Coke Follows Pepsi Into Coconut Water Market

Last Updated Sep 2, 2009 12:54 PM EDT

The Coca-Cola Company just became an investor in ZICO Beverages, a California company that makes coconut water. The move comes two weeks after rival soft drink giant PepsiCo purchased Brazil's largest coconut water producer, Amacoco.

As carbonated sodas fall out of favor, soft drink companies are looking to expand their offerings and focus more on things like teas, sports drinks, energy drinks and vitamin waters.

Coconut water is a popular option in many Asian and Latin American countries, and it's slowly gaining attention in the U.S. It's found within young, green coconuts and is different from coconut milk, which is squeezed from the meat of the fruit. Complete with electrolytes and carbs, coconut water has been hailed as a natural sports drink.

But Coke and Pepsi are making tentative steps -- the Coca-Cola Company took only a minority stake in ZICO, and PepsiCo is starting off selling coconut water just within the Latin American market.

If the coconut water trend takes off here, however, both companies will be ready to take advantage.

  • Katherine Glover