Key Interview: Tetra Pak Highlight Growth in Coconut-Based Products

10 Apr 2017 --- Coconut-based beverage products are gaining popularity. Between 2013 and 2016, packaged coconut water alone reports a CAGR of 22% in production volumes. Still a young market, its growth is expected to continue at pace, driving global sales to an estimated $3.4 billion by 2019. With global demand for coconut-based products racing ever higher, Tetra Pak has launched an online version of its acclaimed Coconut Handbook.

Providing an in-depth guide to the entire value chain of products made from this versatile and nutritious fruit, the Coconut Handbook has become a source of reference for more than 1000 industry professionals since it was launched as a print-on-demand book in 2016.

FoodIngredientsFirst recently spoke with Samit Chowdhury, Cluster Marketing Services Director, for Tetra Pak who has been working at Tetra Pak for over thirteen years and works closely with customers to fast track their innovation and maximize opportunities for growth. As part of his role, he also heads the Coconut Knowledge Centre (CKC) in Singapore. CKC, created six years ago, aims to be the end-to-end knowledge hub for the coconut industry. 

“The Coconut Handbook draws on our 20-year experience in the category, as well as insight and research from our dedicated Coconut Knowledge Centre in Singapore. In response to numerous customer requests, and in anticipation of continued growth, we are now making it available online,” he says. 

“We know from earlier experience, with the Dairy Processing Handbook, that an online book has many benefits compared to a printed version. This channel is easily accessible from any digital device, anywhere in the world,” Chowdhury continues, “We also believe that our expertise and knowledge is more easily spread when online, plus, as well as customers, university students welcome the fact that the book is available to read online.”

Is the coconut trend likely to slow down? “On the contrary, we expect the global growth trend to continue,” he claims. “The original growth came from unflavored coconut water but now we see proliferation of flavored and protein-enriched varieties, alongside extension of coconut water from a traditional hydration space into sub categories related to sports drinks and energy management. We also expect traditional coconut water drinking markets to take up packed coconut water due to the convenience factor.” 

Many of the health benefits attributed to coconut water are due to its mineral content and rehydration properties. Analytical studies have shown that it naturally contains nutrients such as glucose, amino acids and electrolytes, such as potassium, calcium and magnesium. Electrolytes are minerals in our blood and other body fluids that carry an electric charge – meaning they have an effect on water retention, blood pH and muscle function. Electrolytes are minerals that help body in regulating water levels, blood pH and muscle function. 

“Coconut water’s natural rehydration and sports nutrition qualities make it an increasingly popular alternative to other sports beverages which are not perceived to be as healthy,” says Chowdhury. “Thanks to UHT processing and packaging close to source, the nutritional goodness of coconut water can be maintained without the need for preservatives.”

Beyond coconut water – Tetra Pak are seeing the emergence of the ready to drink (RTD) coconut milk beverage that is riding on the plant-based beverage trend. According to Chowdhury, coconut milk beverages have seen three-fold growth to 63 million liters in volume in the United States over the last four years. Coconut milk shares the space with other plant based beverages like almond milk, oat milk, rice milk which consumers are using as alternative or complement to dairy. “Coconut cream is another category that we believe will continue to perform very strongly, driven by demand in Asia due to its use in Asian traditional cuisine,” Chowdhury adds. 

Packaged coconut water and coconut milk beverages are undoubtedly the key market drivers at present, and are therefore yielding the most growth. As for coconut milk beverages, “those with 1.5-2% fat content have been very popular in China for many years, and the market continues to grow,” he notes.

Coconut is considered a wonder tree because all its parts can be utilized for a wide variety of products. Coconut water, coconut oil (CNO), coconut milk and cream have become mainstream products and witnessing significant growth over last few years. Virgin Coconut oil (VCO) is gaining prominence as  a healthy oil for dietary and non-dietary purposes and seeing a healthy double digit CAGR over last 3-5 years. Amongst dehydrated products, desiccated coconut, and coconut palm have a fairly sizeable market too, with North America, Australia and New Zealand, Europe, and Middle East being the major consumers. 

Chowdhury comments further: “Coconut water, coconut milk/cream and virgin coconut oil (VCO) are expected to be main growth drivers for growth in coconut products.  Coconut water is a new category that continues to evolve,” he states. “It is an extremely sensitive product that requires appropriate and careful handling from tree to package, therefore I expect innovation to occur across the value chain, from collection of coconut water at source to more efficient processing.”

“Currently processing consists of pre-processing (washing and opening of the nuts) which is extremely labor-intensive,” Chowdhury continues, “That means as the growth continues, there will likely be moves to invest in more automation that will make it easier to expand capacity quickly and meet growing demand.”

Could this high demand for coconuts result on a global shortage? “The coconuts that are being used for coconut water today are still a very small portion of the total coconuts available globally, plus coconuts are produced throughout the year,” he explains. “What you find on the streets in tropical countries is the vendors generally selling younger, green coconuts because they are more commonly associated with the coconut water beverage than mature nuts.”
 
“However, for production of coconut water on a large scale, a mix of young and matured nuts are often used with the meat of more mature coconuts which are normally used to create products like desiccated nuts and virgin coconut oil. As the demand continues to increase, efforts would certainly be required to keep pace on the supply side. This would mean initiatives at farm level to increase the area under cultivation for coconut, as well as increasing productivity of coconut plantations,” says Chowdhury.

Another critical, pressing point for coconut production to meet the increased demand is investment in processing capacity, which has already started happening. “Tetra Pak currently has close to 15 processing and packaging facilities in South and Southeast Asia focused on coconut water, and these facilities can still expand their capacity if needed,” he finalizes. 

by Elizabeth Kenward