The sun is shining on the coconut water category. With dollar sales up 13.8% YoY through early March, there’s optimism that summer will be even hotter. Here’s a quick breakdown on the current category outlook: 

Vita Coco, firmly established as the category’s dominant player, is leveraging its position to push coconut into new areas. Following last year’s launch of Coconut Barista Milk, the brand’s latest innovation – Vita Coco Treats, debuting exclusively at Target in a single 16.9 oz. SKU, Strawberries & Cream, for $3.49 – is notable as an overtly indulgent release that moves away from some of the subtler tweaks of past years. 

Within the market, it’s something of an imperfect fit, at least according to the numbers: 

• Vita Coco Treats packs 35 grams of sugar in each carton, running in contrast to the 54.2% of coconut water consumers who rank “low sugar” as an important label claim, according to Brightfield Group Quarterly Consumer Wellness Survey, (Q1 2024).
• But it ticks boxes for both “hydrating” health claims (61.5%) and “made with real food ingredients” (59.5%).

While TetraPak remains the brand’s calling card, Vita Coco’s interest in cans – as represented by its c-store oriented, two-SKU Vita Coco Coconut Juice line in 16.9 oz. cans – is growing.

• The format represented around 31% of its total coconut water volume in 2023, according to Jefferies Equity Research analysis. 
• However, retailers surveyed by Goldman Sachs this quarter expect to decrease shelf/cooler space for Vita Coco by 0.3% on a weighted average store basis.

Cans seems to be where much of the early stage action is playing out: see Australian brand Koko & Karma, which is touting functional ingredients like marine collagen and prebiotic lychee in its 16.9 oz. cans, now available in 12-packs at retailers like HEB and Central Market. 

Elsewhere, on-the-move Once Upon a Coconut also has a functional SKU – Energy+, with 120 mg of caffeine – moving through powerful partners like Big Geyser in NYC, while 100 Coconuts has teamed up with Manhattan Beer Distributors in NYC to carry both its standard RTDs and boozy cocktails. A sponsorship deal with the hottest team in Major League Soccer, Inter Miami FC, isn’t likely to hurt either.

Don’t forget about legacy brands like Zico Rising, C2O or Zola, either. Zola’s parent company  Arcadia Biosciences teased the release of new flavors this spring during a recent quarterly earnings call last month, citing optimism that the brand has “turned the corner” on the back of improving volumes. And Novamex-aligned C2O, a longtime player in cans, has also continued to show growth – to the tune of +16.1% dollar sales/+17.8% volume over the 52-weeks ended March 5, per NielsenIQ.  

Meanwhile, at cold case leader Harmless Harvest, there may be some uncertainty in the c-suite following CEO Ben Mand’s sudden departure to Guayaki, but the brand’s suite of coconut products continues to widen, most recently with the launch of sparkling coconut water at Expo West last month. With around 61% share of the refrigerated category (+12 dollar sales YoY through March 26, per Nielsen), its position in beverages is strong as ever – maybe part of the reason it’s been pushing further in yogurts and other coconut products as of late. 

Go Deeper: Once Upon A Coconut Makes Growth Leap, Adds Investors.

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Casa Azul, Clase Azul – one can understand how consumers could get confused between the brands. But according to a federal judge, the name similarities are not enough to win a trademark infringement case. Yesterday, the judge ruled in favor of Casa Azul, the tequila company founded by beverage innovator Lance Collins, in a trademark trial filed by long standing tequila brand Clase Azul.

• The dispute began in September 2022, soon after Casa Azul launched its canned tequila sodas. Clase Azul filed a trademark infringement action in federal court arguing that the new brand caused undue confusion with its flagship tequila.
• Clase Azul, with its signature ceramic bottle, has been changing the perception of tequila worldwide since it launched in 1997.
• Casa Azul, meanwhile, has turned its attention towards its organic high end tequila of the same name and has recruited a roster of celebrity investors, representing the newer wave of high-end tequila since consumers began trading up during the pandemic. 

Read the full story on BevNET.

Brands are always on the move, so here’s the latest distribution news from around the beverage industry:

🍋 “Ready-to-make” cocktail sachet brand SAYSO is now in all 163 locations of The Fresh Market with its Skinny Spicy Margarita and Skinny Cardamom Paloma varieties, co-founder Alison Evans announced on LinkedIn.

🍹 Canned agua fresca brand Bawi is now chainwide in 70 Fresh Thyme Market locations with distribution via Pod Foods.

🇻🇳 RTD Vietnamese coffee brand Sang is rolling out to all 13 Bristol Farms locations in California. 

🍸 WithCo Cocktails is now launching in around 1,500 Walmart stores and 500 Hyatt Hotels, the company said on LinkedIn.

🦌 Energy drink brand Bucked Up is now sold in Jewel-Osco stores.

The Hemp Beverage Alliance (HBA) has formalized its decision-making team, announcing the formation of its inaugural board of directors. The nine-seat board features senior leadership from North Canna Co., Happi, Jones Soda, Cheech & Chong's Global Holdings, Cycling Frog, Plift, Cantrip, Squared and Rebel Rabbit.

📝 HBA president and CEO Christopher Lackner chose the board members in accordance with the Alliance’s bylaws and after several months of discussions with both advisors and potential candidates.

💬 Its main purpose will be to provide “overall strategic guidance and vision for the organization” while providing oversight for the organization's finances, operations and administration, Lackner said.

🍸 The Board will also work as ambassadors for the category as the HBA works with regulators, retailers, distributors and other stakeholders to open up the marketing, distribution and sales for hemp beverages.

Wine and spirits sales weighed down revenue growth for luxury goods group LVMH in Q1 2024, according to the company’s earnings report yesterday. 

• LVMH saw their overall wines and spirits business fall in revenue down -16% in Q1, blaming a cautious attitude among retailers.
• Spirits and Cognac were down -16% in sales, due to retailers limiting their orders for Hennessy, mirroring issues across the board for spirits.
• Like other Cognac brands, Hennessy has experienced a significant slowdown in sales in the U.S. after accelerated growth during the pandemic. Revenue gradually recovered for wine and spirits towards the end of last year, rising 4% in Q4.

Cognac, which makes up 4% of spirits dollar share off-premise, was down -10.4% at the end of 2023, according to NIQ, and has become one of the spirit categories where consumers are now trading down. 

Check out our recent interviews with startups and major spirits companies on how they plan to revitalize the category.