Coconut water is the latest battleground between Pepsi and Coca-Cola

Big Soda is thirsty for coconut water.
Big Soda is thirsty for coconut water.
Image: Reuters/Eddie Keogh
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Two of the world’s biggest soda companies are looking to serve up a fresher, healthier face to the public, and they’re betting one way to do that is by selling coconut water.

Pepsico is exploring a bid to acquire All Market, the owner of Vita Coco, the leading brand of coconut water. If an offer is accepted, the deal would push Pepsi past its rival, the Coca-Cola Company, which owns the Zico coconut water brand, to become the global leader in sales of the product.

That Pepsico is looking to scoop up a popular coconut water brand isn’t surprising, given that soda companies have been and continue to be assailed for their role in the detrimental impact sugar has had on public health in the US. As the belief that sugar-heavy products have had an outsized effect on the American obesity epidemic has become more mainstream, food companies have faced mounting pressure to change their products and the ways they are marketed. Pepsico CEO Indra Nooyi told investors in April that she’s committed to reshaping the company into one that can “deliver products that are lower in sugar and a lot of zero-sugar products and beverages with positive nutrition.”

One way to achieve these goals is to diversify product offerings beyond soda and sugar-heavy fruit juices, and the 350% growth between 2011 and 2017 in volumic sales of US coconut water makes that product a natural target.

Beverage industry experts have said that Vita Coco represents about a quarter of total global coconut water sales—a beverage category that some analysts expect to grow by about 20% a year for the next few years. In other words, if the Pepsico-Vita Coco deal goes through, it would put Pepsico at the top of a projected $2 billion coconut-water business within a few years.