Top soft drink makers Coca-Cola, PepsiCo, and Dr Pepper Snapple are tapping coconut water, a natural drink touted as chock full of health benefits and one of the fastest growing categories in the US beverage market. For some perspective, coconut water accounts for a $400 million-and-growing fraction of the $100 billion nonalcoholic beverage industry.
Dr Pepper Snapple tied the distribution knot in 2010 with Vita Coco, the #1-selling US coconut water. Vita Coco recently reached $100 million in sales, more than double over its start in 2004.
Coca-Cola, however, led the wave in 2009 by purchasing a minority interest in the #2 coconut water brand Zico. As Zico has grown ahead of projections, there is talk that the #1 soft drink maker may soon try to acquire a majority stake. Today, Coca-Cola is expanding distribution of Zico in Europe, according to a recent Just Drinks article.
Over the last decade, Americans’ increasing focus on health has led to a decline in soft drink consumption. Coca-Cola US soda sales by volume have dwindled 12% from 2001. A 24/7 Wall Street article cites a 14% slide in PepsiCo soda sales by volume in the last 10 years. Sales by volume of Dr Pepper Snapple’s 7-Up brand tumbled 53% in the same period.
But despite these sales declines, consumers still drink carbonated soft drinks more than any other beverage in the US, according to Beverage Marketing Corp. This suggests that although coconut water isn’t likely to overthrow soft drinks in the nonalcoholic beverage market, soft drink makers continue to see the value in investing in healthier alternatives.