Coconut water is one of the latest trends to mark the health world, and consumers worldwide are knocking back the drink by the gallon because of its purported health benefits.
The water is the clear liquid extracted from young (or green, or unripe) coconuts. This is not to be confused with coconut milk, which is taken from the meat of the coconut.
While it is technically a fruit juice, the popularity of coconut water has been growing worldwide because it is rich in electrolytes like magnesium, phosphorus, potassium and sodium. This makes it a perfect natural energy drink (or hangover cure, if that’s more your speed).
Yes, consumers are pretty smitten with coconut water, to the extent where the global coconut water market is expected to reach $4.19 billion by 2019, growing at a CAGR of 25.24%.
Coconut water is great, but it’s no miracle drink
The thing about something that seems too good to be true is that it probably is.
Don’t get us wrong, there are definitely a lot of health benefits to coconut water, just maybe not as many as some manufactures would have you believe.
False health claims and undeclared added sugars (and other ingredients) have plagued big vendors, and lead to a lot of consumer confusion about whether to include coconut water in their health routine.
Vita Coco, for instance, positioned its products as super-hydrating, claiming that its coconut water has almost 15 times more potassium than a sports drink. These claims about super-hydration were found to be false and Vita Coco faced law suits in 2012. Similarly, Zico is also facing law suits for claiming that its products were natural, while in reality they were made from concentrate.
On top of the furor over these erroneous health claims, the coconut water market is facing an uphill climb as several big challenges threaten its growth.
Sourcing of tender coconuts
Initially the top vendors in the market sourced their coconuts from Brazil but eventually, supply was not able to meet skyrocketing demand. Vendors have now shifted to Asia to source coconuts from countries like the Philippines, Indonesia, and India.
However, most of the coconut trees in Asia were planted during the late 1950s. The most productive period for coconut trees lasts between 10 and 30 years, so the aging trees in the APAC region are likely to be a big challenge for market growth over the forecast period.
Emergence of maple water
As a health fad itself, coconut water was destined to be challenged by other fads. Maple water—made from the raw sap of sugar maple trees—is one such fad.
Maple water can match coconut water’s health benefits in terms of calcium, magnesium, and potassium content. But it’s got a step up from coconut water, as it’s a younger market with nowhere to go but up. Additionally, no one has debunked the health claims of maple water yet (although we’re sure this will happen eventually).
Maple water retailers in the US are displaying the product side by side with coconut water in order to capitalize off the better-known product and up their sales and tap into the built-in market for natural energy drinks.
High price of coconut water
Like most ‘health’ foods, coconut water is expensive. It’s sold at a higher price point than conventional fruit juices and sports drinks alike, which limits its penetration in both these market segments.
The high price is mostly due to the higher price of the raw materials and the cost of pasteurizing and packaging the product. But regardless of the reason for the higher prices, consumers are fickle and easily put off by high price tags, which will be a big barrier for coconut water to overcome in the next four years.
