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Item 1. Business

2024-02-29 compared with 2023-03-14 · 55 added, 67 removed, 123 unchanged (50% of the section changed)

The Vita Coco Company is a leading platform for brands in the functional beverage category.

We pioneered packaged coconut water in 2004 and have extended our business into other healthy hydration categories.

We pioneered packaged coconut water in 2004 and have extended our business into other categories.

Our mission is to deliver great tasting, natural and nutritious products that we believe are better for consumers and better for the world.

We are one of the largest brands globally in the coconut and other plant waters category, and one of the largest suppliers of Private Label coconut water.

Our branded portfolio is led by our Vita Coco brand, which is the leader in the coconut water category in the United States, and also includes coconut oil, juice, hydration mix and milk offerings.

Our other brands include Runa , a plant-based energy drink inspired from the guayusa plant native to Ecuador, Ever & Ever , a sustainably packaged water, and PWR LIFT , a protein-infused fitness drink.

We also supply Private Label products to key retailers in both the coconut water and coconut oil categories.

We are one of the largest brands globally in the coconut and other plant waters category, and a large supplier of private label coconut water.

Our branded portfolio is led by our Vita Coco brand, which is the leader in the coconut water category in the United States, and also includes coconut oil, juice, and milk offerings.

Our other brands include Ever & Ever , a sustainably packaged water, and PWR LIFT , a protein-infused fitness drink.

We also offered Runa , a plant-based energy drink inspired by the guayusa plant native to Ecuador, which we ceased selling in December 2023.

We supply private label products to key retailers in both the coconut water and coconut oil categories.

Additionally, we generate revenue from bulk product sales to beverage and food companies.

We source our coconut water from a diversified global network of 14 factories across six countries supported by thousands of coconut farmers.

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Our products are distributed primarily through club, food, drug, mass, convenience, e-commerce, and foodservice channels.

We are also available in a variety of on-premise locations such as corporate offices, fitness clubs, airports, and educational institutions.

The Vita Coco Company, Inc., formerly known as All Market Inc., was incorporated as a Delaware corporation in January 2007 and incorporated in Delaware as a public benefit corporation in April 2021.

Our products are also available in a variety of on-premise locations such as corporate offices, fitness clubs, airports, and educational institutions.

The Vita Coco Company, Inc., formerly known as All Market Inc., was first incorporated as a Delaware corporation in January 2007 and re-incorporated in Delaware as a public benefit corporation in April 2021.

We completed an initial public offering (the "IPO") of our common stock in October 2021.

We operate in the functional beverages industry.

Our primary brand Vita Coco Coconut Water competes in the approximately $2.7 billion global coconut and plant waters category, as estimated by Euromonitor (2022).

Our Runa brand competes in the plant based energy beverage category, our Vita Coco coconut milk product is a plant-based dairy alternative and our PWR LIFT brand competes in the enhanced isotonic category.

Our primary brand Vita Coco Coconut Water competes in the global coconut and plant waters category .

Our Vita Coco coconut milk product is a plant-based dairy alternative and our PWR LIFT brand competes in the enhanced isotonic category.

We also develop and sell other brands in the beverage category, and occasionally in other categories, as we test our ideas for expanding our product portfolio.

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that may have substantially greater financial resources and stronger brand recognition than we have.

We also compete with other leading functional beverages

including Goya, Harmless Harvest, Foco, BodyArmor, Monster Energy, Red Bull, Bang, Ocean Spray and Bai, as well as a range of emerging brands and retailers’ own private label beverage brands.

We also compete with other leading functional beverages including Goya, Harmless Harvest, Foco, BodyArmor, Monster Energy, Red Bull, Bang, Ocean Spray and Bai, as well as a

range of emerging brands and retailers’ own private label beverage brands.

Our competition and competitors vary by market due to regional brands and taste preferences.

We are also a leading supplier of Private Label coconut water and oil brands, and we compete with other Private Label suppliers for that business.

We are also a leading supplier of private label coconut water, and we compete with other private label suppliers for that business.

Business Operations

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(i) the Americas segment, comprised of our operations primarily in the United States and Canada and (ii) the International segment, comprised of operations primarily in Europe, the Middle East, Africa and the Asia Pacific regions.

While ov er 91% of our business is based on sales of coconut water, we have used our access to market to add other beverage brands with a view to building a diversified beverage platform of compatible brands.

While ov er 92% of our business is based on sales of coconut water, we have used our access to market to add other beverage brands with a long-term view to building a diversified beverage platform of compatible brands.

With the launch of the Vita Coco brand in New York City in 2004, we established coconut water as a premium lifestyle drink in America.

Vita Coco is the coconut water category leader with approximately 50% market share in the United States according to IRI U.S.

for the 52 weeks ending December 25, 2022, which over indexes to younger households and to more multicultural shoppers.

We offer Vita Coco coconut water as an alternative to sugar-packed sports drinks and other less healthy hydration alternatives.

Vita Coco is the coconut water category leader with greater than 50% market share in the United States according to Circana US for the 52 weeks ending December 31, 2023, which over indexes to younger households and to more multicultural shoppers.

We offer Vita Coco coconut water as an alternative to sugar-packed sports drinks and other less healthy alternatives.

Vita Coco has evolved from a primarily pure coconut water brand to a full portfolio of coconut-based products.

The portfolio now includes multiple offerings in the coconut water category with Vita Coco Pressed, Vita Coco Coconut Juice, and Farmers Organic, with offerings in adjacent plant-based categories such as Vita Coco Coconut MLK, Vita Coco Barista, Vita Coco Coconut Oil, and Vita Coco Hydration Drink Mix.

In 2022, we focused on expanding our multipack strategy in coconut water to increase consumption with core consumers.

In addition, we expanded our Farmers Organic product to national distribution and focused on the regional rollout of Vita Coco Coconut Juice.

In 2023, we intend to continue to develop these initiatives, while in parallel expanding into new occasions through a licensing collaboration with Diageo.

Vita Coco Spiked with Captain Morgan is a ready-to-drink cocktail sold by Diageo and made with their flagship Captain Morgan rum and our flagship Vita Coco coconut water that will be distributed nationally in 2023.

Internationally, our business is anchored by Vita Coco ’s presence in the United Kingdom, where it is the chilled coconut water category leader with 82% market share, according to IRI UK, for 52 weeks ended December 31, 2022.

Our key strategies for growth for Vita Coco coconut water include:

1) offering more multipacks in coconut water to increase consumption with core consumers, 2) increasing distribution of other product offerings such as Farmers Organic and Vita Coco Coconut Juice, 3) expanding the number of households that purchase our products, and 4) growing opportunities for new usage generally.

Internationally, our business is anchored by Vita Coco ’s presence in the United Kingdom, where it is the chilled coconut water category leader with 89% market share, according to Circana UK, for the 52 weeks ended December 30, 2023.

Our United Kingdom commercial team and our supply chain based in Asia have allowed us to sell into other European and Asian countries.

Vita Coco coconut water has a presence in key markets such as China, France, Spain, the Benelux region, the Nordic Region, Africa and the Middle East.

Vita Coco coconut water has a presence in key markets such as China, France, Germany, the Middle East, the Benelux region, Spain, the Nordic Region, and Africa.

Private Label

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We also supply retailers with private label coconut oil.

Runa is a plant-based, natural offering for consumers in the energy drink market.

We believe that Runa ’s clean energy drinks provide consumers with a refreshing energy boost without the jolts and jitters, and with less sugar, than traditional energy beverages.

A key ingredient in Runa is guayusa, an Amazonian jungle plant which we believe is a "super-leaf."

Launched in 2019, Ever & Ever is a purified water brand packaged solely in aluminum bottles.

Given emerging consumer concerns with the disposal or recyclability of plastic water bottles, we created Ever & Ever to respond to the consumer need for a sustainably packaged water product in aluminum bottles with potential infinite re-cyclability.

Ever & Ever was launched with a focus on the foodservice and office channels.

Ever & Eve r is also available in our Direct-to-Consumer ("DTC") channels.

In 2021, we launched PWR LIFT, a beverage targeted at post-workout and recovery hydration occasions with added nutritional benefits.

PWR LIFT is a protein-infused sports drink with electrolytes and zero sugar, designed to provide fitness-minded consumers with protein in a hydrating beverage.

In 2022, we tested PWR LIFT in select markets including Arizona, North Carolina, South Carolina and Georgia and, in 2023, we plan to expand the offering to Texas.

Given consumer concerns with the disposal or recyclability of plastic water bottles, we created Ever & Ever to respond to the consumer need for a sustainably packaged water product in aluminum bottles with potential infinite recyclability.

Ever & Ever was launched with a focus on the food service and office channels.

In 2021, we launched PWR LIFT, a beverage targeted at post-workout and recovery occasions with added nutritional benefits.

PWR LIFT is a protein-infused sports drink with electrolytes, BCAAs and zero sugar, designed to provide fitness-minded consumers with protein in a hydrating beverage.

In 2022 and 2023, we tested PWR LIFT in select markets including Arizona, North Carolina, South Carolina and Texas.

During that time, PWR LIFT became the official sponsor of HYROX, a rapidly-growing competition known as the "World Series of Racing." In early 2024, PWR LIFT will launch in New York City metro area.

The brand targets fitness enthusiasts and consumers seeking healthier beverage options, and we plan to grow the brand by focusing on premium retail execution, brand sponsorships, influencer partnerships and social media advertising.

Runa is a plant-based, natural offering for consumers in the energy drink market.

A key ingredient in Runa is guayusa, an Amazonian jungle plant.

As of December 2023, we ceased offering this brand.

We engage contract manufacturers, co-packers and third-party logistics providers to manufacture and distribute our products.

Our fixed asset-lite model enhances production flexibility and capacity, and enables us to focus on our core in-house capabilities which include supplier management, logistics, sales and marketing, brand management and customer service.

Our well-diversified global manufacturing network spans across six countries, 14 coconut water factories operated by our manufacturing partners and five co-packing facilities for products not packaged near source.

Our well-diversified global manufacturing network spans across 14 coconut water factories in six countries that are operated by our manufacturing partners and five co-packing facilities for products not packaged near source.

Our network provides us with significant production capacity and capabilities, and an ability to re-allocate coconut water sourcing in the event of supply chain issues, weather, logistics or other macroeconomic impacts.

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Raw materials used in our business and by our co-packers consist of ingredients and packaging materials purchased from local, regional and international suppliers.

The principal ingredients include coconut water, Tetra Paks and caps, cardboard cartons, PET bottles and aluminum bottles and cans.

The principal ingredients and packaging include coconut water, Tetra Paks and caps, cardboard cartons, PET bottles, and aluminum bottles and cans.

We work with our contract manufacturing partners to purchase our raw ingredients from local suppliers in accordance with rigorous standards to assure responsible sourcing, quality and safety.

The majority of our products are produced and packaged with materials sourced from a single supplier, Tetra Pak, whether purchased by us or by our contract manufacturers on our behalf, which provides us efficiency in the packaging and export of our products, and furthers our commitment to responsible sourcing, packaging near source and sustainability.

Our production contracts are mostly denominated in United States dollars, with some limited contracts in local currencies such as the Brazil Real.

The majority of our products are produced and packaged with materials sourced from a single supplier, Tetra Pak, whether purchased by us or by our contract manufacturers on our behalf, which provides us efficiency in the packaging and exporting of our products, and furthers our commitment to responsible sourcing, packaging near source and sustainability.

Our production contracts are mostly denominated in United States dollars, with some limited contracts in local currencies such as the Brazilian real.

Distribution, Sales and Marketing

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Our products are typically shipped directly from our contract manufacturing partners to a network of third-party warehouses located in our selling markets.

We go to market in North America through various distribution channels, including a Direct Store Delivery distribution network ("DSD"), Direct-to-Warehouse network (DTW), broadline distributors, and our own DTC channel.

We go to market in North America through various distribution channels, including a Direct Store Delivery distribution network ("DSD"), Direct-to-Warehouse network ("DTW"), broadline distributors, and our own Direct-to-Consumer ("DTC") channel.

We match the customers' needs with the right route to market providing us flexibility for our established brands and for our innovations.

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Our European market is primarily retail and e-commerce operator direct sales, with some countries supported by distributor or importer type relationships.

In China, we sell to Reignwood Investment (China) Co., Ltd, which is our import and distributor partner for the territory, and, through its affiliates, has been one of our significant shareholders since 2014.

In China, we sell to Reignwood Investment (China) Co., Ltd, which is our import and distributor partner for the territory, and, through its affiliates, was one of our significant shareholders prior to 2023.

Other countries are serviced through importers with limited retail direct relationships or in partnership with one of our manufacturing partners through licensing or other agreements.

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We also employ a brand, marketing, e-commerce and insights team with strong creative, social and digital capabilities with a primary focus on the North American and European markets.

The primary goal of our marketing function is to educate consumers about the functional benefits of our products while inspiring consumers to fall in love with our brands.

The primary goal of our marketing function is to educate consumers about the functional benefits of our products while inspiring consumers to fall in love

with our brands.

Since the early days, our brands have been sponsored by a roster of celebrity and athlete fans.

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As is typical in the beverage industry, sales of our beverages are seasonal, with the highest sales volumes generally occurring in the second and third fiscal quarters during the warmer months of the year in our major markets.

Over the past few years, the COVID-19 pandemic has caused general business disruption worldwide.

Since the beginning of this pandemic in January 2020, our top priority has been the health, safety and well-being of our employees.

Although our workforce has returned to the office on a hybrid basis, some of the impacts on our business created by the COVID-19 pandemic have continued or evolved.

After COVID-19 emerged, among other impacts, we saw significant changes to global ocean shipping availability and pricing of containers, lengthening transit times, increased domestic transportation costs and some payroll inflationary effects.

We also experienced negative impacts on our inventory availability and delivery capacity and temporary manufacturing and distribution partner shutdowns which affected, at times, our ability to fully service our customers’ demand.

We took measures to bolster key aspects of our supply chain and we continue to work with our supply chain partners to ensure our ability to service customers and their demand.

Some of these supply chain and logistics impacts have lessened over time, but conditions have not returned to those existing before the COVID-19 pandemic.

In some cases, new challenges have emerged.

For example, towards the end of 2022 into 2023, although the pricing and availability of shipping containers has improved, the cost of warehouse space in the United States used to store inventory has increased significantly over recent months while availability of such warehouse space has decreased.

We continue to closely monitor the impact of the COVID-19 pandemic and developments related thereto on our business.

For additional discussion of the factors above and the impact of COVID-19, see Part I, Item 1A.

“Risk Factors” and Part II, Item 7.

"Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Annual Report on Form 10-K.

Product Innovation

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We believe the protection of our trademarks, designs, copyrights, patents, domain names, trade dress and trade secrets are important to our success.

As of December 31, 2022, we had over 30 registered trademarks, over 10 pending trademark applications in the United States, over 230 registered trademarks and over 20 pending trademark applications in other countries.

As of December 31, 2023, we had over 30 registered trademarks and over 10 pending trademark applications in the United States, as well as over 240 registered trademarks and over 10 pending trademark applications in other countries.

Depending upon the jurisdiction, trademarks are valid as long as they are in use and/or their registrations are properly maintained.

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product standards;

product safety, product safety reporting;

product safety and reporting;

marketing, sales, and distribution;

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Furthermore, in order to advance the best interests of those materially affected by the corporation’s conduct, it is intended that our business and operations create a material positive impact on society, taken as a whole.

In March 2022, The Vita Coco Company, Inc.

announced it was designated as a Certified B Corporation, a certification reserved for businesses that balance profit and purpose to meet the highest verified standards of social and environmental performance, public transparency and legal accountability.

In 2022, The Vita Coco Company, Inc.

was designated as a Certified B Corporation, a certification reserved for businesses that balance profit and purpose to meet the highest verified standards of social and environmental performance, public transparency and legal accountability.

Through achieving Certified B Corporation status, The Vita Coco Company, Inc.

joined its subsidiary, All Market Europe Ltd, a United Kingdom company, which had previously achieved B Corporation status.

We believe that we bring our products to market through a responsibly designed supply chain, and provide our farmers and manufacturers the partnership, investment, and training they need to not only reduce waste and environmental impact, but also bring income and opportunity to their local communities.

joined its subsidiary, All Market Europe Ltd., a United Kingdom company, which had previously achieved Certified B Corporation status.

We believe that we bring our products to market through a responsibly designed supply chain, and provide farmers and manufacturers the partnership, investment, and training they need to not only reduce waste and environmental impact, but also bring income and opportunity to their local communities.

In 2014, we created the Vita Coco Project to support and empower our coconut farming communities by encouraging innovative farming practices, improving education resources, and scaling our business to promote economic prosperity.

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Additionally, we attempt to partner with other third-party organizations that share and advance our ideals, including fair trade, accessible nutrition and wellness, and environmental responsibility.

We believe this purpose-driven approach has aided our growth as it is strategically aligned with the beliefs of our global consumer base and has improved our supplier relationships.

Since 2022, we have published an annual Impact Report to evaluate and communicate the environmental and social impacts of our business.

We believe this purpose-driven approach has aided our growth as we believe it is strategically aligned with the beliefs of our global consumer base and has improved our supplier relationships.

To further support our public benefit purpose and "Give, Grow, Guide" philosophy, we formed the Vita Coco Community Foundation, a standalone nonprofit corporation in December 2023.

Annually, we publish an Impact Report describing the environmental and social impacts of our business.

As a public benefit corporation, we are required by Delaware law to provide a biennial statement on our promotion of the public benefits identified in our certificate of incorporation and of the best interests of those materially affected by the corporation's conduct.

We intend to use the Impact Report to be issued later this year as such biennial statement.

Our biennial public benefit corporation statement was included in our Impact Report issued in early 2023.

Human Capital

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Our people are at the heart of our business.

Our Board of Directors provides oversight of the policies and procedures in place that relate to talent, leadership and culture, and compensation plans for our Executive Chairman and Chief Executive Officer.

The Compensation Committee evaluates and approves the compensation plans related to our executive officers.

In 2022, we received a Great Place to Work Certification from the Great Place to Work Institute based on the ratings of our employees.

Our Board of Directors provides oversight of the policies and procedures relating to talent, leadership, culture and compensation plans for our Executive Chairman and Chief Executive Officer.

The Compensation Committee evaluates and approves the compensation plans for our executive officers.

We believe that we have been able to attract diverse and highly engaged employees who share our belief in our mission and further promote our inclusive company culture.

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Based on exit interviews and employee surveys, we identify opportunities for improvement in our processes and track our employee engagement levels.

At the time of our IPO and again in the first quarter of 2023, we awarded all full-time global employees an equity grant with vesting based on continued employment in order to motivate retention and align our employees with our other shareholders.

We award equity grants with vesting based on continued employment to eligible employees in order to motivate retention and align our employees with our other shareholders.

We promote and value a diverse, equitable and inclusive culture for our employees.

In 2020, our employees formed a Diversity and Inclusivity Committee which has worked to celebrate all our employees, educate and recommend improvements to our processes to enhance our organization and our culture.

Our Diversity and Inclusivity Committee works to celebrate all our employees, educate and recommend improvements to our processes to enhance our organization and our culture.

As of December 31, 2023, approximately 47% of our employees identified as female, 49% identified as male, and 4% did not disclose their gender identity.

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Additional Information

The Vita Coco Company, Inc., formerly known as All Market Inc., was incorporated in Delaware as a corporation in January 2007 and as a public benefit corporation in April 2021.

The Vita Coco Company, Inc.

was incorporated in Delaware as a corporation in January 2007 and as a public benefit corporation in April 2021.

We completed an initial public offering of our common stock in October 2021.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business