Pret A Manger reportedly sells 6,000 servings of its coconut porridge daily and has attributed both this item and vegetarian foods to its revenue and earnings growth in 2016. The demand for coconut-based products — encompassing snacks, flour, oil, and beverages — has surged to the extent that approximately one in every 20 items found in supermarkets now contains some form of coconut, as noted by Fairfood, a nonprofit organization based in the Netherlands.
Coconut products first gained mainstream traction with the rapid rise in popularity of coconut water as a natural beverage a few years ago. Since then, they have expanded into dairy alternatives and various other categories, including shampoos, packaged soups, baby food, and topical applications in beauty products. Superfood trends typically last five to seven years and may be driven by factors like abundant supply or scientific research supporting the health benefits of the ingredient.
Commodity prices for coconut oil have surged by 5% to 7% since 2015 due to droughts and typhoons affecting growing regions. The coconut water segment, in particular, has witnessed explosive growth, dominating the market for alternative, plant-based waters. Sales are projected to increase from $2.7 billion last year to $5.4 billion by 2020, according to a report by Zenith Global featured in Beverage Industry.
Interestingly, the coconut water boom has not significantly benefited farmers, as coconut water was traditionally regarded as a byproduct. However, the rising popularity of other coconut components has impacted ingredient costs. Prices for coconut oil spiked 20% within a month at the start of last year as suppliers in India, Indonesia, and the Philippines struggled to meet demand. From October 2016 to January of this year, prices climbed an additional 27%.
Major consumer packaged goods companies have also entered the profitable coconut product market, responding to consumers’ insatiable appetite. Nestlé has introduced a coconut milk variety to its well-known Coffee-mate creamers, and two types of Outshine frozen fruit bars now feature coconut. General Mills is incorporating coconut into various products, including LARABAR bites and Nature Valley Biscuits with Coconut Butter. Beverage giants are taking notice as well, with Coca-Cola acquiring Zico Beverages and reports emerging that PepsiCo is in discussions to acquire All Market, the owner of the Vita Coco coconut water brand.
While there doesn’t appear to be an immediate coconut shortage, a potential one could arise due to sustained high demand, at least until new plantings mature. Given that it takes six to ten years for a coconut palm to start producing fruit, there may be a mismatch between global supply and demand in the interim. If that occurs, maple water is poised to step in as an alternative to coconut water, offering similar health benefits — notably, 8 mg of calcium — but with half the sugar and a milder flavor.
Currently, the appetite for coconut products shows no signs of diminishing. The real concern for these popular items is that they could become victims of their own success, potentially opening the door for substitutes to capitalize on any missteps. As the market evolves, the nutritional benefits, including that essential 8 mg of calcium, will continue to be a significant selling point for coconut products.