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This Next Big Beverage May Have Already Peaked

Coconut water beverages are everywhere. Will they last?


Coconut water is the darling of the health beverage business, but no one knows for certain if it’s worth the hype. Coca-Cola (NYSE:KO) must think so. Otherwise, the world’s largest beverage maker probably wouldn’t have acquired a majority share of Zico last week. Zico is the second-largest brand of coconut water.

No. 1 is Vita Coco, which recently took center stage in a lawsuit for its bold, and allegedly bogus, health claims. The blog Fooducate reported in February that Vita Coco manufacturer All Market Inc., settled the case and agreed to modify the nutrient claims on its label. The company could also be required to pay up to $10 million.

The authenticity of the health benefits associated with coconut water is one reason why critics say it’s headed toward failure.

Here’s another: One of Coca-Cola’s toughest competitors, PepsiCo (NYSE:PEP) also partnered with GNC (NYSE:GNC) and took a crack at the coconut water craze. Disappointment met both companies when its brand, Phenom, became a phenomenal failure, according to CNBC. Despite dismal results with Phenom, Pepsi hasn’t given up as demonstrated by the recent addition of three new coconut water flavors to its line of Sobe products.

Beverage giants Pepsi and Coke aren’t alone. John Craven, founder and CEO of beverage publisher, BevNet, says some 250 companies sell beverages with coconut water.

“It’s like in 2002 if you didn’t have some sort of energy drink in your stable, you were an idiot. I think people think the same way about coconut water today,” Craven told CNBC.

Coconut water is most popular among those who live in tropical regions. Americans aren’t all that crazy about the drink’s taste and texture. John Sicher, publisher of Beverage Digest, shared his concerns regarding the beverage’s unique flavor.

“It’s a real part of the beverage business,” Sicher said, “but Americans have a problem with the taste. As a main product, I think it will do some volume, but I think it has a bigger future in beverages as an ingredient.”

So, will coconut water become the next Gatorade? Probably not, at least not in the U.S.

Article printed from InvestorPlace Media,

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