Coca-Cola sells Zico coconut water to PE firm founded by brand’s creator

US – American multinational beverage company Coca-Cola has sold its Zico coconut water brand to PE firm founded by brand’s creator Mark Rampolla for an undisclosed sum.

The sale comes as the beverage giant aims to cut about 200 brands to focus on more profitable, faster-growing products coming out of the pandemic.

Having been purchased by its creator, Zico, the distant No. 2 brand in the coconut water space behind Vita Coco, will be considered to be going back to a familiar former home.

Rampolla, its founder, first discovered coconut water and its natural replenishing properties as a Peace Corps volunteer in Central America in 1994 and a decade later, he started Zico above the garage of his New Jersey home.

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At the time, the market in the U.S. hadn’t really taken hold and was populated by smaller offerings from companies such as Goya and premium waters being imported from Brazil.

 Five years later, Rampolla sold a minority stake in Zico to Coca-Cola for US$15 million before the beverage giant acquired the rest in 2013.

“I always knew if Coke ever did lose interest in it or decide to do something with it I certainly would be open to doing this again,” Rampolla said.

“The feeling was this is meant to be. It felt like there are just too many circumstances to line up that make me feel this is the inevitable path of Zico.”

Zico will be added to the portfolio of PowerPlant Ventures, an equity fund Rampolla co-founded in 2015 that has invested in companies including Beyond Meat, Apeel Sciences and Just.

PowerPlant, which is only acquiring the Zico brand name from Coca-Cola, will spend the first year reviewing the business, reestablishing relationships with suppliers and building up production, Rampolla said.

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 As this occurs, Rampolla expects “minimal” disruptions in supply of the product — a similar message posted by the brand on its website.

The purchase of Zico comes as the once-hot coconut water category has fallen sharply from its peak just a few years ago, under heavy competition from other healthy beverage options.

Retail sales of coconut and other plant waters declined to US$582.8 million in 2020, down nearly 14% from 2015, according to Euromonitor International.

Sales of coconut water did rebound last year during the pandemic as consumers boosted their consumption of better-for-you offerings.

Rampolla is however optimistic the category has more room to grow and that it remains relevant with health-focused consumers.

 He believes Zico would benefit under the ownership of his venture fund, which can move more quickly than a large CPG like Coca-Cola, and comes with the money, resources and team in place to invest in the business.

PowerPlant Ventures also can use the expertise it has amassed through its other investments and tap into resources from these businesses to grow Zico. 

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