Coca-Cola’s ZICO – Silent dominance of a Multi-billion Dollar Market
With three recent product launches, Coca-Cola looks very keen on the coconut water market in North America.
What is ZICO?
ZICO is a pure premium coconut water beverage launched in the year 2004 by Mark Rampolla. It boasts of an impressive nutrient profile with presence of five electrolytes, potassium content equivalent to that of a banana and low acidity. The key selling point is that of ‘natural’ taste, with the company declaring – ‘You used to have to shinny up a tree and machete-open a coconut to experience this miracle. Not anymore. We climbed the tree for you’
Coca-Cola began investing in the company since 2009 and acquired it in late 2013 through their Venturing and Emerging Brands (VEB) business unit. Through this investment, Coca-Cola aimed to attain a leading position in the rapidly increasing coconut water market.
In March 2018, Coca-Cola announced three new products – ZICO COCO-LIXIRS, ZICO Chilled Organic and ZICO Jalapeno-Mango. Of these Coco-lixirs is particularly interesting as it combines coconut water with a cold-pressed juice.
Coconut Water – Why the interest?
Coconuts, which have a traditional and ritualistic significance in countries such as India, are relatively new phenomena in North America. ZICO is a pioneer in this regard due to its extensive focus on the contents and natural aspects of their products back when notions such as ‘cold-pressed’ and ‘organic’ were in their infancy.
A Non-soda Health Drink
Premium coconut water brands such as ZICO, position their products as an alternative to sugary carbonated drinks. This positioning is an extension of the ‘low sugar, low calorie’ marketing megatrend. The rising obesity rates and government actions in the form of sugar taxes and awareness programs are also a key aspect of the rise of coconut water.
Hydration & Refreshment
Everyone knows about the necessity of staying hydrated – not just as a biological need but also to lose weight. For a while now companies have focused on the idea of making water more exciting, which is evident in the launch and success of water enhancers such as Kraft’s MiO and Dasani Drops. Coconut water, with its large presence of electrolytes, is an ideal and natural choice.
Yoga, martial arts and chicken tikka are enough proof of the influence that Asian cultures have on western consumers. The idea of being associated with such products has always been an exotic feeling and companies have capitalized well on this trend.
Premium Segment – A detriment?
An interesting thing about ZICO is that it is positioned as a relatively high-priced premium brand. The traditional coconut of Asia is a cheap good and is available throughout summer in abundance. Even after considering the costs of getting the drink to North America, the premium looks a bit high. One cannot argue this is due to the all-natural /direct-from-the-tree nature of the product because that is how coconut water is traditionally consumed. Could this be the reason for the relatively slow pace of innovations in the market (it was acquired nearly six years ago)?
For all its nutritional benefits and electrolyte-charge coconut water is an acquired taste, it, after all, is a tropical plant and not native to North America. Will such products remain in the premium segment and act as growth drivers or move to the mass-market segment is a big question with no certain answer.