Date: August 7 ,2014

A coconut water market update:

• MARKET SHARE OF UNSWEETENED COCONUT WATER IS 25% WITH STRONG GROWTH POTENTIAL
• SWEETENED COCONUT WATER SEGMENT IS 75% AND HAS A CLEAR MARKET LEADER BUT SEGMENT HAS MANY BRANDS NOT LISTING ADDED SUGARS
• BIGGEST POTENTIAL IS THE USE OF COCONUT WATER IN 100% JUICE BLENDS TO LOWER OVERALL CALORIC CONTENT

iTi Tropicals (iTi), the leading importer of 100% pure coconut water in bulk, released its survey of market data revealing that coconut water products with added sweeteners represent about 75% of the coconut water market. Consumers may not realize there are essentially two categories of coconut water products: (1) those with no added sugars and (2) those with added sugars. It may be challenging for consumers to identify all products with added sugars because testing by a reputable laboratory revealed that some of the sweetened coconut water products, which represent about 15% of the market, fail to declare added sugars.

The market leaders in the unsweetened category represent 25% of all volume sold¹ and include brands such as Coco Libre, Naked, Purity Organics, Zico, and Zola, which supply 100% pure coconut waters without added sugars declared on the label or found in the products. Consumers of these products are demonstrating an interest in the pure coconut water taste and the lower levels of total sugars they provide. As consumers continue to look for products without added sugars, we believe the unsweetened coconut water is poised for rapid growth. For that growth to occur, companies will need to properly label added sugars to allow consumers to distinguish the sweetened and the unsweetened varieties of coconut water. Unfortunately, our testing of coconut water beverages in the market has revealed that numerous brands that are not properly labeling their products with added sugars.

The added sugar category represents 75% of all volume sold and includes brands such as Vita Coco and Goya who combined represent 60% of all volume sold in the United States. These products declare the added sugars and generally contain more sugars than the 100% pure coconut water. For example, according to the product label of the market leader Vita Coco, it contains "less than 1% natural fruit sugar." While one percent may sound like a small number, it can represent approximately 25% of the total sugars in the product.

In addition, iTi identified 12 canned and bottled brands packed in Thailand that contain undeclared added sugars. These inexpensive added sugars sweeten the products and help mask the taste of the naturally occurring minerals in pure coconut water and in some cases are even used to replace coconut water sugars. The practice offers unfair economic advantages to the perpetrators; it also hurts iTi (which markets only 100% pure coconut water in bulk, as an ingredient, with no added sugars) and it also harms companies that properly label their products. This latter group represents approximately 15% of the total market and brings the total sweetened category to 75%.

As one of the world's leading suppliers of bulk coconut water, iTi became suspicious of the labeling of many of the coconut water beverages sold in the United States. Indeed, iTi's concerns have been reinforced by a statement made by an executive from Vita Coco who acknowledged in a recent interview the widespread problem of added sugars used in coconut water.² It is in this context that iTi engaged a leading juice authenticity laboratory, Krueger Food Laboratories, to determine if commercially available coconut waters are properly labeled.

iTi is concerned that the continued sale of coconut waters with undeclared added sugars and other ingredients threatens to jeopardize consumer confidence in the category. iTi, therefore, feels it is incumbent on the industry to take proactive steps to put an end to this misleading practice. By releasing the summary of the results of these analyses, iTi hopes that retailers and brand-holders will strive to ensure the ingredients added to coconut water are properly labeled.

iTi views the use of coconut water in formulating reduced calorie 100% juice blends as one of the biggest emerging growth opportunities. Some of the cleanest, least-processed, packaged foods on the market are 100% juice products. As consumers look for alternatives to sugary soft drinks that are lower in calories and sugars, 100% juice blends made with coconut water offer an attractive option. Coconut water is the ideal ingredient to accomplish this goal. For example, in an 8 oz. serving of coconut water, there are only 36 calories versus 140 calories for grape of the same serving size, 113 calories for orange, and 150 calories for pomegranate. A 50/50 coconut water blend with any of these fruit juices could reduce the caloric content by 30-50% and the beverage could still be labeled as 100% juice. iTi recently designed a new website (www.coconutwaterconcentrate.com) for developers with FAQs, application ideas, news and a calculator for pricing and calories. This calculator can simply be used to compare the cost and calories for several ingredients, or as a more comprehensive cost and calorie calculation for new beverage development. Coconut water can also be used to reduce the thickness of highly viscous purees and yogurts, which are the complete opposite of banana puree that can be used to increase viscosity in fruit smoothies and other products. And, being relatively bland, coconut water does not interfere with other flavors and allows for the development of a 100% juice product with simple ingredients the consumer can pronounce, an ideal viscosity, and an improved nutritional profile with lower sugars and calories.

iTi has many solutions for both the unsweetened and sweetened category as well as ideas how to blend 100% juices and reduce the overall caloric content. Iti also offers a wide range of coconut waters from Philippines, Indonesia and Thailand that are all guaranteed 100% authentic. It also has organic solutions and furthermore offers product concept ideas. For a full report including testing methods and solutions iTi offers, please request iTi's White Paper on coconut water at www.ititropicals.com

About iTi Tropicals
iTi Tropicals, Inc. is an independent company headquartered in Lawrenceville, NJ. Its sole business is importing high quality tropical and exotic fruit puree & concentrates in bulk to be used as ingredients by US food manufacturers. In business for over 25 years, the focus at iTi Tropicals is on products such as: coconut cream, banana, guava, papaya, mango, passion fruit, pineapple, açaí, acerola, mangosteen, tamarind and coconut water.