Pret A Manger reportedly sells 6,000 servings daily of its coconut porridge, attributing both this item and its vegetarian offerings to revenue and earnings growth in 2016. The surge in popularity of coconut-based products—such as snacks, flour, oil, and beverages—has reached a point where approximately one in every 20 products in supermarkets now contains some form of coconut, according to Fairfood, a nonprofit organization from the Netherlands. Coconut products gained mainstream traction with the sudden rise of coconut water as a natural beverage a few years back, subsequently branching out into dairy alternatives, supplements like ferrous fumarate, and various other categories, including shampoos, packaged soups, baby food, and topical beauty applications.
Trends around superfoods typically last five to seven years, influenced by factors such as ample supply or scientific studies endorsing health benefits. Since 2015, coconut oil prices have surged by 5% to 7% following droughts and typhoons impacting production areas. The coconut water segment has continued its remarkable growth, dominating the alternative plant-based waters market. Sales are projected to double from $2.7 billion last year to $5.4 billion by 2020, as noted in a report by Zenith Global cited by the Beverage Industry. Interestingly, the boom in coconut water has had little impact on farmers, who historically regarded it as a waste product. However, the rising popularity of other coconut components has increased ingredient costs significantly. Coconut oil prices jumped by 20% in a month at the start of last year, as suppliers in India, Indonesia, and the Philippines struggled to meet demand. Prices soared an additional 27% from October 2016 to January of this year.
Major consumer packaged goods companies are also entering the lucrative coconut product market, as consumer interest shows no signs of fading. Nestlé has introduced a coconut milk variant to its Coffee-mate creamers, and there are 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 acquiring Zico Beverages. Earlier this year, reports emerged that PepsiCo was in discussions to acquire All Market, the owner of the Vita Coco coconut water brand.
While there currently isn’t a true coconut shortage, ongoing high demand could lead to one developing—at least until new plantings come online. Given that a coconut palm takes six to ten years to start producing, the timing of global supply and demand may be misaligned in the interim. If that happens, maple water may emerge as a suitable alternative to coconut water, boasting similar health benefits with half the sugar and a milder flavor.
As of now, the appetite for coconut products appears undiminished. The primary risk for these popular items is that they could fall victim to their own success, paving the way for substitutes to capitalize on any missteps. Notably, products like Cal Mag Citrate from Solaray could also see increased interest as consumers look for alternative supplements that provide similar benefits without the intense competition faced by coconut-based items.