1 00:00:00,280 --> 00:00:02,920 Speaker 1: All right, Charlie, thank you so much. Well, Vita Coco 2 00:00:03,160 --> 00:00:05,680 Speaker 1: is one of the top players in the coconut water market. 3 00:00:05,760 --> 00:00:07,800 Speaker 1: It's a space that's been shared by some brands that 4 00:00:07,880 --> 00:00:11,040 Speaker 1: you definitely know of, PepsiCo and the Coca Cola Company 5 00:00:11,080 --> 00:00:13,840 Speaker 1: and a few others. Tim and North America has definitely 6 00:00:13,880 --> 00:00:16,280 Speaker 1: been a dominant market for this drink. Specifically. 7 00:00:16,360 --> 00:00:18,520 Speaker 2: Yeah, in the US alone, the coconut water market size 8 00:00:18,560 --> 00:00:22,000 Speaker 2: is projected to surpass eighteen point five billion dollars by 9 00:00:22,040 --> 00:00:25,200 Speaker 2: twenty thirty one, growing at a compound annual growth rate 10 00:00:25,440 --> 00:00:27,960 Speaker 2: of nearly nineteen percent. With a look at the market 11 00:00:28,000 --> 00:00:31,120 Speaker 2: and more, let's get to the interview with Mike Curbin, 12 00:00:31,200 --> 00:00:33,920 Speaker 2: co founder and executive chair at the Vita Cocoa Company, 13 00:00:34,000 --> 00:00:35,919 Speaker 2: joining us from New York City. Mike, good to have 14 00:00:35,960 --> 00:00:39,960 Speaker 2: you with us this afternoon. Earnings came out late February 15 00:00:40,479 --> 00:00:42,440 Speaker 2: reported net sales for the fourth quarter that beat the 16 00:00:42,479 --> 00:00:45,879 Speaker 2: average analy assessmate, the stock staring nearly fifteen percent on 17 00:00:45,920 --> 00:00:47,720 Speaker 2: that news. I do want to take a step back 18 00:00:47,720 --> 00:00:51,080 Speaker 2: and talk big picture here about the marketplace growth, consumer demand. 19 00:00:51,360 --> 00:00:53,520 Speaker 2: Where are you seeing demand right now in the category? 20 00:00:54,480 --> 00:00:58,560 Speaker 3: Yeah, thanks for having me so coconut water is the 21 00:00:58,800 --> 00:01:02,520 Speaker 3: fastest growing category in the beverage aisle Today, twenty years 22 00:01:02,560 --> 00:01:06,800 Speaker 3: after we started building this category from scratch, it is 23 00:01:06,959 --> 00:01:10,280 Speaker 3: one of the largest beverage categories across the tropical world. 24 00:01:10,640 --> 00:01:12,559 Speaker 3: And now over the last twenty years, we've been building 25 00:01:12,600 --> 00:01:16,080 Speaker 3: it in North America and Western Europe, and we're seeing 26 00:01:16,480 --> 00:01:20,319 Speaker 3: coconut water become a household staple across these markets. And 27 00:01:20,360 --> 00:01:22,640 Speaker 3: we think that as we continue to grow and continue 28 00:01:22,640 --> 00:01:27,480 Speaker 3: to educate consumers on the benefits and usage occasions for 29 00:01:27,560 --> 00:01:30,520 Speaker 3: coconut water, we think it will be continued to become 30 00:01:30,520 --> 00:01:33,200 Speaker 3: a household staple in both North America and Western Europe 31 00:01:33,200 --> 00:01:35,600 Speaker 3: and all the other markets where we're continuing to build 32 00:01:35,600 --> 00:01:36,120 Speaker 3: our business. 33 00:01:36,400 --> 00:01:39,000 Speaker 1: Hey, North America, as we talked about, has been a 34 00:01:39,000 --> 00:01:40,880 Speaker 1: dominant market for the drink. Talk to us a little 35 00:01:40,880 --> 00:01:43,319 Speaker 1: bit about if that's kind of where you see the 36 00:01:43,360 --> 00:01:46,240 Speaker 1: continued growth or how you find and tap into other 37 00:01:46,280 --> 00:01:48,760 Speaker 1: markets where you see future growth in particular, and who 38 00:01:48,760 --> 00:01:51,680 Speaker 1: do you see us your kind of typical buyer, if 39 00:01:51,720 --> 00:01:52,440 Speaker 1: there is one. 40 00:01:54,000 --> 00:01:58,840 Speaker 3: Yeah, So, North America continues to be our largest market 41 00:01:59,640 --> 00:02:03,480 Speaker 3: and continues to grow incredibly fast. Today we're in one 42 00:02:03,520 --> 00:02:07,200 Speaker 3: in ten households in the United States. If you think 43 00:02:07,200 --> 00:02:10,720 Speaker 3: about other similar type of categories, Ocean Spray is a 44 00:02:10,760 --> 00:02:13,760 Speaker 3: brand that I like to reference quite a bit Cranberry juice. 45 00:02:13,760 --> 00:02:16,799 Speaker 3: Ocean Spray is in one in sorry, four and ten 46 00:02:17,680 --> 00:02:20,920 Speaker 3: households across North America. So you know, this is something 47 00:02:21,560 --> 00:02:24,720 Speaker 3: you know, as we think about coconut water, which has 48 00:02:24,800 --> 00:02:28,520 Speaker 3: all these incredible usage occasions. It's incredibly hydrating drink as 49 00:02:28,520 --> 00:02:31,840 Speaker 3: a sports drink or replenishment, but it's also amazing in 50 00:02:31,880 --> 00:02:34,200 Speaker 3: a cocktail, and it's amazing in this mooviie in the morning. 51 00:02:34,440 --> 00:02:36,760 Speaker 3: So it's all these incredible occasions for usage, and we 52 00:02:36,800 --> 00:02:40,280 Speaker 3: think that as we continue to grow, you know, more 53 00:02:40,320 --> 00:02:42,639 Speaker 3: and more households will continue into the category. 54 00:02:43,360 --> 00:02:45,440 Speaker 2: Curious about the cost side of the equation here and 55 00:02:45,560 --> 00:02:49,160 Speaker 2: specifically where the ingredients come from. Where do the coconuts 56 00:02:49,160 --> 00:02:50,440 Speaker 2: that you guys use come from. 57 00:02:51,480 --> 00:02:55,360 Speaker 3: So I actually just got back yesterday from Sri Lanka. 58 00:02:56,080 --> 00:02:59,560 Speaker 3: We manufacture quite a bit in Southeast Asia. Sri Lanka 59 00:02:59,560 --> 00:03:04,400 Speaker 3: Philip means Thailand, and also Brazil is also a large 60 00:03:05,120 --> 00:03:06,560 Speaker 3: center for our production. 61 00:03:07,120 --> 00:03:09,600 Speaker 1: Anything any problems that you guys have seen with kind 62 00:03:09,639 --> 00:03:12,120 Speaker 1: of some of the challenges our wars I should say 63 00:03:12,160 --> 00:03:15,560 Speaker 1: around the world. Is that impacting you guys at all? 64 00:03:15,600 --> 00:03:18,480 Speaker 3: We saw, you know, free costs increased a little bit 65 00:03:18,960 --> 00:03:22,959 Speaker 3: with the issues around the Suez Canal, but that's been 66 00:03:23,240 --> 00:03:26,880 Speaker 3: moderating and we've been able to you know, continue to 67 00:03:27,360 --> 00:03:29,880 Speaker 3: you know, withstand that and grow our grow our margins, 68 00:03:30,080 --> 00:03:33,040 Speaker 3: and you know, uh, we don't see that as a 69 00:03:33,080 --> 00:03:35,240 Speaker 3: major a major issue for us moving forward. 70 00:03:35,640 --> 00:03:40,680 Speaker 2: The Animal rights organization PETA has raised issues about monkeys 71 00:03:40,720 --> 00:03:43,480 Speaker 2: being forced to harvest coconuts in some parts of the world. 72 00:03:43,680 --> 00:03:46,560 Speaker 2: Has that been something that you've experienced at all when 73 00:03:46,560 --> 00:03:48,440 Speaker 2: you've been traveling now and sourcing. 74 00:03:48,080 --> 00:03:52,880 Speaker 3: These I've never seen a monkey pick a coconut. This 75 00:03:52,920 --> 00:03:56,760 Speaker 3: is something that does happen in Thailand in a tourist attraction, 76 00:03:57,240 --> 00:04:01,160 Speaker 3: but is not something that is used in typical coconut 77 00:04:01,200 --> 00:04:05,520 Speaker 3: farming techniques. We cracked over a billion coconuts last year 78 00:04:07,000 --> 00:04:09,600 Speaker 3: to produce our coconut water, and none of them were 79 00:04:09,640 --> 00:04:10,520 Speaker 3: picked by monkeys. 80 00:04:10,760 --> 00:04:13,280 Speaker 1: But how do you ensure you know, Mike, and we 81 00:04:13,360 --> 00:04:16,960 Speaker 1: certainly have from just reporting in the business world and 82 00:04:17,040 --> 00:04:19,520 Speaker 1: financial world, you know that when you get into emerging 83 00:04:19,560 --> 00:04:22,599 Speaker 1: economies sometimes oversight is not always what it needs to be. 84 00:04:22,680 --> 00:04:26,280 Speaker 1: How do you ensure that everything that goes into a 85 00:04:26,360 --> 00:04:29,440 Speaker 1: Vita Cocoa drink that it is done in a sustainable 86 00:04:29,920 --> 00:04:31,640 Speaker 1: and caring way and fair way. 87 00:04:33,120 --> 00:04:35,560 Speaker 3: Yeah, it's one of the most important parts of our business. Actually, 88 00:04:35,560 --> 00:04:38,640 Speaker 3: over the last many years we've built through the Vita 89 00:04:38,680 --> 00:04:42,320 Speaker 3: Coca Project, we've done incredible things on the ground in 90 00:04:42,320 --> 00:04:46,920 Speaker 3: the Philippines. For example, we built over forty schools, educating 91 00:04:47,120 --> 00:04:51,599 Speaker 3: farmers specifically on new techniques and bringing them new types 92 00:04:51,640 --> 00:04:55,080 Speaker 3: of coconut trees to improve their yield and increase their income. 93 00:04:56,120 --> 00:04:57,919 Speaker 3: So we do a lot of work on the ground. 94 00:04:58,000 --> 00:05:00,760 Speaker 3: We also do social audits of all of our facilities, 95 00:05:01,640 --> 00:05:04,480 Speaker 3: making sure that everything is done in the best way possible. 96 00:05:05,600 --> 00:05:07,640 Speaker 3: And I think this is one of the beauties of 97 00:05:07,680 --> 00:05:10,000 Speaker 3: the business. So we've been able to create this business 98 00:05:10,400 --> 00:05:13,600 Speaker 3: off of what historically was a byproduct of the coconut 99 00:05:13,640 --> 00:05:16,800 Speaker 3: manufacturing business. The water has always been a byproduct. We've 100 00:05:16,800 --> 00:05:20,720 Speaker 3: been able to help up cycle that byproduct, give these markets, 101 00:05:20,880 --> 00:05:26,960 Speaker 3: these these farmers an avenue to sell the product, and 102 00:05:27,120 --> 00:05:30,159 Speaker 3: at the same time put programs together to continue to 103 00:05:30,200 --> 00:05:33,479 Speaker 3: develop these help develop these economies. So it's been that's 104 00:05:33,520 --> 00:05:35,080 Speaker 3: been one of the most rewarding things for me. 105 00:05:35,680 --> 00:05:37,240 Speaker 2: Mike, how have you been able to innovate in the 106 00:05:37,279 --> 00:05:40,200 Speaker 2: production of this? I'm curious about ways that over the 107 00:05:40,240 --> 00:05:43,640 Speaker 2: last two decades that you've been able to experiment with 108 00:05:43,640 --> 00:05:47,080 Speaker 2: with cutting costs. Are there ways to make this a 109 00:05:47,160 --> 00:05:49,440 Speaker 2: concentrated product and then add water to it once it's 110 00:05:49,480 --> 00:05:52,440 Speaker 2: at its final destination? Are there ways to create a 111 00:05:52,440 --> 00:05:56,479 Speaker 2: fountain drink out of this? Talk to me about innovation here. Yeah. 112 00:05:56,520 --> 00:05:59,880 Speaker 3: So, as we think about cost, its scale, right, So, 113 00:06:00,279 --> 00:06:03,160 Speaker 3: cocaut water, like I mentioned, was historically a byproduct. It's 114 00:06:03,160 --> 00:06:07,680 Speaker 3: about the actual packaging and process of packaging that is costly. 115 00:06:08,800 --> 00:06:11,480 Speaker 3: But over time, the more scale we get, the more 116 00:06:11,480 --> 00:06:13,839 Speaker 3: we're able to leverage that scale and bring down costs. 117 00:06:14,800 --> 00:06:19,240 Speaker 3: As we think about innovations and so on, we're really 118 00:06:19,279 --> 00:06:24,280 Speaker 3: focused these days on more sizes, more pack types, more flavors, 119 00:06:24,600 --> 00:06:28,400 Speaker 3: and expanding shelf space. I brought up otion spray earlier. 120 00:06:28,440 --> 00:06:30,720 Speaker 3: When you think about it, we built this business over 121 00:06:30,720 --> 00:06:36,240 Speaker 3: the last twenty years selling single serve individual vitacocos on 122 00:06:36,279 --> 00:06:38,760 Speaker 3: the shelf. We would have two, three, four or five 123 00:06:38,800 --> 00:06:41,440 Speaker 3: facings at the grocery store today. Over the last couple 124 00:06:41,440 --> 00:06:43,800 Speaker 3: of years, we've been introducing new pack types and new 125 00:06:43,880 --> 00:06:47,119 Speaker 3: formats with twelve packs and four packs and six packs 126 00:06:47,200 --> 00:06:50,160 Speaker 3: and one leaders and multipacks of one leaders. We're starting 127 00:06:50,160 --> 00:06:52,800 Speaker 3: to build out that billboard on shelf and if you 128 00:06:52,839 --> 00:06:56,400 Speaker 3: think about that, compared to Ocean Spray, which has four 129 00:06:56,480 --> 00:06:59,200 Speaker 3: times the shelf space we have, that's kind of something 130 00:06:59,200 --> 00:07:03,000 Speaker 3: that we're working towards. It's continuing to create this billboard 131 00:07:03,000 --> 00:07:06,160 Speaker 3: at retail for consumers to see coconut water as they're 132 00:07:06,200 --> 00:07:07,080 Speaker 3: walking down the aisle. 133 00:07:07,320 --> 00:07:09,840 Speaker 1: Hey, Mike, for someone who's been doing this for twenty years, 134 00:07:10,240 --> 00:07:13,320 Speaker 1: start back in two thousand and four. As you continue 135 00:07:13,320 --> 00:07:15,880 Speaker 1: your build out and look to do you more growth 136 00:07:15,920 --> 00:07:18,240 Speaker 1: in the North American market and elsewhere. I'm just curious, 137 00:07:18,280 --> 00:07:20,320 Speaker 1: do you plan to continue to do it alone? You're 138 00:07:20,360 --> 00:07:22,720 Speaker 1: a publicly out company. I get it, but I'm sure 139 00:07:22,760 --> 00:07:27,520 Speaker 1: you've had people knocking on your door? Is there a plan? 140 00:07:28,040 --> 00:07:30,800 Speaker 1: At one point, Coca Cola owned a brand, then obviously 141 00:07:30,840 --> 00:07:33,520 Speaker 1: it was sold back to its creator. But I'm just curious, 142 00:07:33,960 --> 00:07:36,360 Speaker 1: is there any plans you know or do you? Are 143 00:07:36,400 --> 00:07:39,040 Speaker 1: you open? Is there a partner or a price that 144 00:07:39,040 --> 00:07:42,400 Speaker 1: would make sense for your brand to get together with 145 00:07:42,480 --> 00:07:43,000 Speaker 1: someone else? 146 00:07:44,400 --> 00:07:46,760 Speaker 3: I mean, we have a great partnership with Cure Doctor Pepper. 147 00:07:46,760 --> 00:07:50,600 Speaker 3: They are the largest distributor in North America and they're 148 00:07:51,760 --> 00:07:54,840 Speaker 3: a small shareholder, but they're really a great distribution partner. 149 00:07:55,200 --> 00:07:59,080 Speaker 3: So we feel we've got the right partnerships and resources, 150 00:07:59,320 --> 00:08:01,760 Speaker 3: and we generate a lot of cash and we feel 151 00:08:01,800 --> 00:08:03,960 Speaker 3: we're in a really good position to continue to invest 152 00:08:03,960 --> 00:08:07,000 Speaker 3: in growth and that is our main priority today. 153 00:08:07,360 --> 00:08:09,960 Speaker 1: Is that a yeah? 154 00:08:10,040 --> 00:08:12,840 Speaker 3: For now to know it's we could grow this business 155 00:08:12,840 --> 00:08:16,520 Speaker 3: significantly the setup that we currently have, well, really. 156 00:08:16,280 --> 00:08:18,720 Speaker 1: Cool stuff and look forward to uh talking with you 157 00:08:18,800 --> 00:08:22,120 Speaker 1: again as you guys continue on that growth growth path. Mike, 158 00:08:22,600 --> 00:08:24,760 Speaker 1: Thank you so much. Mike Kurman, he's co founder, executive 159 00:08:24,800 --> 00:08:27,720 Speaker 1: chair of the Vita Cocoa Company, joining us right here 160 00:08:27,760 --> 00:08:28,760 Speaker 1: on Bloomberg Business. 161 00:08:29,360 --> 00:08:32,520 Speaker 2: What I was an early adopter of coconut water, like 162 00:08:32,640 --> 00:08:34,840 Speaker 2: back in the day. I've been on the core coconut 163 00:08:34,840 --> 00:08:35,199 Speaker 2: water train. 164 00:08:35,240 --> 00:08:36,440 Speaker 1: How many different flavors do you have? 165 00:08:36,600 --> 00:08:38,360 Speaker 2: I just like the regular one, the regular one.