong competition from streetside young coconut sellers, who offer a similar product for half the price.

But abroad, Thai firms possess a privileged place in this rapidly growing market. International brands source their coconuts from Thailand, and Thai origin is slowly becoming synonymous for high-quality organic products, a prized asset for multinationals looking to move away from sugary drinks and into healthier alternatives, local producers have argued.

Coconut water sellers have been a ubiquitous sight on Bangkok's sidewalks for decades, but large players like Coca-Cola say the market for packaged coconut water is still in its early stages. Trapped between food and drink behemoths like Coca-Cola and street sellers are hundreds of local independent brands that mainly cater to specialised shops.

While these sellers lack the distribution networks and marketing budgets of their larger counterparts, some of them can garner large brand equity in foreign markets.

Consumers in developed markets increasingly look for organic products that provide full information about their contents, origins and production processes. In the market for organic foods, small brands have a first-mover advantage, since they are already perceived by consumers as bringing clarity in this respect, something that big food companies are rushing to emulate.

In recent years, independent brands like Kind Bars and Vita Coco have represented fierce rivals to food and drink giants. Many of these brands eventually become acquisition targets.

Kind Bars, founded in 2004, was one of the first in the US market to eliminate preservatives and is now an acquisition target for Kellogg, General Mills, Campbell Soup, PepsiCo and Mars, according to Reuters.

Pepsi recently acquired KeVita, which makes "sparkling probiotic drinks", for US$200 million (6.3 billion baht) and, according to Reuters, is in talks to buy the maker of Vita-Coco, the largest coconut water brand by volume. In 2013, Coca-Cola acquired coconut water maker Zico, which made its entry into the Thai market in the last quarter of 2017.

Demand for soda, including diet soda, has been falling for more than 10 years straight in the US. As demand for traditional drinks lags, global players like Coca-Cola and Pepsi are adding alternate ones, including coconut water, to their line-ups.

As consumers move away from sugary drinks, coconut water has been a big winner. Demand for coconut water is expected to increase 25% year-on-year in the next four years to $8.3 billion. Coca-Cola expects the segment globally to grow more than 50% in the next two years. The company expects the same growth pattern for the category in Thailand.

"Thai coconut water is one of the best in terms of quality. Thai coconuts speaks for themselves in international markets," said Piyaporn Tindukasiri, managing director of Family Garden Coco Co, which produces the local coconut water brand Deli Harvest.

Zico is manufactured and packaged in Thailand, in conjunction with two co-packers, one located in Ayutthaya and one in Sampram district. Coco Vita also sources a substantial portion of its coconuts from Southeast Asia.

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