Cracking the Coconut Water Craze

Feb. 21, 2010— -- Ah, the coconut. The brown orb has lined beaches and bonked unsuspecting cartoon characters on the head since the beginning of time. It's been the subject of songs, from the classic "I've Got a Lovely Bunch of Coconuts" to the contemporary, such as Tyga's "Coconut Juice."

But what was once thought of as a tropical vacation indulgence has now become part of a multimillion dollar industry: coconut water.

It's low in calories, fat-free, natural and serves a purpose: hydration. Some consumers are likely to choose it over sugar-laden sports drinks, so it's no wonder big name beverage companies are vying for their piece of the coconut pie.

John Craven, the president of Bevnet.com, the beverage industry's leading review publication on all non-alcoholic beverages, says, "Coke and Pepsi are realizing that the future is not in soda. They obviously operate at a billion dollar or more level, and this niche is about $50 million, so they're trying to find the next innovation earlier."

Here's a success story that sounds like the start of a joke: Two guys walk into a bar in New York City and meet two stunning Brazilian women. In between small talk and cocktails, the beauties reveal a secret, an elixir from their homeland. In Brazil, coconut water is more popular than orange juice. The next thing you know, Ira Liran and Michael Kirban are on a plane to Brazil. Today, they're the owners of Vita Coco, one of the world's biggest coconut juice companies.

Maybe it's because she was burned by Pepsi when they dropped her after the controversial "Like a Prayer"-sponsored commercial, but Madonna is now joining the coconut water bandwagon. She plans on investing $1.5 million in Vita Coco, one of several coconut water companies in the United States.

Big Business of Coconut Water

Bevnet.com's Craven says attracting an A-list celebrity can boost a small company into the majors. "This is something that helps get eyeballs on the brand. I think this is the equivalent of a Gatorade commercial with Derek Jeter in it. It sells that lifestyle," he says. "Madonna has a healthy spiritual side to her and that's the type of user Vita Coco wants to attract right now, so it makes total sense for them."

Although coconut water is mainly sold at high-end outlets such as Whole Foods, and there's no TV advertising for the product, more people are ditching sport drinks and vitamin-infused waters in favor of the next big thing.

Most coconut water retails for about $2 for an 8-ounce drink box. Or you can always go to the real source.