Michael Kirban, Co-founder and executive chairman of Vita Coco.
vita coco
When it comes to selling coconut water to the health obsessed, New York’s Vita Coco has served up a master class, schooling even giant rivals like Coke and Pepsi. Its next test will be withstanding Trump’s tariff shocks.
What do you do when 96% of your revenue comes from coconut water and 100% of your supply comes from tropical countries targeted by Donald Trump with high tariffs?
This is exactly the situation confronting one of the nation’s hottest small cap companies today, $516 million (revs) Vita-Coco of New York City, the leading maker of coconut water. Its biggest source of coconuts, has heretofore been Brazil, a country now squarely in the crosshairs of a proposed 50% tariff, courtesy of the Trump administration. Its six other sources for coconuts aren’t much better: Philippines (tariff:19%), Malaysia (25%), Vietnam (32%), Indonesia (32%) Thailand (36%) and Sri Lanka (46%).
Still, you wouldn’t know that Vita Coco was facing a Trump tariff nightmare given the company’s bullish tone—or its stock performance. Shares are up nearly 32% over the past 12 months, outperforming many better-known consumer-staples names. Even with the stock down roughly 5% year-to-date as the broader market rallies, Wall Street is shrugging off Vita Coco’s inevitable pricing pressure.
“Brazil is really a nonissue for us,” insists co-founder and executive chairman Michael Kirban. “We started working on reallocating our Brazil supply, which historically goes to the United States, to supply Europe and Canada, several weeks ago.” The main source of supply for Europe, meanwhile—the Philippines, Sri Lanka and Malaysia—will now all shift to the U.S. “This is something we can pull the trigger on really quickly,” reasons Kirban, seemingly unconcerned about the high tariffs in his alternative source countries.
He goes on: “With decreasing ocean freight rates and pricing [increases] we took earlier this year to mitigate the initial 10% baseline tariffs, we think we are in a good position.” Co-founder Kirban says he doesn’t expect to pass any further price hikes in the coming months, but this may be wishful thinking if Trump doesn’t back away from his harsh tariffs on tropical countries.
Here is what Vita Coco CEO Martin Roper said on the Q2 earnings call held a few weeks ago: “Our planned U.S.-based price increase in May to cover inflationary cost of goods pressures produced an approximately 7% increase at U.S. food retailers according to Circana over the quarter.” However the May price increase does not include another recent price increase implemented in the current quarter, which Vita Coco management refuses to provide Forbes details on.
For now, Wall Street is putting its faith in Vita Coco management.
By working with seven of the largest coconut processors in the world, Vita Coco currently controls roughly 40% of the U.S. coconut-water market, far ahead of smaller competitors like Goya and Harmless Harvest. “Coca-Cola tried to enter this market, buying Zico, and Pepsi also failed,” Larry Carlin, an equity analyst at $8 billion (assets) Conestoga Capital Advisors who is hopeful that Vita Coco’s strong position will give it more flexibility in the face of looming tariffs. “They’ve developed a supply chain with substantial barriers to entry,” adds Carlin.
Founded by two friends in 2003 after a chance bar room encounter in Manhattan, Vita Coco’s met with early success in its first decade, thanks in part to celebrity investors including Madonna, Demi Moore, and Matthew McConnaghy. However about a decade into their journey growing pains hit—thin margins, distribution hiccups and a rocky 2021 IPO kept many institutions away.
But over the past two years the company has executed a disciplined turnaround, tightening its supply chain after the Covid pandemic. It has also expanded its portfolio of offerings into protein-infused PWR LIFT, aluminum-canned Ever & Ever water, and most recently, the coconut-milk-based beverage line Vita Coco Treats. Up until the onslaught of Trump’s tariffs, Vita-Coco was the envy of the Russell 2000, appearing near the top of Forbes Best Small Companies ranking in 2024. The stock is up 133% since its IPO, and five-fold from its low in 2022.
On the company’s second quarter earnings call, held July 30th, CFO Corey Baker noted that Vita Coco is pursuing a formal tariff exemption request with U.S. trade officials. If that isn’t granted, management basically told shareholders to brace themselves: “If [the 50% Brazilian tariff is] enacted, we would ultimately need to pass through price increases,” says Baker. “Even under a worst-case scenario, we believe we could pass through price if necessary while maintaining share.”
On Wall Street, six of the ten analysts covering Vita Coco rate it a “buy”, while the other four give it a “hold” rating, often interpreted as “sell” by investors. Short sellers have begun to circle its stock.
A 23-page March 2025 report by UK-based short-seller NINGI Research accused Vita Coco of numerous underlying business problems including failed attempts at diversification, supply chain foul ups and millions in CEO and insider stock sales. NINGI’s main argument was that the company was an unsustainable growth story: “Vita Coco is nothing more than a one-trick pony” and an “operational basket case,” it wrote. The report’s most impactful claims were that Vita Coco had lost its large private-label contract with Costco due to supply chain mismanagement, which would lead to a significant revenue hit.
While Vita Coco publicly refuted the report as containing “inaccuracies and mischaracterizations,” subsequent public statements and financial results support NINGI’s allegations about the lost Costco contract. The company’s Q2 2025 earnings report confirmed a significant 36.5% decline in private-label sales; What’s more, Costco now appears to have stopped selling Vita Coco and is instead stocking its own coconut water under its in-house private label brand, Kirkland Signature.
Today, a 12-pack of Costco’s own Kirkland coconut water sells for $12.99 versus $19.59 for a 12 pack of Vita Coco at Target. Vita Coco has also publicly acknowledged that inventory constraints in 2024 led to “unacceptable private label service levels.” Despite these issues, Vita Coco bulls maintain that the company’s core branded coconut water business is strong.
Ever the optimist, Kirban is unfazed. “Sales are continuing to perform really nicely. So I think consumers are willing to pay,” says Kirban, referring to his tariff related price hikes. “This is a product that comes from a tree. It’s not created in a lab, and it is three and a half times the electrolytes of the leading sport drink.”
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Source: https://www.forbes.com/sites/sergeiklebnikov/2025/08/27/trumps-tariff-tidal-wave-could-drown-this-coconut-water-juggernaut/