With Xiao Zhan and Wang Junkai as the spokespersons, will coconut water, which became popular overnight, be the next consumer "assassin"?

Coconut water has rapidly emerged in the Chinese market due to its unique taste and health properties, becoming a new generation of popular beverage. However, with the skyrocketing prices of raw materials and the increase in transportation costs, the price of coconut water products has gradually increased, which is contrary to the current trend of consumers pursuing cost-effectiveness.

Coconut water, endorsed by Xiao Zhan and Wang Junkai respectively, has become popular again.

With the popularity of coconut water in the past two years, coconut water products and brands have emerged in large numbers. How to stand out among so many homogeneous products is a question that every coconut water brand has to think about.

The lesser-known if and the lesser-known Jiaguoyuan chose to cooperate with popular stars to increase brand awareness.

The effect is obvious. The brand's voice and sales have increased. Due to the enthusiastic buying of many fans, the products even overflowed from warehouses.

But how long can celebrity popularity last?

In fact, the sudden popularity of coconut water-related drinks in the past two years has caused the raw materials of coconut water to go from being "disliked by everyone" to being in short supply. Last year, the topic of "Coconut water prices soared 4000%" became a hot search and was even reported by CCTV.

The rising purchase cost, coupled with the "fragile" nature of coconut water, has resulted in high costs for transportation and storage, which has resulted in both ready-to-drink coconut water and room temperature bottled coconut water being relatively expensive.

You know, nowadays, all industries are swept by the "low price trend", and consumers are paying more attention to the cost performance of products. Contrary to the consumption trend, how can coconut water, which has the potential to be a consumer "assassin", retain the love of consumers for a long time?

1. Why is coconut water so popular?

In the first half of this year alone, three well-known coconut water brands, Huanlejia, if and Jiaguoyuan, have collaborated with well-known celebrities.

Among them, "Coconut Shark", a brand under Huanlejia, announced in April that NBA star O'Neal was its spokesperson. Afterwards, "Jiaguoyuan" under Jianong and coconut water brand if officially announced Wang Junkai and Xiao Zhan as their respective brand spokespersons.

The coconut water brand endorsed by a popular celebrity became an overnight sensation.

The topic of "Wang Junkai endorses Jiaguoyuan Coconut Water" directly became a hot search, with a reading volume of 160 million.

Data from third-party agency Chanmama shows that the official flagship store of Jiaguoyuan has achieved sales of 1 million to 2.5 million yuan in the past 30 days. On June 13, the day of the official announcement, sales soared 1,000 times to over 1 million yuan, but on June 16, sales had fallen back to 25,000 to 50,000 yuan.

The sales of if endorsed by Xiao Zhan also increased significantly. After the announcement of the endorsement, it occupied 7 positions in the top 10 of the real-time beverage list. It can be said that Jiaguoyuan and if have expanded their popularity by inviting popular stars to endorse.

However, compared to the current popularity of coconut water, the market a few years ago was almost like "stagnant water".

Logically speaking, young people today should be familiar with coconut milk. After all, "Coco Tree Coconut Juice" is almost engraved in the memory of every young person. However, a few years ago, coconut water was hardly loved by Chinese people.

Vita Coco, a coconut water brand with a 46% market share in the United States, tried to enter the Chinese market in 2015, but failed in the end. Since then, companies such as Coca-Cola and Indonesia's Sanmu have tried to develop coconut water product lines in China, and the results are self-evident.

Nowadays, the sudden popularity of coconut water is attributed by many to Luckin Coffee’s classic product, raw coconut latte.

(Picture/Internet)

In 2021, Luckin Coffee, which was suffering from heavy losses, launched a new product, Raw Coconut Latte. This product was once considered by the industry to be "Luckin Coffee's life-saving straw" because Raw Coconut Latte contributed 1.26 billion yuan in revenue to Luckin Coffee in just 8 months.

At the same time, coconut drinks such as coconut juice and coconut milk became popular.

After that, after three years of baptism by the epidemic, consumption trends have also changed, and "healthy consumption" has become a new consumption keyword for the younger generation of consumers.

A survey on the 2024 New Year gift-giving trends showed that 87% of consumers surveyed would pay attention to whether the product has health attributes, ranking first in their concern.

Therefore, from the product itself, the "healthy attribute" of coconut water has attracted many consumers to buy it. After all, since the epidemic, contemporary young people have invested more energy in "health", and healthy drinks have become a new consumption trend.

Coconut water, as a purely natural drink, is rich in electrolytes, vitamins, fiber and minerals. It plays a role in promoting digestion, maintaining intestinal health and lowering blood pressure, and meets the requirements of healthy people for drinks.

Xue Chongyuan (pseudonym), 25, told iBrandi: "I bought a coconut water drink called 'Coconut Three Brothers' last year. I was really amazed at it. It didn't contain a lot of sugar or other additives, so I didn't have to worry about health issues. I ordered this drink for two months after that."

“Who discovered that coconut is so delicious? Why didn’t you say it earlier?” Many consumers who love coconut water “roared” on social platforms to express their love for coconut juice.

Data shows that in 2023, the number of group purchase orders for "coconut water" increased by more than 300% year-on-year, and the number of catering stores launching related products increased by more than 368%. This means that coconut water is gradually entering the vision of Chinese people and becoming a new trendy drink.

After becoming a hit in the European and American markets, coconut water is now also popular in the Chinese market.

2. Consumption of "Assassin" Reserves?

The explosively popular coconut water is deviating from current consumption trends.

Last August, the topic “Coconut water prices soared 4,000%” became a hot topic and sparked widespread discussion.

Fu Fangbao, head of a coconut water production company in Hainan, said: "In 2020, coconuts were mainly sold for their flesh, and no one wanted coconut water. We had to pay someone to take it away and process it. Later, someone asked for it, and the price rose from 100 yuan per ton to 4,000 yuan per ton."

Even CCTV has reported on the popularity of coconut water. The report mentioned that a coconut water production company in Jiangsu has a daily production capacity of more than 100 tons, and its products were sold out within three days of release.

According to statistics, my country's demand for coconuts is as high as 2.6 billion per year, but Hainan's coconut production only maintains at around 200 million to 230 million, and has been in a state of supply exceeding demand for a long time.

In order to obtain sufficient raw materials, most of my country's coconut water needs to be imported from Southeast Asia. According to data from the General Administration of Customs, in 2022, the import volume and import value of unshelled coconuts were 1.0708 million tons and 3.799 billion yuan.

But coconut water is not like fresh water, which is available everywhere, inexhaustible, and can be filtered and sold in large quantities.

Against the backdrop of the popularity of coconut water, the rising prices of limited raw materials will undoubtedly lead to an increase in the prices of end products.

In addition, the preservation of coconut trees is also a factor that increases costs.

As the most delicate of all fruits, coconut water contains 202 minerals and is extremely easy to deteriorate. It cannot be sterilized at high temperatures and is difficult to preserve for long periods of time. This also leads to higher cost investments, which in turn affects the selling price of the end product.

Nowadays, most offline brands of ready-to-drink coconut water are priced around 30 yuan.

(Photo/Meituan)

Taking bottled coconut water as an example, the price of 12 bottles of 350ml coconut water is 62 yuan, or about 5 yuan per bottle.

(Photo/Taobao)

In comparison, the prices of bottled coconut water and ready-to-drink coconut water are both in the middle and low-end price range in their respective fields. However, the entire consumer market is "fighting for low prices". Luckin Coffee, Kudi, and Starbucks are "fighting fiercely" in the 9.9 market, and the Lucky Coffee brand under Mixue Ice City has even opened the "6.6 Coffee Era". Nayuki's Tea and Heytea have already lowered their prices to the 20 yuan price range.

Well-known brands of ready-to-drink beverages have lowered their prices to follow the current trend of “cost-effective consumption”. But how long will coconut water, which costs nearly 30 yuan per cup, be loved by consumers?

In the coconut water market, Yebuer was the first to launch the 9.9 price war.

However, most brands in the industry have only been established for a short time and their supply chains are not mature. It is almost impossible for them to join the price war and ensure the quality of their products at the same time.

But if we don’t follow the consumption trend, how long will coconut water remain popular?

3. Serious homogeneity and intensified chaos

Even though it suffers from problems with raw materials and costs, the popularity of coconut water has still attracted the attention of capital to this niche market.

In recent years, the scale of coconut water market in my country has expanded year by year.

Industry data shows that the domestic coconut water market has risen from 513 million yuan in 2018 to 780 million yuan in 2022, and is expected to exceed 1 billion yuan in 2025. Globally, the coconut water market is expected to grow at a compound annual growth rate of 6.3%.

The most intuitive expression is "Chinese people consume 2.6 billion coconuts every year."

The explosive popularity of coconut juice and the increasingly prominent market potential have attracted capital investment.

In 2020, Coconut Water brand Koko Coco, which was established less than a year ago, won angel round and A round financing of tens of millions of yuan in succession; in 2022, Cha Daye, which was also established only a year ago, completed nearly 10 million yuan in financing from Qingteng Culture Investment; in 2023, the leading brand Good Luck Coconut has completed three rounds of financing, with a cumulative financing amount of tens of millions of yuan.

The injection of capital has ignited the coconut water industry even more thoroughly.

In the past two years, along with the growth of the coconut water market, regional brands have also increased, such as Cocosakura in Shanghai, Cococean in Beijing, Kokoye and Chadaye in Shenzhen, Zhengyeye and Yebengbeng in Changsha, and coconut water brands have also appeared in Nanjing, Chengdu, Hefei and other places.

Among bottled room-temperature coconut water, there are dozens of brands including if, ZICO, Vita Coco, Coco Tree, and Happy Home. In addition, supermarkets such as Walmart and Metro are launching their own coconut water brands.

(Photo/Xiaohongshu)

It can be said that today's coconut water market is flourishing, but it has also led to intensified competition.

After becoming a dominant force in their own regions, offline ready-to-drink coconut water brands have started to expand their brands, but the results have not been satisfactory. Even the leading brand "Yebuer", which has been in the industry for five years, still found it difficult to prevent the decline in the number of stores in 2023.

This also represents the situation of most offline brands in the industry.

According to statistics released by the restaurant boss insider, among the top ten coconut water brands, two have a store closure rate of more than 50%, and three have a store closure rate close to 50%. Except for Yebuer and Koukouye, the remaining brands are mostly stuck at the bottleneck of 30 stores as they open and close stores at the same time.

The difficulty in scaling up a brand has a lot to do with the homogeneity of coconut water itself.

Often, brand expansion requires relying on its own uniqueness to attract new customers, but each core region has its own coconut water brand, and the entry of foreign brands is somewhat difficult, making it difficult for regional brands to expand outward.

The bigger problem is that the innovative coconut water products of various companies are similar, with no technical barriers and unique taste. This leads to the perception of many consumers that, apart from the different names, there is almost nothing special about the products.

After trying many brands of coconut water, Xue Chongyuan no longer felt that his favorite brands were unique. "The 'Three Coconut Brothers' that I liked at first are available in almost every brand that sells coconut water. Later, the 'Chestnut Coconut Milk' and 'Wine Coconut Milk' that I liked are also must-haves in every household, with only slightly different names and flavors."

Online coconut water brands do not need to worry about expansion issues, but product homogeneity is more serious because they are almost two products: coconut water and coconut milk. With the same raw materials, it is difficult for each company to make differentiated products.

(Photo/Xiaohongshu)

This also leads to the fact that among a large number of coconut water products, consumers do not know the differences between each brand's products. They often make a choice based on which one they like or is cost-effective. The taste is just a simple feeling of "delicious, very authentic" or "not delicious".

Perhaps it is in this context that if and Jiaguoyuan chose to play the "traffic star" card one after another.

Among a number of homogeneous products, products endorsed by popular celebrities with greater influence than the brand are obviously more likely to be noticed and seen by consumers, which makes it easier to tell the story behind them.

Whether it is the competition of industry homogeneity or the internal competition of low-price consumption, these are the problems that coconut water brands need to face. It is easy to win the favor of consumers, but how to continue to gain this favor is the real test.

Author:Tinney

Source: WeChat official account: "iBrandi Pinchuang (ID: ibrandi)"