ZICO Coconut Water offers new entry points for consumers
Coconut water projected to be $1.5B industry by 2020
The liquid refreshment beverage market has seen the emergence of many categories in the past decade or so. Among those emerging categories, coconut water has shown that it has the ability to reach both niche and mainstream consumers through its health positioning as well as exploration of new flavors and product formulations.
“The coconut water category has continued to climb over the years,” says Tom Larsen, president and general manager at ZICO, El Segundo, Calif. “While initial explosive category growth has naturally slowed in line with the total beverage category, we’ve seen household penetration hit 13.5 percent, plus coconut water is no longer isolated to just the natural channel. We’ve even seen coconut water showing up on menu options resulting in a threefold increase in foodservice menu penetration. We’re really excited to see coconut water evolving as both a stand-alone product and ingredient base, and we have high expectations for the future.”
As one of the category leaders within the coconut water market, ZICO has seen the evolution of the market and its consumer base. Through this evolution, the brand remains optimistic about its market future.
“The coconut water category is projected to be a $1.5 billion industry by 2020,” says Meghann Seidner, ZICO’s vice president of marketing. “We’re in a sweet spot this year with consumer interests and functional trends. We’re seeing coconut water go from a beverage offering beloved by the early adopters to becoming a mainstream beverage offering.”
Aiding the coconut water market’s ability to reach these projections, ZICO has continued the revolutionary spirit that helped springboard the brand to where it is today.
“Industry trends show that the coconut water category will see continued evolution and growth in entirely new categories, with the increase of coconut water as an ingredient and in functional and plant-based beverages, like our ZICO COCO-LIXIRS line,” Larsen says. “As seen from our 2018 innovation, we’re committed to lead the category by finding new ways to incorporate added functionality and benefits with coconut water always as the hero.”
Seidner also highlights the early innovations from 2018 as an opportunity for ZICO to reach a more diverse consumer base.
“For 2018, it excites us to think of ZICO’s growth through delicious new flavors and pushing the industry on ingredients like organics,” she says. “Given new consumers are 30 percent more likely to enter the category through flavors, we see a tremendous opportunity to introduce more consumers to our brand and the inherent benefits of coconut water with fun new flavors such as Jalapeño Mango.
“We know that more and more consumers are reaching for coconut water when they want to take better care of themselves,” she continues. “We look forward to leveraging our equity in coconut water to embrace the opportunity and the runway the category is providing to roll-out our ZICO COCO-LIXIRS and ZICO Chilled Organic lines.”
Founded in 2004 by Mark Rampolla, ZICO’s distribution and reach took a new turn when it received an investment from the Venturing and Emerging Brands (VEB) unit of The Coca-Cola Co., Atlanta. In 2013, ZICO went from being an investment of The Coca-Cola Co. to a wholly owned subsidiary.
During the past five years, ZICO has maintained the culture that led to its founding 14 years ago while still realizing the benefits of having the backing of the largest non-alcohol beverage manufacturer.
“ZICO has always believed in the power of holistic wellness, as evidenced from our beginnings in the yoga community in New York and L.A.,” Larsen says. “When ZICO and VEB first started working together during the brand’s early growth state in 2009, the partnership allowed us to scale the brand even further and bring this vision to life for more consumers. The VEB incubation unit has provided us the resources and tools we needed to get more sophisticated in our planning, while retaining the magic of the ZICO culture in our Los Angeles office.
“We have plenty of fun in the office, find ways of bringing yoga and other forms of mindfulness into our day-to-day, and have the full support of the VEB system,” he continues. “We’re empowered to be dexterous and agile in our execution, and commit to experimenting across the category space.”
Seidner explains that because of VEB’s access to market insights and distribution networks, investment brands like ZICO are able to develop connections to today’s market and the future. “We’ve been able to leverage our partners and find ways to expand across categories to meet beverage consumers’ ever-evolving needs by connecting them to a portfolio of future-forward choices,” she says.
For brands in the scaling stages, such as ZICO, VEB has been able to apply real-time market lessons that were learned from its earlier investment brands.
“The beauty of the VEB model is that it allows us to learn from multiple brands within the system,” Larsen explains. “The lessons learned from our VEB partners are always helping us to grow and evolve in smarter and faster ways. A great example of this is the work done on the ZICO COCO-LIXIRS line. It was a result of the combined efforts of a sister VEB brand, where we were able to tap into their proprietary technology and demonstrate how we were able to work cross-functionally as partners within the VEB organization.”
ZICO’s success also can be pinpointed to market penetration as it has achieved global status, with the bulk of its business in North America, Larsen says.
Another benchmark related to ZICO’s performance since fully joining the VEB unit was its accomplishments from last year.
“2017 was an exciting year for ZICO,” Seidner says. “Following the success of our What’s Inside is Everything campaign, which resonated with consumers more strongly than any brand campaign to date, we launched several massive experiential events that encouraged consumers to look within themselves and discover what they’re made of. Of course, consumers enjoyed sampling what we’re made of too.
“Additionally, it was also the first full year of our PET bottle restage,” she continues. “We moved to 100 percent not-from-concentrate coconut water with no sugar added in a beautiful, proprietary PET bottle. This on-the-go bottle and the marketing behind it was able to drive our business volume to grow more than 30 percent in cold availability channels in 2017.”
Although ZICO has long been a headmost brand for the coconut water market in the United States, the brand leader is not resting on it brand recognition to further its place in the beverage market. Instead, it is taking its forward-thinking approach to bring the brand and the coconut water category into the next wave of innovation.
“At ZICO, we are committed to the promise we made to consumers 14 years ago — when we introduced the brand and the inherent benefits of coconut water,” Seidner says. “As one of the pioneering brands in the category space, we’re proud of the fact that our hero product — ZICO Natural — is 100 percent not-from-concentrate coconut water, with no sugar added. Our commitment to simple, high-quality, and purposeful ingredients is at the core of the ZICO brand and always will be.”
The brand showcased this commitment a few years ago with the development of its Chilled line. “The chilled space is one of the primary drivers of growth within the category, with coconut water being used as a ‘hero’ ingredient,” Larsen says. “We were able to leverage the opportunity and give consumers a beverage option that offered the best of both worlds — all the hydration benefits of coconut water and the taste of refreshing juice.”
The success of this innovation can be recognized by ZICO’s efforts to expand the Chilled lineup with the release of Pineapple Mango Chilled Organic Coconut Water and Natural Chilled Organic Coconut Water.
“At ZICO, it’s important that we’re always evolving to better meet consumer needs, and this is exactly what we did with ZICO Chilled,” Larsen explains. “The chilled lineup is non-GMO, 100 percent organic, and offered in a convenient PET bottle. The flavored option, ZICO Pineapple Mango Chilled Coconut Water, has just three ingredients: 100 percent organic not-from-concentrate coconut water, organic pineapple juice and organic mango puree.”
Recognizing that it is too early to pinpoint where the Chilled lineup will land in regards to ZICO’s SKU performance, Larsen says its presence is necessary for the brand’s advancements.
“While it’s too early to tell just yet, since it just recently hit shelves, we’re looking forward to seeing the response, since chilled is what’s really driving recruitment to the category,” he says.
ZICO also furthered its flavor commitments to its ambient line with the release of ZICO Jalapeño Mango Flavored Coconut Water. “Bringing exciting new flavor options to the category is essential for recruitment, and Jalapeño Mango is a particularly appealing flavor combo, as mango flavored juices grew by 9 percent in 2016, and spicy flavors are increasingly in-demand,” Seidner says. “ZICO is the first brand to introduce a spicy and sweet flavor fusion to the coconut water category with Jalapeño Mango Flavored Coconut Water.”
However, ZICO’s innovations are not reserved to only the coconut water category. Featuring a blend of coconut water with organic, cold-pressed juice, ZICO COCO-LIXIRS is the brand’s first major foray into the hybrid beverage market.
“We know that people reach to both coconut water and cold-pressed juices to feel their best, so we believe this new innovation offers the best of both worlds,” Larsen says. “We’re leveraging the equity in the coconut water category that we talked about, and capitalizing on the growth the cold-pressed juice category has seen.”
Available in three varieties — unbe-leaf-able, turn up the beet, and for lemon’s sake — ZICO COCO-LIXIRS are designed to meet additional consumer need states, Seidner explains. “Ours will be the only offering out there that is coconut water based, under 100 calories, organic, cold-pressed juice, not from concentrate, and contains adaptogenic ingredients like ginger and turmeric,” she says.
Designed with health and wellness, and approachability in mind, ZICO COCO-LIXIRS’ founding can be traced to the consumption habits of ZICO team members.
“While we’re committed to being a champion for the consumer, we’re consumers ourselves,” Seidner says. “We had a feeling a greens variant was going to be a staple, given that here at the ZICO office, there’s a pretty heavy juice habit amongst a lot of the team. It was a great team effort playing with the cold-pressed juice options in development.
“We knew we really were onto something special when we realized how a base of coconut water versus other juice options gave a smooth taste experience, while keeping the products naturally low in sugar,” she continues. “Ultimately, we’re excited where we landed with ZICO COCO-LIXIRS; they’re delicious, functional and meet the growing needs of what the consumer wants, plus the names are such an added bonus. They exemplify the fun-loving spirit of ZICO as a brand, and introduce people to our better-for-you options with that edge of approachability and wit.”
Retailers within the natural channel and select customers saw the roll out of ZICO COCO-LIXIRS this spring, while a national expansion is slated to take place this fall, Seidner adds.
Although ZICO has showcased its ability to be a forward-thinking innovator when it comes to flavor and new product trends, the brand also applied that dedication to its packaging. To meet the need of consumers across various consumption occasions, ZICO packages its coconut water in plastic bottles as well as in cartons.
“We are the first brand to offer coconut water in both a bottle and Tetra Pak option,” Larsen says. “We work with the [Forest Stewardship Council] FSC Certification to ensure all of our Tetra Pak comes from responsibly managed forests. The motivation behind our packaging evolution was to accommodate the consumer need for ease and functionality and reinforce ZICO as a great on-the-go offering.”
Although the company does not have any new products or packaging news to share at this time, Seidner and Larsen both state that innovations are always in the works for the brand, so distributors and consumers should “stay tuned.”
Being a leader within the coconut water category, ZICO recognizes that expanding consumer reach for the brand also requires robust marketing programs and executions.
“We have a team of incredibly nimble and creative people in the ZICO marketing organization,” Seidner explains. “By being part of the Coca-Cola family, we’ve been able to execute multiple marketing programs in conjunction with the Olympic Games, which continues to be a strong pillar program for us.
“We previously referred to the success of our What’s Inside is Everything campaign, to help reinforce the duality of our message that it’s what’s inside that counts,” she continues. “In this campaign, we not only got our brand belief out via telling Jessica Alba’s compelling personal story, but we also were able to tell the stories of a few Olympic athletes to further hit home this powerful message. The team is about to roll out our most exciting marketing campaign to date, where we support consumers in their journey to combat the depleting demands of modern life by showing them how easy and accessible holistic wellness can be. This new campaign will launch this summer so please stay tuned to see what’s next.”
Yet, like many national brands, ZICO must also walk the line when it comes to national programs and regional ones.
“While we activate some programs at national level to ensure scale and program efficiency, we firmly believe that one size does not fit all, hence regional and customer customization are a staple for our brand,” Seidner says. “In addition to our national programs, we work on a regional level and with top customers directly to ensure a targeted connection with shoppers and we leverage our best in class field marketing team to help ZICO to reach consumers regionally in a personal and engaging way.”
Whether its marketing programs, new product development or packaging developments, ZICO has shown in its tenure that health-and-wellness motivations coupled with creativity will be staples in the future of the brand. BI