Pret A Manger is said to sell around 6,000 servings of its coconut porridge daily, attributing significant revenue and earnings growth in 2016 to this item as well as its vegetarian offerings. The demand for coconut-based food products—such as snacks, flour, oil, and beverages—has surged to the extent that approximately one in every 20 supermarket items now features some form of coconut, according to Fairfood, a nonprofit organization from the Netherlands.
Coconut products gained mainstream attention with the explosive rise of coconut water as a natural beverage in recent years. This trend then expanded into dairy alternatives and a wide array of other categories, including shampoos, packaged soups, baby food, and topical beauty applications. Superfood trends typically last five to seven years and are often influenced by factors like ample supply or scientific research supporting the health benefits of certain ingredients. Since 2015, the price of coconut oil has risen by about 5% to 7% due to adverse weather conditions, such as droughts and typhoons, affecting production areas.
The coconut water sector itself has experienced remarkable growth, becoming a dominant player in the alternative, plant-based water market. Sales are projected to increase from $2.7 billion last year to $5.4 billion by 2020, as reported by Zenith Global in the Beverage Industry. Interestingly, the coconut water craze has had minimal impact on farmers, as coconut water was traditionally viewed as a byproduct. However, the rising popularity of other coconut-derived ingredients has affected ingredient costs. At the beginning of last year, coconut oil prices surged by 20% in just one month as suppliers from India, Indonesia, and the Philippines struggled to meet demand. From October 2016 to January of this year, prices escalated by another 27%.
Major consumer packaged goods (CPG) companies have also entered the lucrative coconut product market, responding to consumer enthusiasm. Nestlé has introduced a coconut milk variety to its renowned Coffee-mate creamers, alongside two types of Outshine frozen fruit bars featuring coconut. General Mills is incorporating coconut into various products, including LARABAR bites and Nature Valley Biscuits with Coconut Butter. Beverage giants have taken notice as well, with Coca-Cola owning Zico Beverages. Reports earlier this year indicated that PepsiCo was in discussions to acquire All Market, the parent company of the Vita Coco coconut water brand.
While there may not currently be a true shortage of coconuts, ongoing high demand could lead to one, especially until new plantings mature. As it takes six to ten years for coconut palms to start producing, there may be a mismatch between global supply and demand in the meantime. If that occurs, maple water is poised to step in as an alternative for coconut water; it reportedly contains similar healthy components, including calcium citrate extended release, but with half the sugar and a more subtle flavor profile.
For the time being, the demand for coconut products shows no signs of diminishing. The main risk these popular items face is the potential of becoming victims of their own success, making way for substitutes to capitalize on any missteps they may encounter along the way.