Danone invests in Harmless Harvest coconut water
Danone's venture capital arm, Danone Manifesto Ventures, announced last week it was part of a $30 million investment in coconut water producer Harmless Harvest, according to Food Business News. The brand sources coconuts from Thailand and produces fresh, organic coconut water through a microfiltration process.
Harmless Harvest — which launched in 2010 — differentiates itself in the increasingly crowded coconut water space through its Fair for Life certification. This is awarded to sustainable businesses that support social, agricultural and environmental improvement.
“Harmless Harvest is a unique U.S. brand with a strong consumer base and a great growth potential in the attractive plant-based category,” Laurent Marcel, managing director of Danone Manifesto Ventures, told Food Business News. "We look forward to leveraging our expertise and resources to help Harmless Harvest reach its full potential, while maintaining the unique DNA that has enabled its success."
The $2 billion-plus U.S. coconut water industry just got a little more competitive.
Danone's latest investment gives the French company access to a hot space that market research firm Technavio expects to hit $3.1 billion by 2021, according to an article from FoodBev Media. This investment, a savvy move by the plant-based company, reflects the growing power of the broader alternative water market. Sales jumped 21% in 2016 to $2.7 billion and is forecast to reach $5.4 billion by 2020.
Harmless Harvest officials said the investment will be used to support growth initiatives by "increasing and optimizing sustainable production capacity," as well as boosting brand awareness and expanding distribution.
Danone's investment continues a recent trend of big food companies, including General Mills, Nestle, Kellogg and Campbell Soup, that have used the vehicle to become involved with young startups. The investment not only allows them the ability to purchase a stake in a growing company it can infuse with its insight, purchasing efficiencies and wider distribution network, but it gives them another look into a new market it may not be familiar with. At the same time, the food maker is able to do this with little financial risk if the company it is investing in doesn't survive.
Danone isn't the only large food firm interested in the popular beverage category. In 2013, Coca-Cola acquired ZICO Pure Premium Coconut Water, and PepsiCo — which already has a stake in O.N.E Coconut Water — was rumored to be in talks last year with Vita Coco.
There are a number of factors driving the product’s sales trajectory and investment optimism, including its perceived health benefits. Consumers are increasingly turning to carbonated beverage alternatives, and coconut water is well positioned because of its high nutrition content and naturally sweet flavor. The product also is finding traction because of its authentic, exotic appeal — attributes that today's consumers are increasingly interested in.
Danone has been building out its plant-based portfolio of late, most notably with its acquisition of Silk parent owner WhiteWave. The company also has poured money into marketing its So Delicious non-dairy frozen dessert line. The company's stake in Harmless Harvest fits with this trend, and could strengthen the company's health halo thanks to its mission-based claims and organic status.
It will be interesting to see whether Danone will be able to grow Harmless Harvest quickly enough to compete with market leader Vita Coco, which boasts about $1 billion in sales. Despite a healthy amount of M&A activity by big food firms in the space, coconut water hasn't yet reached market saturation. Danone could find a moneymaker that, if it succeeds, is ripe for its next acquisition.
- Food Business News Danone's venture arm invests in organic coconut water company