The Vita Coco Company (COCO) Piper Sandler 5th Annual Growth Frontiers Conference summary

Category growth and market drivers

• Coconut water category is growing rapidly, up 28% year-to-date in the U.S., with strong international growth as well.

• Growth is driven by consumer demand for functional, healthier, and natural beverages, with younger demographics increasing consumption.

• Two-thirds of U.S. growth comes from new households, with the remainder from increased purchases by existing customers.

• Household penetration remains below major juice categories, indicating significant runway for further expansion.

• Long-term branded coconut water growth is expected to be around 15%, with confidence in sustaining double-digit momentum.

Distribution, capacity, and operational focus

• Distribution opportunities remain, especially with major retailers like Walmart, where shelf space and SKU count can be expanded.

• Food service and international markets such as the U.K. and Germany present additional growth avenues due to low per-capita consumption.

• Capacity has been tight due to higher-than-expected demand, but improvements are underway, with full recovery and inventory build expected by Q4.

• Capacity expansion investments are ongoing, with new lines taking about 18 months to secure and install.

• Service levels are expected to improve as more capacity comes online, preparing for stronger performance in 2027.

Cost pressures, pricing, and margin management

• Packaging and logistics costs have increased, with packaging cost hikes seen as permanent and logistics/fuel costs viewed as more temporary.

• Pricing actions are planned for early next year to offset permanent cost increases, aiming to maintain gross margins in the high 30s to 40%.

• Consumer willingness to pay for premium, functional beverages has supported favorable elasticity in past price increases.

• Price increases are expected to be modest, with no substantial inflation anticipated.

• Ocean freight inflation is considered temporary, with significant new shipping capacity expected to stabilize rates.