Israeli chutzpah lies at the heart of America’s favourite coconut drink
Ira Liran cofounded Vita Coco, a globally successful coconut-water business, with no retail experience. Investors today include Madonna, Demi Moore, Rihanna and Matthew McConaughey.
Two guys walk into a New York City bar in 2003 and meet a couple of Brazilian women.
“What do you miss most from home?” the men ask. “Agua de coco,” the women answer. Coconut water.
In 2004, the two men found Vita Coco, which takes off like wildfire as consumers everywhere seek alternatives to sugary soft drinks.
Today, Vita Coco is the global market leader in coconut water, the clear nutritious liquid inside young green coconuts. The company has 10 manufacturing facilities in eight tropical countries, which altogether utilize two million coconuts daily.
“In the US we have 45 to 50 percent of the market share. Coconut water sales in the US are $1.2 billion per year and $1.9 billion globally,” says Ira Liran, the Israeli-born member of the founding duo, who followed his love to Sao Paulo.
Celebrity investors including Madonna, Demi Moore, Rihanna, Matthew McConaughey and Anthony Kiedis of the Red Hot Chili Peppers love the drink and Vita Coco’s social initiatives in communities where the coconuts are sourced, ranging from scholarships for farmers’ children to sustainable farming programs.
“I never dreamed it would be this successful. My original plan was to sustain my life in Brazil,” Liran tells ISRAEL21c during one of his frequent trips to visit family in Israel. “But we knew we had something special on our hands.”
Vita Coco recently signed a distribution agreement in Israel, its 31stmarket. This is something of a homecoming for Liran.
Born in 1978 in the Tel Aviv suburb of Ramat Gan, he was two when his parents moved to New York. On his father’s side he is eighth-generation Israeli. On his mother’s side, his grandfather Yeshayahu Anug served as Israel’s ambassador to several countries. The Lirans came back to visit every summer.
“I’m an Americanized Israeli,” says Liran, who has a degree from Columbia University in Italian cinema and cultural studies, and cofounded Vita Coco with zero retail experience. When he went to the bar with Mike Kirban that fateful night, he was head of US marketing for Italian jewelry company Nomination.
“After I moved to Brazil a few months later, I saw coconut water everywhere. People were consuming it all day — with breakfast, at the gym, in cocktails, as a hangover cure, walking down the street,” says Liran. “Brazilians, like Israelis, are active and health-conscious and I realized there could be a business here.”
Ironically, Vita Coco isn’t sold in Brazil; there are too many local competitors. It’s available at major retailers throughout North America, and in most of Europe as well as Mexico, Colombia, Japan, New Zealand, China and Israel.
Though the business thrived, it almost went bankrupt before the first carton hit the shelves.
“We went all in, bought tons of product, put it on a boat in two huge containers and sent it to the US,” Liran relates.
Three days before the ship’s arrival, the US Food and Drug Administration (FDA) asked for the product’s FDA registration number. Liran and Kirban didn’t have one. They learned it would take 16 to 18 weeks to process their application.
“We panicked. We didn’t have enough money to discard, let alone store, the product. So we decided to divert it to the Bahamas and sold as much as we could there to recoup some of our losses. That could have been the end of us but we were able to regroup, wait for the FDA number and then restart.”
He admits that he invested a fair amount of Israeli chutzpah (audacity) into the business.
“You have to have a little chutzpah to go against the system,which says you need millions [of dollars] to give out free stuff. Instead, we went into stores and said ‘You have to support the little guy; you have to buy this. We’re not Coke and Pepsi. We have rents to pay.’ And chutzpah took us where we needed to go.”
The Vita Coco partners have spurned buyout offers from some of their 250 coconut-water competitors.
“Our two biggest competitors are Coke and Pepsi in the US, and we’re bigger than both of them combined,” says Liran.
In 2010, the partners got a call from Guy Oseary, Madonna’s manager.
“Guy said Madonna was drinking Vita Coco on tour and she wanted to get involved in our business. We explained that we didn’t have money for a celebrity endorsement, so how about investing in us? She did, and Guy did too,” says Liran. “He brought along Matthew McConaughey and others, and that propelled our business.”
In 2011, the singer Rihanna developed her own flavor of Vita Coco, the limited-edition Tropical Fruit. “It was on the market for one cycle and did very well,” Liran reports.
Five varieties are currently in the lineup. New products include Vita Coco Café and Vita Coco organic virgin cold-pressed coconut oil.
The company is headquartered in Manhattan and has offices in Singapore, London and Sao Paulo. Globally, Vita Coco employs close to 400 people.
“We’re having fun and it’s so important to us to make the business sustainable,” says Liran. “We really want to give back to the communities where our coconuts are grown, so we do things like build schools. We constantly we want to do more.”
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