U.S. coconut beverage producer coconut water brand Vita Coco (COCO. US) went public on the NASDAQ on Thursday, with an IPO offering price set at $15 per share, below the pricing range (previously expected to be in the $18-21 per share range).
Vita Coco's product matrix mainly includes the main product coconut water, as well as expanded coconut oil and coconut milk products, plant-based energy drink RUNA, etc. The company is an American coconut faucet brand with a market share of 46% in the United States, while the second place has a market share of only 10%.
Vita Coco ended up down 9.87% on its first day of listing at $13.52, with a market capitalization of $750 million.
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Founded in 2004, Vita Coco initially had only one category, coconut water, and later expanded to include coconut plant milk, coconut oil and other products. Vita Coco's shareholder lineup is very luxurious, including the Abbey InBev related Verlinvest family, movie stars Matthew McConaughey, Demi Moore, singer Madonna, and Reignwood Group, the parent company of Red Bull China.
It was also with the help of celebrities such as Madonna that Vita Coco quickly spread in the European and American markets as a "natural sports drink".
According to the prospectus, according to IRI Custom Research, Vita Coco is the leader of coconut water brands, with a market share of 46% in the United States, 36 percentage points ahead of the second place.
In 2014, Vita Coco raised $166 million by selling a 25% stake in Reignwood Group, the parent company of Red Bull China, at a valuation of $665 million. The two reached a strategic partnership and established Vita Coco China, where Reignwood Group enjoys distribution rights in Vita Coco's Greater China region.
As of June 30 this year, Vita Coco's Asia Pacific business accounted for 15% of its international business, compared with 60% in Europe.
According to prospectus data, Vita Coco had net sales of $311 million and net profit of $32.69 million in 2020, compared to just $9.42 million in the same period of 2019. In the first half of 2021, Vita Coco's net sales increased by 15% year-over-year to $177 million, primarily from Vita CocoCoconut Water, whose net sales increased 29%.
Affected by the epidemic, the sales data of health drinks have increased worldwide, and the scale of coconut water has also expanded. According to Euromonitor, the global coconut water market has expanded to $2 billion. According to the prospectus, during the epidemic, Vita Coco sales also increased by more than 100% year-on-year and expanded to 24 countries or regions.
This year, driven by health trends and plant-based beverages, the popularity of coconut water has not decreased.
For example, in August this year, Yuanqi Forest announced a new product on its public account - "summer wind" low-sugar coconut water; the new brand of coconut water, which was established in October last year, also completed three consecutive rounds of financing within less than a year of establishment.
Yuanqi Forest "Summer Wind" positioned the price of 9.5 yuan a bottle, cocoa full point coconut milk price of about 12 yuan a bottle. Only from the pricing point of view, the two products are different from the old coconut coconut palm tree positioning of about 4 yuan a box, and will share more with Vita coco in e-commerce, convenience stores, fresh supermarkets, etc. Coconut water, which targets young people such as Vita coco, has a unit price of around 10 yuan.
According to consultancy Euromonitor, the retail sales of coconut water products increased from 296 million yuan to 1.248 billion yuan in the five years from 2014 to 2018. From the perspective of sales trends, it is expected to reach 2.87 billion yuan in 2023.
In fact, FMCG giants PepsiCo, Danone, Coca-Cola, etc. have long been laid out on coconut water, and Wahaha has also produced a coconut aquatic product. In 2013, Coca-Cola coconut water brand zico, and in 2016 the product was officially brought to China.
Vita coco and Zico are very similar in appearance, they were both created in 2004, the ingredients are from Southeast Asia, and the share of the coconut water market in the United States was ranked first and third, respectively. After Zico entered the Chinese market, it once relied on the Coca-Cola channel to face Vita coco.
However, Vita coco's ongoing promotion in the Chinese market is still stronger than Zico's. Every year, Vita coco displays its products in hypermarkets during the high season and places advertisements in subway stations with high traffic. Vita coco's coconut aquatic products are also abundant, in addition to the original taste, there are pineapple flavored green coconut juice coconut water and so on.
Last year, under the influence of the epidemic, Coca-Cola made brand cuts around the world, and Zico, although it has become the second largest coconut milk brand in the United States, is also within the scope of the cuts and announced the suspension of production. Coca-Cola discontinued Zico, in addition to the competition of strong brands such as Vita coco, the category itself is too niche is also one of the reasons. During the period of its acquisition by Coca-Cola, Zico's market share never exceeded that of Vita coco.
In the Chinese market, the consumption habits of coconut water are far less mature than in Europe and the United States. Under the influence of plant protein groups, plant drinks such as oat milk, soy milk and almond milk are also more strong. In particular, soy milk has a more consumption base in China.