---
title: "Why Has Coconut Water Never Really Taken Off?"
description: "The coconut water market presents both opportunities and challenges. Despite a surge in popularity as a health drink, coconut water remains a niche product in China due to low consumer awareness, supply chain constraints, and limited consumption scenarios."
author: "杨玉琳"
publisher: "New Distribution"
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published: "2023-08-04"
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# Why Has Coconut Water Never Really Taken Off?

> The coconut water market presents both opportunities and challenges. Despite a surge in popularity as a health drink, coconut water remains a niche product in China due to low consumer awareness, supply chain constraints, and limited consumption scenarios.

**Introduction: The coconut water market presents both opportunities and challenges.**

**Author** | Yang Yulin  **Reviewer** | Gou Gou  **Layout** | He Wen

In recent years, during a period of intense competition in the beverage industry, coconut water suddenly broke out of the track, gaining consumer favor and becoming a new trend in healthy drinks. Its explosive popularity seemed unstoppable. However, the actual situation has not been as rosy. In 2015, Vita Coco entered the Chinese market with the help of the Huabin Group, surpassing 100 million yuan in sales in its first year, but has not released relevant data since. That same year, Coca-Cola's Zico entered China, but Zico failed to leverage Coca-Cola's strong distribution channels to grow. Wahaha also launched a coconut water brand, little coco, but it gained little traction and gradually faded away. In 2020, Uni-President launched a coconut drink brand, Youye, but it received a lukewarm response. In 2023, Uni-President launched another coconut water brand, Yixiang... Coconut water brands have emerged one after another, yet the category has not seen significant growth, remaining a niche track and niche product.

According to a report by Touyan Research, the market size of China's coconut liquid beverage industry grew from 10.28 billion yuan in 2017 to 14.44 billion yuan in 2021, with a compound annual growth rate of 7%. To date, coconut water accounts for only 0.7% of the bottled water market in China. The development of coconut water can be described as "loud thunder, small raindrops." Why is this happening? What are the underlying reasons?

[Image: Touyan Research report]

**Insufficient Consumer Awareness: Confusion Between Coconut Water and Coconut Milk**

Before exploring why coconut water hasn't become a mainstream beverage, we need to understand the difference between coconut water and coconut milk. As the leader in the coconut milk industry, Coconotree accounts for over 90% of coconut milk sales. Many consumers mistakenly believe that Coconotree is coconut water, but in reality, Coconotree's best-selling coconut milk is quite different from coconut water.

Coconut water is the liquid stored in green coconuts, transported and filtered through the roots, stems, and seed coats of the coconut palm. It is often called "water grown on trees." It is clear, refreshing, light in texture, and slightly sweet. Coconut milk, on the other hand, is a beverage made by grinding and processing the mature coconut meat. During production, water and white sugar are added, followed by filtration, resulting in a milky white liquid with a coconut aroma.

To help clarify the difference, the author has compiled several products available on the market for reference.

**Coconut Milk** | **Coconut Water** | **Coconut Cream**

Low consumer awareness of the product is a major pain point for coconut water. First, we must clarify the differences between products, as different products have different markets and functions. Familiarity with product categories and properties helps us make better choices. In other words, **coconut water has not developed significantly since entering the domestic market; there is still a need to further educate the market and cultivate consumer awareness.**

**Supply Chain Constraints**

Coconut palms are tropical plants that thrive in high temperatures, abundant rainfall, and ample sunlight. Therefore, China's coconut water supply chain is mostly concentrated in Hainan, Leizhou Peninsula, and the southern islands of Guangdong, with insufficient output. For example, Dongjiao Town in Wenchang, Hainan, is a major supplier of coconut water, and many merchants even pay in advance to secure supply. Currently, China's coconut supply can only meet a small portion of market demand, with the majority relying on imports from Southeast Asia. Data from Zhiyan Consulting shows that from 2015 to 2021, China's imports of coconut juice (coconut water) far exceeded exports, indicating a high degree of external dependence. In 2021, China exported 1,145.8 tons and imported 76,871.7 tons, with imports being 67 times exports. This huge disparity highlights the supply chain constraints facing coconut water development.

**1. Product Limitations**

Coconut palms have a long growth cycle and limited yield, making coconut water supply unstable. This leads to higher prices and lower cost-effectiveness, which also limits its popularity. Coconut water is perishable and has a relatively short shelf life. During transportation, efficient and fast logistics systems are required to ensure product quality. Once opened, coconut water cannot be stored at room temperature, as bacteria multiply rapidly, potentially causing bacterial food poisoning. It is also inconvenient in terms of storage. Moreover, the taste of coconuts varies by region and climate, making standardization difficult. Large-scale commercial production of coconut water is challenging, hindering the industry's ability to achieve economies of scale and reduce costs.

**2. Market Limitations**

According to the "China Natural Beverage Market Data Report" released in 2020, the market size of natural beverages in China was 151.3 billion yuan in 2019, with coconut water annual sales of only about 280 million bottles, accounting for just 0.3%. In contrast, in foreign markets such as Thailand, Vietnam, the Philippines, and Indonesia, coconut water accounts for over 50% of sales. Due to the underdeveloped upstream industry chain in China, many foreign brands have entered the Chinese market. Although some domestic companies are doing well, many coconut water brands still rely mainly on OEM processing and have not formed a stable supply chain. Compared to other beverages, coconut water is more expensive and has a unique taste that some find hard to accept. Many consumers joke that coconut water tastes like boiled corn silk water. Its consumer base is mainly young people, and its penetration rate remains low.

**Perhaps the Chinese market has great potential, but without product innovation, it will be difficult to break through.**

**Limitations of Consumption Scenarios**

With changing consumer demands, coconut water has achieved some breakthroughs in recent years. Currently, there are two main consumption scenarios: **one is sports and fitness, and the other is dining.** However, compared to other best-selling beverages, coconut water's consumption scenarios are still quite limited. The taste of coconut water is relatively monotonous, making it easily replaceable in both dining and sports scenarios.

**1. Sports and Fitness Scenario**

Coconut water is low in sugar and fat and rich in potassium, making it a natural source of electrolytes. After exercise, the body may experience mild dehydration, so drinking coconut water can quickly replenish lost fluids and help improve fatigue and electrolyte imbalance. However, the current sports drink market is highly homogenized, with many choices available. Most consumers tend to prefer energy drinks that replenish stamina.

**2. Dining Scenario**

In April 2021, Luckin Coffee launched "Raw Coconut Latte," which has sold over 300 million cups as of early April this year. This shows that coconut water has a significant advantage in the new tea drink segment, but relying solely on pairing with freshly made tea drinks is not enough. According to the "2022 Tea Drink Category Development Report" jointly released by Meituan Food and Ka Men, the number of coconut-themed tea drink specialty stores increased by 66.5% year-on-year in 2022. With the popularity of freshly made tea drinks, many niche brands have emerged. However, current consumption habits are hard to change. Coconut water has a single flavor, and in dining scenarios, consumers tend to prefer carbonated drinks or sugar-free sparkling water with richer flavors and refreshing tastes. Market demand for coconut water is relatively low, making it difficult to expand the audience.

In fact, considering coconut water's inherent advantages—low calories, low sugar, low fat, and high vitamin and electrolyte content—it fully aligns with modern consumers' pursuit of health. **In the future, coconut water brands can try to develop more flavors, develop new products for specific consumer groups, and create differentiated advantages.**

**At the same time, expand product marketing, broaden consumption scenarios, and further increase the market share of coconut water brands.**

**Exploring the Infinite Possibilities of Coconut Water**

Overall, compared to cola, sparkling water, and juice, coconut water still requires consumer education, faces supply chain challenges, and has not fully opened up consumption scenarios, which is why it has never truly taken off. However, the development prospects for the coconut water category remain promising. In recent years, coconut milk and coconut cream brands have been bundling with coffee and tea drink scenarios, developing a new model of joint B2B and B2C growth, comprehensively laying out channels, increasing channel penetration, and continuously capturing consumer mindshare. They have gradually been accepted by the market.

**With the improvement of consumers' health awareness and the deepening trend of sugar-free beverages, coconut water, as a pure natural plant-based beverage, has growing market demand.** According to a report by global market research firm Technavio, the global coconut water market is expected to grow at a compound annual growth rate (CAGR) of 11.24% from 2022 to 2026, indicating increasing consumer demand for such products. To meet consumer needs, coconut water products and flavors will become more diversified. Many foreign brands have experimented with mixed flavors, including coffee chocolate, cinnamon, and lemon. Referring to the development of foreign coconut drinks, China's coconut drink flavors are also continuously innovating, and new coconut water brands are emerging to promote category education. For example, Keke Manfen has partnered with brands and institutions like Lefit Sports to host outdoor themed activities such as surfing, frisbee, and camping, and has collaborated with various coffee shops and bars to launch specialty drinks and alcoholic beverages, using experiential consumer education to bridge the gap with consumers. They also collaborate with online influencers on platforms like Xiaohongshu and Douyin to increase consumer interest and awareness, expanding diversified consumption scenarios such as work tea breaks, home cooking, and post-meal refreshment. Additionally, the Fino brand is investing substantial resources in production and technology refinement, deepening product R&D, and has already laid out 38,000 mu of coconut groves overseas, continuously polishing supply chain stability. In the future, as coconut water production and distribution technologies improve, prices will gradually decrease. Meanwhile, Coconotree, the leader in the coconut milk industry, launched 100% coconut water as early as 2015, and has been promoting the coconut water category as a key item nationwide, continuously increasing its commitment to coconut water with innovative packaging and diversified product lines, showing its optimism for the coconut water market. New brand Coconut Knows has widely expanded its presence online and offline, with strong co-branding and multi-dimensional seeding. It has launched a cherry blossom limited edition in collaboration with Meituan Maicai, and a limited 0-sugar fresh coconut milk with XIAOLAN FRIENDS. Its multi-SKU matrix penetrates high-frequency consumption scenarios such as afternoon tea, breakfast, and coffee pairing, showcasing the innovation and vitality of new domestic brands.

With the gradual improvement of consumer demand and the joint efforts and promotion of the industry, coconut water, as a pure natural beverage, has the opportunity to gain more market share. The coconut water market is full of opportunities, with broad prospects for future development, and is worth looking forward to.


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