The coconut market is evidence that with the right product development strategy, companies can capitalize on the popularity of existing products to foster consumer adoption of new products.
Coconut products have been on the market for some time, as evidenced by the mainstream adoption of everyday products like coconut oil and coconut water. But whereas products that have been on the market for quite a while can often become stale and incapable of innovation, coconut is still a major source of inspiration for a variety of brands. Manufacturers are innovating increasingly creative and unusual coconut products, satisfying a growing consumer appetite for coconut.
Margaret Gomes of ingredient supplier NP Nutra (Gardena, CA) says that coconut product sales have skyrocketed in the last decade, growing from essentially zero to USD $612.5 million since the early 2000s. “It’s easy to understand why coconut products are so popular,” Gomes says. “Coconut is one of nature’s perfect foods-easily digested and rich in nutrients like vitamins, minerals, amino acids, and cytokines. It’s also a very versatile product, with both the coconut meat and water used in a multitude of functional food and beverage applications.”
Gomes notes that the diversification of the coconut product market is the result of both consumer demand and supplier innovation, with no end in sight to the market’s expansion. “You name it; we’re seeing it. The focus has shifted. We’re not just talking about innovative new products; we’re talking about new delivery formats. Nutrient-infused energy pods, gels, chews, sprays, blends-the sky is the limit right now. Anything with coconut in it has a good chance of selling.”
So, how are today’s innovators determining which coconut path to follow? Ahead, we take a look at brands that have found success through experimentation.
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Coconut Granola for the Gluten-Free
On its face, gluten-free granola sounds like an oxymoron. Granola’s base ingredient, oats, are by definition rich in gluten. But the team at GrandyOats (Hiram, ME) has found a tasty, gluten-free granola alternative made with a coconut base.
GrandyOats’ “Chief Granola Officer” Aaron Anker says that coconut granola is gaining popularity thanks to two attributes: its taste and its nutritional profile. Says Anker: “The market has been asking for a grain-free granola, so we started playing around with different varieties. We wanted something with similar nutritional benefits-not just filler-that also tastes good. The vast majority of people like coconut, and coconut contains heart-healthy oils. It’s a great product for our purposes.”
Anker points to coconuts’ light sweetness as the ideal flavor profile for a granola base, as it pairs well with sweeteners like maple syrup and honey as well as other granola ingredients like nuts, seeds, and chocolate. He notes that while classic granola has contained coconut since the 1970s, his company’s “coconola” is the first granola to use coconut chips as a base.
Anker notes that his product exists in a dual space. Coconut is part of GrandyOats’ unique selling proposition, but he considers coconola to be first and foremost a granola product. “When you do a blend, you have to market it differently than you would a single-origin product. With coconut water, for example, it’s all about the origin of the coconut. But with a blend, you’re marketing the whole product: a paleo, grain-free granola with a nice blend of organic ingredients that aren’t overly sweet.”
Anker says that using coconut as a base also yields a variety of cost benefits. Non-grain granola bases tend to be expensive, he says, but coconut is quite affordable and nutritionally dense.
Anker says he expects the coconut market to grow significantly over the next year. “I’ve been in the market for 20 years, and I’ve seen trends come and go. The one that has been the most consistent is coconut.”
Photo from GrandyOats
We All Scream for Coconut
It’s not just the gluten-free market that’s capturing coconut brands’ imagination. The alternative-dairy market is also seeing an influx of coconut products.
Australia-based product manufacturer COYO (Yandina, Queensland) is meeting demands for vegan yogurts and ice creams with dairy treats made from natural organic coconut milk. COYO “National Sales Jedi” Aaron Wallace (Indianapolis, IN) says that COYO is capitalizing on an increasing demand for dairy-free yogurt.
“People are moving away from dairy products,” Wallace explains. “I used to work for a dairy company before I joined COYO. Dairy products are in decline across the board because people are learning about the benefits of plant-based alternatives like coconut yogurt.”
Wallace says consumers are becoming more conscious about how their bodies respond to various foods, leading them to try alternative products to determine what works best for them. In that quest for healthier alternatives, he says, coconut is a prime choice.
“Coconut is a great superfood that you can use in a variety of ways. The drink category definitely propelled it into the mainstream, with coconut water being rich in MCTs and electrolytes. Obviously, that means there are now more competitors. But consumers want to see new things, and more people are finding out that you don’t have to sacrifice taste with some of these alternatives.”
Wallace says that coconut’s growing popularity will pose challenges for brands that will be forced to differentiate themselves in more ways. He also notes that ethical sourcing will become increasingly difficult, as there are a finite number of coconut groves in existence. Wallace adds that COYO is solving the marketing challenge with a grassroots movement that leverages connections with nutritionists and independent grocers to tell the COYO story.
Photo from COYO
Coconut Chips: A Healthy Junk-Food Alternative for Consumers with Food Sensitivities
Coconut’s presence in the snack foods category extends beyond health-conscious options like granola. In fact, coconut is now revolutionizing the “junk food” category with healthier innovations like coconut chips.
Mitch Compton, cofounder of Coconut Beach (Bonita, CA), says that the coconut-based snack space is just now starting to see growth, with a few first movers working to drive consumer adoption. “Coconut snacks are very different from coconut water,” Compton explains. “We sell coconut chips (made from coconut copra), which is quite unique in this space. There’s a lot of runway for coconut snacks, but it’ll involve getting people to try the products. We need a trial in the snack area to hook people.”
Coconut Beach’s strategy involves capitalizing on the popularity of other coconut verticals in order to introduce consumers already familiar with coconut to increasingly diverse products. Basically, Compton says, driving consumer adoption primarily involves leveraging the existing coconut products industry. Says Compton: “Coconuts are weird; people usually love them or hate them. But someone who likes coconut water is more likely to gravitate toward trying other coconut products like coconut chips.”
Compton says that coconut snacks like coconut chips also offer potential for making inroads into the allergy-conscious foods market. Coconuts aren’t actually nuts, he says, which means coconut chips and similar products are ideal for those with nut allergies and other food sensitivities.
“My wife has celiac disease, and my middle daughter has a nut allergy. But coconuts are processed without wheat, and the coconut isn’t actually a nut, so both my wife and my daughter can eat coconut chips,” he says.
Compton says that the coconut category will eventually reach a point of market saturation, resulting in less innovation. But right now, he says, coconut products are an excellent category for new brands to experiment with, and there’s lots of room for growth.
Photo from Coconut Beach
Coconut Coffee and Tea: Reinventing RTDs and Non-Dairy Creamers
Adding coconut oil to coffee is a habit that a variety of health gurus have touted for years, but now it seems that savvy coffee manufacturers are building on coffee bloggers’ enthusiasm for coconuts with new innovations that are changing the coffee and tea market.
Coffee and tea manufacturer CAcafe (Upland, CA) is incorporating coconut into its superfood coffee and tea formulas, with a product line that includes coconut coffee, coconut tea, and even coconut cocoa. However, these products are marked by a few key differences that set them apart from the do-it-yourself recipes that have populated the blogosphere in recent years.
While most at-home recipes involve adding coconut oil to coffee or tea, CAcafe’s product line consists of natural whole-coconut products that make use of both the coconut’s oil and its milk. These products are capitalizing on the growth of the functional coffee market(1) and a growing consumer preference for dairy alternatives that evidently extends beyond products like yogurt into dairy creamers.(2)
Coffee and tea manufacturers are also experimenting with coconut in other ways, with companies like RealBeanz (Brooklyn, NY) introducing RTD iced coffees made with 20% coconut water.(3) Cold-brew coffees are also seeing the introduction of coconut as a main ingredient, as evidenced by recent product launches by five cold-brew coconut coffee companies at the 2017 Natural Products Expo West trade show.(4)
1. Arthur R. “Trend Watching in Tea & Coffee: New Varieties, Artisanal Products and Functional Attributes.” Beverage Daily. Published online June 8, 2017.
2. Denis NP. “Category Spotlight: Coconut Products.” Specialty Food Association. Published online January 13, 2017.
3. Watrous M. “Slideshow: Coconut Water Gets a Refresh.” Food Business News. Published online June 21, 2013.
4. Caballero M et al. “Expo West 2017 Recap.” BevNet. Published online March 14, 2017.
Photo from CAcafe
Coconut Sugar: A Natural Low(er)-GI Sweetener That’s Rich(er) in Minerals
Once thought to be relatively harmless, traditional refined table sugar now finds itself at the center of a major scientific controversy. Scientific studies continue to demonstrate the health dangers of excessive sugar intake, leading consumers to search for healthier sweetener alternatives. One 2015 in vivo clinical trial, for instance, found that participants who reduced dietary sugar intake and substituted with starch saw improvements in blood pressure, cholesterol levels, insulin response, and body weight. The study authors said that sugar’s negative health effects are independent of its caloric density or its effect on weight gain and pinpointed fructose specifically as a problematic sugar to be limited or avoided.(5)
Coconut sugar, in contrast, offers some minor advantages over standard white and brown sugar. Coconut sugar-made by evaporating the water out of coconut sap-is high in inulin, a fiber that has been found to promote weight loss through fat oxidation and reduce body weight in randomized clinical trials involving pre-diabetic patients. (6) One randomized double-blind clinical trial also found that coconut-derived D-xylose has a lower glycemic index than table sugar;(7) however, this study failed to account for coconut sugar’s high fructose level.
Some research indicates that coconut sugar is a low-glycemic index (GI) sweetener and rich in minerals compared to table sugar-but experts say these findings come with important caveats. While some scientists and manufacturers claim that coconut sugar has a glycemic index of 35,(8) the University of Sydney (Sydney, Australia) and other institutions peg coconut sugar’s glycemic index in the mid-50s.(9) This is still lower than that of standard white table sugar, but it’s significantly higher than the GI of natural sugars found in most fruits.
Victoria Taylor, senior dietician for the British Heart Foundation (London, UK), says that coconut sugar has just as many calories as other sugars. Taylor notes that while coconut sugar does contain vitamins, minerals, fiber, and antioxidants, these nutrients aren’t present in large enough quantities to render any health benefits. Taylor says that in order to benefit from these nutrients, one would need to consume extremely large amounts of coconut sugar, at which point any theoretical health benefit from vitamins or other nutrients would be greatly outweighed by the detrimental effects of excessive sugar consumption.(10)
Experts like Taylor say that coconut sugar is still a sugar and thus it should still be used sparingly. However, coconut sugar manufacturers can confidently say that coconut sugar has a lower glycemic index than white table sugar, making it a good alternative for health-conscious consumers. Coconut sugar manufacturer Big Tree Farms recommends using coconut sugar as a 1:1 replacement for regular brown sugar.
As coconut sugar continues to grow in popularity, manufacturers and distributors will likely face unique challenges in the form of sugar industry resistance.
The research on sugar, at first glance, appears to be mixed. A 2016 literature review published in Annals of Internal Medicine claims that dietary restrictions on sugar are based on low-quality evidence.(11) But digging deeper, the real story emerges: Scientists are speaking out on the dangers of excessive sugar intake, and the sugar industry is pushing back with “science” of its own. In 2016, The New York Times reported on the above-mentioned literature review, which lambastes health experts who advise consumers to cut back on sugar. (12) The pro-sugar Annals review, which concludes that “guidelines on dietary sugar do not meet criteria for trustworthy recommendations and are based on low-quality evidence,” declared the International Life Sciences Institute (ISLI) as its primary funding source. The New York Times reporting found that ISLI receives funding from food and agrochemical corporations, including General Mills, Kraft Foods, Coca-Cola, Monsanto, and Hershey’s-a clear conflict of interest.
The New York Times’ reporting also unveiled a variety of methodological and scientific shortcomings in the review, and compares the paper to tobacco industry efforts to influence scientific literature on the health effects of smoking.
Against this type of backdrop, companies in the coconut sugar niche could soon face a unique challenge: navigating the war between scientists and Big Sugar without getting caught in the crossfire.
References listed on last slide.
Photo from Big Tree Farms
Coconut Jerky: High-Protein, Meatless Jerky
Coconut’s appeal to the vegan market extends beyond dairy alternatives. Now, the ingredient’s unique oil and fat profile has made it ideal for use in meat analogues.
Kelly Shone, director of marketing and innovation for Bioriginal (Saskatoon, SK, Canada), says that the popularity of coconut oil has led to market saturation that forced coconut product manufacturers to innovate. The result is surprising new products like Bioriginal’s coconut jerky.
“We saw multiple supportive trends that helped us identify coconut jerky as something that would appeal to multiple markets,” Shone says. “Consumers are looking for more choices in their coconut products, which is why brands that have diverse lines will be the most successful.”
Bioriginal’s coconut jerky-launched in March 2017 at the Natural Products Expo West trade show-also capitalizes on the gluten-free and high-protein verticals. Shone says that coconut’s healthy oils and unique fatty acid profile make it ideal for use in a jerky. However, he notes that market trends and supply chain issues present challenges that coconut product manufacturers will need to plan for in the future. “We have to make sure that we’re ready for any issues that come up, whether that be a supply matter due to tropical storms or common storage problems associated with coconuts.”
Shone says that Bioriginal plans for these challenges with a well-planned supply chain shaped by close and careful analysis of the latest market trends.
Photo from Bioriginal
Coconut Market Still Fertile Ground for Innovative New Brands
NP Nutra’s Gomes says that the coconut products industry is currently undergoing significant diversification, with industry players developing products to meet consumer demands for functional foods and beverages, dietary supplements, and even cosmetic products. She points to coconut’s widespread availability in a variety of formats and the various studies proving its nutritional benefits as two of the main factors that make coconut an ideal ingredient for nearly any nutraceutical or healthy food application.
The expanding coconut market still has plenty of space for new brands and new innovations, and experts say the category’s top contenders will be companies that find a way to successfully brand themselves, source coconuts ethically, and maintain market share as multinational brands start to buy out smaller coconut companies.
5. Lustig RH et al., “Isocaloric fructose restriction and metabolic improvement in children with obesity and metabolic syndrome,” Obesity, vol. 24, no. 2 (February 2016): 453-460. Published online October 26, 2015.
6. Guess ND et al., “A randomized controlled trial: the effect of inulin on weight management and ectopic fat in subjects with prediabetes,” Nutrition & Metabolism, vol. 12, no. 36. Published online October 24, 2015.
7. Bae YJ et al., “Coconut-derived D-xylose affects postprandial glucose and insulin responses in healthy individuals,” Nutrition Research and Practice, vol. 5, no. 6 (December 2011): 533-539
8. Flores H. “FNRI: Coco Sugar Has Anti-Diabetic Properties.” Philippine Council for Health Research and Development. Published online September 9, 2010.
9. Brand-Miller J et al. “Coconut Sugar.” Sydney University Glycemic Index Research Service. Published online 2014.
10. Taylor V. “I Spotted Coconut Sugar in the Health Food Shop. What’s Healthy about It?” Heart Matters Magazine. Published online March 29, 2017.
11. Erickson J et al. “The scientific basis of guideline recommendations on sugar intake: A systematic review,” Annals of Internal Medicine. Published online ahead of print December 20, 2016.
12. O’Connor A. “Study Tied to Food Industry Tries to Discredit Sugar Guidelines.” The New York Times. Published online ahead of print December 19, 2016.
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