If you've ever wondered just how much effort it takes to get a consumer product on the retail shelves, then The New York Times has the story for you. It's about how the $400-million coconut water industry has gone "from invisible to unavoidable" in the blink of an eye. The whole article is worth your time, but if you're in a hurry, here are three key takeaways: 

1. Visit stores in person. You want to crack retailers? Then forget about crafting a brilliantly pithy email subject line or devising a HubSpot-vetted inbound marketing campaign. Nope. For the founders of Vita Coco and Zico, at least, what was key in the beginning was visiting the stores--in person--with product in hand, when the owners were there. 

Michael Kirban, cofounder of Vita Coco, "rolled to Manhattan bodegas at night, on in-line skates, carrying samples in a backpack," writes the NYT's David Segal. He would visit as many as 40 locations a night, with the cartons literally strapped to his back. He went late at night, he says, because "the owners were there, counting the money." Mark Rampolla, founder of Zico, drove "a beat-up Econoline Ford van" going store to store in the same neighborhoods "at almost the same time--a week or two apart, in late 2004."

As Segal points out, this strategy has worked not only for coconut water products, but for others trying to crack the beverage market. "Many American beverage superstars--Vitaminwater, Snapple, Arizona, Red Bull and Mystic--began in New York City, mostly because no place has a greater concentration of independent stores. Instead of having to woo a national chain, and perhaps hand over a few grand in placement fees, you can talk your way into one store at a time."

2. Learn to live with and laugh at (and even respect) your competitors. According to the Times, the two coconut water companies practiced "simple acts of retail vandalism, like tossing the competition's signs in the garbage, as well as attempts at psychological point-scoring that could charitably be described as sophomoric." And then there was the less serious, or at least more prank-like, side to their competition, for example when Kirban "sometimes placed a container of Zico beside a sleeping vagabond, took a photograph and then emailed it to Mr. Rampolla."

Both coconut water entrepreneurs appear aware that--even if you're competing seriously--one of the best things you can do is find the humor in it. Jim Koch, legendary founder and CEO of the Boston Beer Co., demonstrated this lesson in levity late last year. During a guest spot on Boston's WEEI, a sports radio station, a caller identified himself as someone with a gluten sensitivity. He then asked Koch if Sam Adams would ever make a gluten-free beer. Koch politely said no, before steering the caller to a gluten-free competitor. 

3. Market and finance your product the right way, and you can compete with colossal global distributors. In 2009, Coca-Cola bought a 20 percent stake of Zico. (In 2013, it bought the whole company.) When Kirban heard the news, he initially worried about Vita Coco's ability to survive. "I thought we were dead," he tells Segal.

But Kirban found a way. In fact, Vita Coco now has more than 60 percent of the market, compared to Zico's less than 20 percent. And as of two weeks ago, Vita Coco had a $665 million valuation, based on its selling a 25 percent stake to Red Bull China. How did Kirban do it? There were two key pieces to his strategy:

  • Hire a sales ringer. Specifically, Vita Coco used former Vitaminwater salesman Michael Goldstein. "He and his team memorized phrases in Spanish, Arabic, Korean and Hebrew and quickly learned to tailor their pitches to different ethnicities," writes Segal. 
  • Recruit the right minority investors. Coke chose his competitor, but that didn't mean Kirban would be fighting alone. In 2007, he had sold 20 percent of Vita Coco to Verlinvest for $2 million. (Verlinvest is a Brussels-based investment firm that had also backed Vitaminwater.) Then Kirban took on more minority investors, including Madonna, Demi Moore and Anthony Kiedis of the Red Hot Chili Peppers. The celebrity investors raised Vita Coco's media profile and helped it land a deal with Dr Pepper Snapple Group, the country's third-largest distributor of beverages. 
Published on: Jul 28, 2014