So You Wanna Get Into The Coconut Business

There’s no doubt the coconut is having its moment in the sun. The tree nut has transformed from being a symbol of your next tropical vacation to being the leading natural superfood (that you can enjoy on your tropical vacation or at your desk).

Perhaps what we love most about it is its versatility as an ingredient – the coconut has been used for everything from bug spray to probiotics. It has gotten its fair share of lukewarm press lately, but that doesn’t seem to be deterring millennial consumers who have an affinity for our sweet, hairy little guys as a nourishing ingredient in beauty products, cocktails, and healthy snacks. There is a new demand for gluten-free coconut flour these days, and the coconut has been proven to be an effective and capable moisturizer. Those who watch what they eat are hungry for animal-fat alternatives like coconut oil, and dairy-free beverages like coconut milk.

So sure, it has a lot of uses, but which consumer market spaces have had the most success with coconut products? Is the coconut an easy product to access and work with on a large scale?

Lesson 1: Create a New Coconut-Cool Category

What’s not to love about coconut oil as a beauty product? It smells amazing, it seals in moisture, and there are no scary 20-lettered alien-language words on the ingredient list. But does it work?

“Coconut oil is Mother Nature’s ultimate multitasker,” says Bryce Goldman, Co-Founder and CEO of Kopari, a coconut oil-based beauty company.

According to Goldman, coconut oil contains a super high concentration of medium chain fatty acids that make the oil ultra-hydrating on skin and hair – which is what sets it apart from other oils and makes it successful as a beauty product. “In addition, it’s anti-bacterial and antimicrobial which help to reduce inflammation and protect skin from bacteria. Coconut oil also penetrates into the hair and absorbs into skin more than most other oils used for beauty use.”

It’s amazing to see what coconuts can do just based on Kopari’s product line: balms, face creams, scrubs, cleansing oils, and more. The consistency in each product is a little different from the coconut cooking oil from your local Trader Joe’s – it’s smooth and satisfying, serving multiple purposes as a moisturizer, lip exfoliator, and cleanser. It’s no wonder that coconut oil has been around for a while as a beauty product.

Thing is, it showed.

“We…felt that most of the natural products on the market looked, felt and sounded very similar – dark amber glass bottles, a lot of oatmeal and green packaging and messaging/copy that was very serious and crunchy,” says Goldman. Coconut products seemed to occupy a private niche that was not readily accessible to the wider beauty market.

Kopari identified a consumer need for a modernized and updated coconut product, and set out to rejuvenate and revitalize a stale space for coconut oil beauty products. “We wanted to lean into natural but make fun, bright and relatable which is who we are as people. In addition, we (co-founders) all grew up at the beach and wanted to inject some of this vibe and esthetic into our brand. Lucky for us this aligned with coconut and everything your mind conjures up when you think of them.”

Those of you who have ever stepped foot in a Sephora store know that this is no small feat. It’s easy to be bombarded by skin products clamoring and claiming to prevent aging or acne, regenerate skin cells, and make you glow and sparkle like a Christmas tree. Staking a flag in the oversaturated beauty market required tons of design creativity and clean innovation. But remember: the coconut is beautiful because it’s all-purpose.

“Because of the versatility of coconut our vision from day one was to build a multi-category beauty brand,” Goldman says. Branching out from coconut-oil based skin care to aluminum-free coconut deodorant seemed to be a move in the right direction: bringing something practical, fresh, natural, and new to a tired category.

Natural deodorant can be a tricky shelf to navigate: there’s usually a short “detox” period (aka stinky period) if you’ve been using products like Dove or Degree, after which you can say goodbye to body odor more or less permanently. Switching to a natural deodorant like cruelty-free Kopari deodorant (or Kopari Deo for short) means you can rid yourself of aluminum, parabens, formaldehydes, silicone, and more. It effectively harnesses that “alternative to” market that is consistently growing and expanding.

“Because coconut oil is anti-bacterial, it’s a natural odor fighter so we had a good place to start – our product formulator took that, added other beneficial ingredients and developed a product that blew our minds. We knew we had a winner and leaned into a big launch.”

Leaning into the big launch worked: Kopari deodorant is the #1 selling deodorant in Sephora, Nordstrom and all of their other retail partners. It was also an Allure Best of Beauty award-winner for 2018.

As Kopari plans to expand into the skincare, body care and personal care categories, they are also in the mindset of giving back to the place where they source all of their coconuts, and, unlike larger beauty companies, don’t turn a blind eye to the people involved in the process. “We have donated funds to build homes for 20 families that work on the coconut groves there and are going make the trip to participate in the construction and to turn the homes over to these amazing families. We found out just recently that they’ve agreed to call this community Kopari Village,” Goldman says.

More and more beauty companies are extending a hand to communities like Kopari Village. Not only does it create a solid, transparent business practice, it reminds customers that they actually have the power to decide where to put their money: into products that actually make a difference.

“My wife/cofounder are going to take our 3 kids to take part,” Goldman says. “This is the initiative I am most excited about next year.”

Lesson 2: Connect With Your Coconut People Over Drinks

“Vita Coco and Zico definitely paved the way for the coconut phenomenon in the states,” says Danielle Zig, Co-Founder of Coconut Cartel, makers of a beautiful and delicious pre-made cocktail of Guatemalan dark rum with coconut water. “But while they stayed strictly family friendly, we took a more risqué approach and became the ipso facto coconut water of the liquor world.”

Danielle Zig and her co-founder and brother Mike Zig had two homes growing up, one in Central America and one in Miami. It wasn’t long before the siblings started smuggling fresh, delicious coconuts from El Salvador and Guatemala through Miami International Airport, making the “home” of coconuts part of the brand’s identity.

Before the success of the rum business, the Zigs focused on brand development through plain old coconuts with a straw, which on their own evoke all the right associations: warm sunsets, sandy beaches, palm-tree vacations. They pioneered the “branded coconut,” and then sought to get it in the right hands (and on the right Instagram accounts.)

“Our Brand Equity has and always will be very important to us, so we took our time building the brand around our halo product. We positioned the coconut in very ‘Instagrammable’ places and organically it went viral,” says Dani Zig. Coconut Cartel harnessed the power of social media to gain product status in the eyes of consumers. A quick scroll through their Instagram reveals glamour shots of celebrities and models, all touting the Coconut Cartel branded coconuts in clubs and poolside, like a hot summer accessory. (They rarely provided private label services in order not to become a commoditized product.)

After some years passed in Miami, the Zigs noticed that their most popular cocktail was a shot of dark rum in their branded coconuts. This was around the same time agave began to trend, but the Zigs held true to the versatile product that they knew was packed with potential. “Instead of following the hyper saturated agave trend, we identified an interest in premium rums,” Dani Zig says. “We realized our clients enjoyed rum, especially Guatemalan aged rum, when it was served in our coconuts. So we…developed a product that hit both the coconut lovers and now the premium rum fans.”

When we asked what made Coconut Cartel pivot from branded coconuts to premium Guatemalan rum, Dani replied with one word.

“Scalability,” she says. The smuggling was fun, but in reality, the kind of branded coconut they were selling were actually very perishable, and difficult to grow to a larger scale. They reasoned that tequila, whiskey and vodka have all had their time in the premium spotlight, but rum was just getting started and seemed like a natural pairing.

“Having grown up in Central America drinking the best regional rums and fresh coconuts, we saw an opportunity to combine our two favorite beverages. It’s no coincidence that this region grows the best coconuts, coffees, and cane sugar in the world. It must be the Terroir,” she says.

The refreshing Coconut Cartel Special is uniquely smooth due to the natural minerality in the coconut water. There are notes of vanilla at first, and a touch of naturally sweet coconut at the end. Add a large ice cube and you’re on the beach.

Importing the best of Central America into Miami, along with a robust social media strategy, speaks directly to the new generation of millennials looking for products that allow them to cultivate their own palates and their own vision of the world. Zig says, “We are building a global brand that speaks to a diverse generation that has lived in many places, tasted many tastes, and ultimately wants to savor the world at their fingertips.”

Lesson 3: Consider the Coconut Culture

We have learned that coconuts can be a versatile ingredient, but getting into the snack market is a totally different ballgame. The major thing going for coconuts in the snack industry is the new eye consumers have for foods that are an “alternative,” or, low-sugar, low-carb, and made with only natural ingredients. This includes the new preference for snack that are dairy-free, gluten-free, soy-free, cruelty-free, and/or vegan.

Dang’s coconuts chips check a lot of those boxes: they are made from fresh Thai coconuts toasted to perfection, dairy-free, gluten-free, soy-free, vegan, low-sugar, low-carb and certified Non-GMO. They work with a small network of coconut farmers to create their product.

Getting to know the tastes of consumers, and target customers, has been vital to building the Dang business. “While coconuts are used for both savory and sweet dishes abroad, here in the U.S., Americans think of coconut as a sweet ingredient due to the sweetened coconut in Mounds, Almond Joy and baked goods,” says Vincent Kitirattragarn, citing a key cultural distinction fundamental to understanding his target consumers. Kitirattragarn is Founder of coconut chip company Dang Foods.

Dang is considered a “Modern Asian Snack,” but growing the American market requires taking into consideration other taste factors. For example, not all coconuts taste the way most Americans expect or prefer them to taste, which highlights the need to know where you will be sourcing your coconuts. “Coconut meat from Philippines or Indonesia is going to be dryer and more gritty than Thai coconut which generally have higher levels of buttery coconut oil,” says Kitirattragarn. “What makes Dang coconut chips different from others is the buttery, umami flavor without dry grittiness.”

Listening to customer feedback has also been key to building out the already well-established coconut chip. “From the beginning, we heard that consumers wanted lower sugar snacks so we came out with an unsweetened coconut chip. It’s became a top seller, so we started thinking about other no-sugar-added innovation,” says Kitirattragarn.

Not too long after the unsweetened coconut chip came the new and improved diet-friendly Dang Bar. The Dang Bar is 100% plant-based, made with cocoa butter, coconut, almond butter, and chia seeds, and fits the ideal macros for the low-carb, high-fat Keto diet: 70% fat, 20% protein, and 10% net carbs.

While this may appear to be a very niche move to focus a new product on one specific diet, Kitirattragarn, who was on the Keto diet at the time, says, “I couldn’t find any good tasting Keto-friendly, whole-food, plant based snacks. We looked into it more and found there was an opportunity to enter the $1.5 billion bar market with something truly differentiated that solved a consumer pain point.”

And so far, this specific and bold new direction as a response to customer needs and tastes has paid off: Dang Bars sold out of their first production run in less than a week. Whole Foods Market will launch the bars in January 2019. “Flavor-wise, we’ll have a mix of top selling flavors like Chocolate Sea Salt, and Asian flavors I love like Lemon Matcha, Cardamom Chai, and Toasted Coconut.”

Apart from consumer preferences for the “alternatives” discussed earlier, there are external forces than can impact and affect consumer tastes. Don’t underestimate the power of shifting cultural perspectives to develop markets that may seem completely tangential to the foods that consumers are interested in, either.

“One huge opportunity is aligning what we do, Modern Asian Snacks, with the larger movement of Asian-Americans breaking out into mainstream US culture. Whenever there is a cultural paradigm shift, there’s an opportunity for brands to hop onto the movement and become iconic,” says Kitirattragarn. He points out that Ben Jerry’s ice cream was a successful product built on 1960’s counterculture references like “Cherry Garcia” and today, “Pecan Resist.”

He believes the same opportunity exists right now, citing Crazy Rich Asians, Ali Wong, and Eddie Huang as icons that have helped Asian Americans break out in 2018. Thanks to them, he says, “Asian Americans are cool for the first time. We have plans to harness this sense of pride with partnerships in 2019 and beyond to create the first truly Asian-American snack brand.”

What about those brass tacks you ask? Our tree nuts friends are on trend right now, but what kinds of coconuts and bolts should you be looking at if you really want to capitalize on the trend as an entrepreneur? Kitirattragarn knows that connecting as directly as possible with consumers is the best approach. “We’ve tried a lot of stuff, but what we come back to is getting our products into people’s mouths where they are likely to buy it,” he says.

That simple rule is what gets people’s attention, and keeping their attention not only ups sales but also gets you the numbers you need to keep growing. “When people try our snacks for the first time, a light bulb goes off that says ‘I get it! Dang that’s good!’ [We] do promotions, demos, and subscription boxes, then stay in touch with fans via social media. One new channel for us is Direct-to-Consumer online sales, which is extremely exciting – the amount of data we have is incredible and we foresee a bright future for this channel.”

We see a bright future for coconuts too!

By | 2018-12-02T23:39:31+00:00 December 2nd, 2018|Blogs|