Vita Coco (NASDAQ:COCO) executives told investors at William Blair’s 46th Annual Growth Stock Conference that the coconut water category is seeing accelerating demand in the U.S. and abroad, supported by rising household penetration, broader retail visibility and consumer interest in natural hydration.
Chief Executive Officer Martin Roper said the company continues to view coconut water as a category in the early stages of growth, despite Vita Coco having launched in the U.S. in 2004. Roper said the company has delivered a 14% top-line compound annual growth rate and a 30% adjusted EBITDA CAGR over the five years since becoming public, based on the midpoint of its current guidance.
U.S. Coconut Water Growth Accelerates
Roper said U.S. coconut water category growth has accelerated from historical high-single-digit to low-double-digit volume growth to much stronger recent levels. According to Roper, category growth moved into the mid-teens by volume in the second half of 2024 and reached about 30% year-to-date through May 24, based on Circana Plus data, which includes club stores such as Costco.
Roper said Vita Coco’s growth has historically come roughly equally from increased household penetration and higher velocity per household. More recently, he said the acceleration appears to be driven more by household growth, while household velocity remains positive.
The company said consumer trends around clean ingredients, functional benefits, hydration, potassium intake and social media-driven wellness themes are helping the category. Roper said coconut water has “3x the electrolytes of the major sports drinks” and noted that it is used across multiple occasions, including breakfast, post-workout hydration, cocktails and recovery after alcohol consumption.
Roper said Vita Coco over-indexes with younger consumers, Gen Z and millennials, and multicultural consumers, including Hispanic, African American and Asian households. He said recent growth is being generated by Gen Z shoppers and families with children aged 13 to 17.
Retail Visibility and Market Share
Roper said retailers are giving coconut water more visibility, moving the category from lower shelves to larger shelf blocks. He pointed to Walmart’s recent reset as the most significant example, saying large modern Walmart stores may now feature about 8 feet of coconut water and adjacent beverages, compared with roughly three Vita Coco SKUs a year earlier.
Roper said Vita Coco holds a 42% share of the U.S. coconut water category based on Circana data. He said private label is the next-largest share position, though he noted that its share can be overstated because some retailers carry only private label coconut water. Among branded competitors, Roper said Vita Coco is about five times the size of the next brand.
The company sees continued room for U.S. expansion. Roper said coconut water represents less than 1% of total U.S. beverage consumption and that Vita Coco believes it can double its U.S. business. He cited opportunities in the Midwest, smaller convenience store chains and food service, where he said the company’s business is currently in the low single digits as a percentage of total sales but “probably should be in the low teens.”
International Markets Remain Underdeveloped
Roper said international markets remain significantly underdeveloped compared with the U.S. on a per-capita consumption basis. He said the U.K. is at about 45% of U.S. per-capita consumption, while Germany is at about 16%.
He said the U.K. grew 37% in the first quarter, while Germany’s coconut water category grew more than 100% and the Vita Coco brand grew close to 200% in Germany. Roper said the company’s goal is to get Europe to the size of the current U.S. business over a five- to seven-year timeframe, while noting that international gross margins are somewhat lower than U.S. margins.
Supply Chain and Capacity
Chief Financial Officer Corey Baker described Vita Coco’s supply chain as a competitive advantage built on long-term partnerships with coconut processors. He said the company operates through a network of 18 factories in six countries and aims to run that network at about 80% capacity to maintain flexibility.
Baker said the network is currently running above that preferred level because of demand growth. He said there are enough coconuts available, but the constraint is building packaging capability and having production lines ready while maintaining a capacity buffer.
A company video shown during the presentation said Vita Coco is on track to crack about 1.5 billion coconuts this year, or more than 4 million per day. Baker also discussed the company’s work through The Vita Coco Project, including efforts to support the planting of up to 10 million trees, build classrooms and hospitals, and help farmers improve productivity.
Guidance and Long-Term Targets
Baker reiterated the company’s guidance provided with first-quarter earnings. Vita Coco expects net sales growth of 18% to 20%, gross margin of about 38% and adjusted EBITDA of $132 million to $138 million.
He said the outlook assumes U.S. category growth of about 20%, though the category is currently growing around 30%, and global Vita Coco brand growth in the mid- to high-teens. Baker also said U.S. private label growth is expected to be 35% to 40%, helped by a launch with a large U.S. customer.
Baker said the company remains on track with its long-term objectives of mid-teens branded net sales growth and adjusted EBITDA margins in the high teens. At the midpoint of current-year guidance, he said Vita Coco would be at a 15% five-year branded net sales CAGR and a 19% adjusted EBITDA margin.
About Vita Coco (NASDAQ:COCO)
Vita Coco, Inc (NASDAQ: COCO) is a global beverage company specializing in coconut-based products. Founded in 2004 by Michael Kirban and Ira Liran, the company pioneered the introduction of refrigerated coconut water to U.S. consumers. Headquartered in New York City, Vita Coco sources coconuts from growers in tropical regions such as the Philippines, Indonesia and Brazil, partnering with local farmers to promote sustainable agriculture and community development.
The company’s flagship offering, Vita Coco Original Coconut Water, is available in multiple pack sizes and a variety of flavors.
