Since 2020, coconut water has become increasingly popular, with sales rising year by year. However, in the past year, there have been growing doubts about 'real vs. fake coconut water' and food safety. For example, last year, professional anti-counterfeiting activist Song Ge Da Hu purchased large quantities of Bestore's 100% coconut water, seemingly preparing for a crackdown, but many people found it unavailable in stores and online. Bestore stated that the 'NFC 100% Coconut Water' product was only sold in its offline stores, and Song Ge said he bought it simply because he liked it.

"There must be room for exploration in every brand's coconut water," said Zhang Hao, who owns four milk tea shops in Shanghai and a health food company, and is very familiar with sourcing, production, and additives. He said, "For example, adding sugar, but the amount is not enough to be detected, so they claim no sugar added, or it doesn't meet national standards. This is common for us in the food industry."

Paradoxically, most 100% coconut water relies heavily on imported raw materials, but as more brands have entered the market in recent years, prices have fallen instead of rising.

Observations show that in offline supermarkets, large quantities of 1L coconut water have dropped below 10 yuan; on platforms like Taobao and Pinduoduo, two 1L bottles of 100% fresh coconut water sell for only 13.9 yuan, and 15 bags of 180ml coconut water cost 23.12 yuan, less than 2 yuan per bag, almost the same price as mineral water.

"To adjust taste, extend shelf life, and reduce costs, some coconut water products add citric acid, vitamin C, and food flavorings," revealed Lin Lin, who has worked in beverage production and quality inspection for ten years. To control costs, a coconut water brand has targeted Guangxi as a raw material source, but the taste of Guangxi coconuts is poor and basically unsuitable as raw material, so the brand had to add large amounts of sugar to mask the off-flavor. Despite this, 'clean ingredient list' remains the most common review for these stores, and many consumers, due to information asymmetry, are unconsciously falling into consumption traps. "Coconut water naturally contains water and sugar, so there is no way to detect if it has been added," Zhang Hao told us. In the industry, adding water and sugar to coconut water is almost an open secret, but the ingredient list only states '100% coconut water,' using vague wording and word games to mislead consumers into thinking the product is pure and additive-free. Besides sugar and water, additives are also common. "I can guarantee that more than 90% of the 100% coconut water products on the market today contain additives. There are many tricks in the industry, but outsiders don't know," a coconut water manufacturer revealed to Lin Lin in a conversation. The situation in freshly made tea drinks is even more concerning. "When we source products, we don't take well-known brands because their prices are relatively transparent and higher than what the company supplies. So we take brands that consumers don't know, even white-label products made specifically for Pinduoduo channels," said a practitioner. The market reality is that many stores have quickly lost market favor within three years, facing questions about flavorings and additives, and even a wave of closures. The overall sales growth of the coconut water market has slowed significantly. Of course, the coconut water story continues, with brands from other sectors entering. On January 15, Zhou Hei Ya and Thailand's IMCOCO Group held a strategic cooperation signing ceremony in Wuhan, jointly launching the natural coconut water brand 'Yaya Ye' to get a piece of the pie. But the question is, is coconut water still a good business now?

Low-Threshold Coconut Water

Playing the Health Card to Win Over Young People

"Coconut water is different from other juices. Juices lose crude fiber during squeezing, leaving only sugar. Coconut water can be understood as just a change of shell," said Guo Guo, a senior coconut water enthusiast, who firmly believes coconut water is the healthiest juice.

Many share Guo Guo's view. In recent years, coconut water, positioned as a 'natural drink,' has been sought after by young people. "100% coconut water is definitely healthier and lower in calories," said '11', a post-95s consumer from Shenyang. He told us he tries popular brands like Sam's Club, Hema, Aldi, if, malee, Dinggeye, and Yeqimanman. Among them, his first choice is the 12.9 yuan 1.08kg frozen password bottled coconut water. The strong consumer demand has attracted many brands, most notably the emergence of white-label products. Since 2020, both well-known large factories and unknown small factories have launched various PET, Tetra Pak, and even bagged coconut waters through mass production or OEM, with an overwhelming number of brands. Traditional domestic companies like Yeshu, Chunguang, Huanjia, and Susa have actively positioned themselves with years of industry experience and resource advantages; new consumer brands like Coconut Knows, Finute, Cocoa Full, and Yeqimanman, as well as foreign brands like Sanlin and if, are also seizing domestic market share. Even established beverage companies like Uni-President and Wahaha have joined the wave. A coconut water brand source told us, "From 2020 to 2023, our peers' growth rates reached 30%-40%. Conservatively, many coconut categories maintained around 20% growth in those three years." With the mindset that "since the ingredient list says 100% coconut water, the quality should be similar," many consumers try these new brands. But they clearly feel that "there are more and more coconut water brands we've never seen or heard of, and prices are getting lower. Even well-known brands have dropped significantly compared to two years ago." However, as they try more, they gradually become 'disenchanted' with coconut water, as many have a corn silk or starchy taste and are sweeter than regular young coconuts.

Through specific consumer examples, Zhang Hao attributes the influx of brands and uneven quality to low production thresholds. "In fact, the threshold for any juice is not high, or any food is not high," he said bluntly. "Many inexperienced manufacturers and brands can easily find an OEM to produce coconut water." Even within the juice category, coconut water has a relatively low threshold. "Coconuts are basically from a relatively stable origin, with similar varieties and relatively uniform taste, making flavor blending easier. Unlike grapes, which have many origins and varieties, requiring complex blending processes." According to our research, coconut water on the market is mainly made in two ways: one is concentrate dilution, and the other is direct filling. There are two typical supply models for foreign coconut water. Lin Lin and Zhang Hao explained that one is to process coconuts into concentrate abroad, transport it to China, and then dilute with water for restoration, which is convenient for transportation and storage and has relatively low cost; the other is to directly fill and package abroad, then import for direct sale, which preserves the original flavor to the greatest extent but has high transportation costs, with prices generally above 10 yuan and specifications around 300ml, 350ml, or 380ml. Domestic coconut water usually uses direct filling, but industry insiders reveal that "domestic coconuts often have poor flavor, and some with decent taste may have added large amounts of fructose and additives." Direct filling involves NFC (Not From Concentrate) processing, covering various technologies like HPP (High Pressure Processing) and Tetra Pak's flash sterilization. Although names differ, "they are essentially ultra-high temperature instantaneous sterilization, just with different durations and temperatures, and different names in national standards."

Is 'Fake' Ingredient Lists the Norm?

The coconut water market has attracted many brands in a short time, leading to uneven product quality. In the eyes of many industry insiders, ingredient list fraud has become an unspoken secret in the coconut water industry. We learned from multiple sources that ingredient list fraud mainly takes two forms.

First, adding large amounts of water, fructose, and various additives is common practice. As mentioned earlier, some coconut waters undergo concentrate dilution. But "in China, diluted coconut water may have excessive water, fructose, and additives added depending on the dilution ratio, and sweetness varies," Lin Lin said, directly reducing the cost per bottle. Domestic coconut water generally has similar issues. Since domestic coconuts have average taste and natural flavor differences, making it hard to ensure consistent taste, adding sugar is the most common adjustment. Some brands even add citric acid, vitamin C, and food flavorings to improve taste, extend shelf life, or enhance flavor. "Most domestic coconuts don't meet sweetness standards, and some ingredients are hard to detect even by third-party testing agencies," insiders further revealed. "Different labs have different testing specifications and capabilities; some lack conditions to test certain additives, and the state doesn't mandate it," providing opportunities for unscrupulous merchants to manipulate ingredients. Second, most brands still claim to be 100% coconut water on the ingredient list. Playing word games is a common trick and a major source of consumer deception. Many merchants have their own explanations. On one hand, they claim that '100% coconut water' is often just a product name, not necessarily indicating the actual content. On e-commerce platforms, brands like Weichangli, Baiduoli, Baiyouguo, Jiaguoyuan, and Yexiaomei, all named '100% coconut water,' are everywhere. On the other hand, taking Jingmi coconut water as an example, it once explained on its product page according to the national standard GB/T31121 definition of 100% juice, which states that as long as no substances other than water are added, it can be defined as 100% juice, providing room for manipulation. Lin Lin pointed out that merchants have many ways to play word games, and whether it's truly 100% coconut water cannot be generalized. First, merchants can register their trademark as '100% coconut water.' Second, they can register the slogan '100% coconut water' and label it on packaging. Some set '100% coconut water' as a product category or directly use it as the product name, which is the most common. Clearly, this misleading is effective. Most consumers subconsciously believe they are buying pure coconut water based on the name alone. Even '11', who drinks coconut water often, said, "I always thought 100% coconut water meant the content." On social media, many complain that there is no specific provincial standard or unified national standard for coconut water. However, from a food manufacturer's perspective, Zhang Hao thinks this is reasonable. He pointed out, "Coconut water doesn't necessarily need a separate national standard because it can fall under a broader national standard, such as juice or NFC juice."

Coconut Costs Soar

But Coconut Water Prices Keep Falling

From an industry-wide perspective, the global coconut water brand landscape is clear, divided into three camps: global leading brands, Southeast Asian local brands, and domestic brands.

A clear trend is that coconut water products have small price differences, and the 'red ocean' effect is emerging, with brands seeking breakthroughs. In recent years, prominent coconut water brands compete on two fronts: one is upstream supply chain control, like Huanjia, which has invested in raw material production areas and launched the independent brand 'Yasha'; the other is brand influence, such as Vita Coco and if, which are well-known professional coconut water brands with high market recognition. Clearly, the supply chain is crucial, but it must be noted that China has few major coconut production areas, weak market competitiveness, and heavy reliance on foreign raw materials. CCTV reported that Hainan Province is the only region in China capable of large-scale coconut cultivation, accounting for over 90% of national coconut production, but Hainan produces only about 220 million coconuts annually, while domestic demand is about 2.6 billion. On social media, insiders also revealed that "Hainan produces about 250 million coconuts annually, meeting only 6% of coconut water market demand." As an industry heavily dependent on overseas supply chains, last year was described by many practitioners as a 'chaotic year for raw materials,' due to significant price increases in foreign raw materials. According to Food Insider data, over 98% of peeled old coconuts processed at Hainan ports are imported. Due to Vietnam's special climate, mature old coconut production dropped significantly, forcing Chinese companies to source from other countries, with costs rising sharply. During procurement, coconut prices often rise by 20%-30%, and related products like coconut oil, coconut flakes, fresh coconuts, old coconuts, coconut juice, and thick coconut milk all saw price increases of over 20%. Under cost pressure, besides adding water and sugar, 'controlling raw materials' is also key. At the raw material end, there is a clear downgrade in coconut selection. "The best-tasting coconut on the market now is Thailand's fragrant coconut, which costs more, while yellow-skinned old coconuts are generally stored longer and cost much less," Lin Lin noted. In recent years, yellow-skinned old coconuts have become the preferred choice for many merchants. At the market end, consumption is also polarizing. Some seek high quality, while others prefer low prices. Zhang Hao told us, "Any place with a slightly warm climate theoretically can produce coconuts, just with taste differences," providing space for low-cost coconuts to enter the market. "To supply cheap products to the broader market, use cheaper coconuts, like those from Guangxi," but such low-cost coconuts often taste poor, leading to a vicious cycle: choosing low-quality coconuts to reduce costs, then adding large amounts of sugar and additives to improve taste. Meanwhile, despite rising raw material costs, coconut water prices have not increased. "First, the current consumption climate is poor; second, domestic coconuts can be used as substitutes, just by adding sugar," Lin Lin said. Market data confirms this: large quantities of 1L coconut water under 10 yuan sell well, and on Pinduoduo, bagged coconut water is the bestseller, with 15 bags for 23.12 yuan, selling over 781,000 bags. Loss risks loom over the industry, and while many brands choose to cut prices to survive, it's hard to fundamentally reverse the situation. New brands struggle in this red ocean. According to Qichacha data, in the past 1-3 years, 96 new catering businesses related to 'coconut water' were added. However, 25 of them had abnormal registration status, meaning nearly one-third of new brands can't survive even three years, and many don't last a year. Looking at the entire industry, before 2023, the coconut water market maintained high growth, but entering 2024, the market situation took a sharp turn for the worse. Even major brands are showing signs of collapse. For example, Huanjia's revenue in the first three quarters of 2024 was 1.34 billion yuan, a year-on-year increase of only 2.61%, extremely slow, and more seriously, profits saw a cliff-like 'change.' Huanjia also stated that due to building the 'Yasha' coconut water new product, the company invested heavily in advertising and offline promotion. Data shows that in the first three quarters of 2024, Huanjia's sales expenses reached 226 million yuan, an increase of 65.47 million yuan compared to the same period in 2023. But from sales volume, even Huanjia, with its supply chain, finds it hard to win the coconut market. The financial report shows that sales of its coconut water products and other beverages declined significantly, with coconut juice product sales down 8.3% year-on-year. After a large number of white-label products entered, consumers became more price-sensitive. Many consumers believe that "Yasha only has pure coconut water as a single product, with no taste difference from other brands, but 12.5 yuan per liter is not cheap." Under consumption downgrading, the coconut water track has also been dragged into the '9.9 yuan' army. To maintain market share, many brands can only cut prices to survive. For brands without a stable supply chain, lacking stable raw material channels and effective cost control systems, they face great difficulty in cost control and are often vulnerable in price wars, with many brands lasting less than a year.

Bad Money Drives Out Good

Fresh Coconut Water Stores Face 'Closure Wave'

The plight of fresh coconut water stores is another microcosm of the industry's current state. Currently, many milk tea shops are squeezing the market space of vertical coconut water fresh stores. A tea shop owner told us, "Compared to other new products, coconut water has a higher launch frequency. We might launch several new products a month, and many are discontinued, but coconut water is always retained." He added that consumers generally believe coconut water is healthier, aligning with the current pursuit of healthy eating; on the other hand, coconut water products are relatively cheap and low-cost. "For a 500ml drink, the actual coconut water added is only 80ml, with the rest being water, ice, and syrup." In stark contrast, the operating conditions of coconut water fresh stores are not optimistic.

Coconut water specialty stores not only have fewer product types but also higher prices. A franchisee helplessly said, 'Opening coconuts on-site and bottling directly keeps costs high, and it's simply not profitable.'

This operational difficulty is directly reflected in market data changes. The "2022 Tea Drink Category Development Report" jointly released by Meituan and Kamen showed that in 2022, coconut tea specialty stores saw explosive growth, with a growth rate of 66.5%. Just two years later, in 2024, things changed dramatically, with nearly half of the top ten coconut water brands having closure rates above 40%.

According to Zhaimen Canyan data, there are currently 12 fresh tea drink brands related to coconut water. Among them, cococean Coconut Water leads with 28 stores, followed by Yexiaoxiao·Yuanqi Coconut Water with 24 stores, and cocosakura Coconut Water with 22 stores. With average prices generally above 20 yuan, store numbers struggle to break the '30-store' mark.

After the expansion boom of the past two years, the pace of new store openings for coconut water brands slowed significantly in 2024. Except for Yebuer, which added 15 stores, most other brands added zero or single-digit stores after the start of the year. For example, cococean Coconut Water peaked in September 2023 with 5 new stores, but from then until April 2024, a period of 7 months, there were no new stores.

The development trajectory of Kekouye also reflects the market's cruelty. In 2021, Kekouye confidently stated it expected to open 60-80 stores by 2022, but reality was a heavy blow. Zhaimen Canyan data shows that as of January 10, 2025, it had only 12 stores, far from its goal.

The 'decline' of many brands highlights the limitations of the coconut water category. Previously, local brands each dominated their own markets. cococean was solid in Beijing, cocosakura occupied a corner of Shanghai, Shenzhen's Kekouye and Chadaye, Changsha's Zhengyeye, Yebengbeng, and Daike Super Coconut Water, Hefei's Koukouye, Nanjing's X-YES! Xunye, and Chengdu's Yeji de Shui all gained loyal followings in their regional markets. Now, the entire market faces short development cycles and low technical barriers, with obvious 'follow-the-trend' phenomena and insufficient product innovation, leading to increasingly prominent homogenization. Product forms are limited to common models like 'seasonal fruit + coconut,' 'milk + coconut,' and 'coconut egg,' with names mostly simple combinations of elements like 'ye,' 'coco,' and 'shui.' Prices hover around 25 yuan, with high similarity, making competition more intense and disorderly.

Conclusion

Looking back at 2020, coconut water, with its healthy and natural attributes, was regarded by many industry insiders and consumers as a dark horse category with unlimited potential. Now, three or four years later, the healthy and natural attributes have gradually become empty talk.

The vicious cycle of price wars has driven the entire coconut water industry into a dead end, returning to the original dilemma. To profit at low prices, costs must be strictly controlled. Some brands have to cut raw materials, pass off inferior goods, and add water, sugar, and additives, temporarily alleviating cost pressure but directly leading to a decline in product quality. As practitioners lament, "A good industry has been ruined in just a few years."

【New Order · Symbiosis】

The 10th China FMCG Innovation Conference

Time: March 17-19, 2025

Location: Chengdu, China