Kombucha vs Coconut Water: A Cautionary Tale of Consumer Trends

Kombucha vs Coconut Water: A Cautionary Tale of Consumer Trends

Kombucha is experiencing a moment of growing retail relevance, but the rise and fall of coconut water suggests that the popular tea could be pushed out by the next healthy beverage trend.

Kombucha, a 2,000-year-old Chinese tea believed to have energising and detoxifying properties, has become the most popular functional drink in Australia among people looking for healthy beverages.

Five years ago, the category was almost non-existent on Australian shelves.

Today, the kombucha trend has taken over. There are at least five brands for shoppers to choose from and hundreds of flavours ranging from lemon to cherry plum. This explosive category boom rings the bell of an old and once promising category known for its “rise and fall” consumer demand: coconut water.

The coconut water category was once an incredibly successful global trend. According to Ibis World, global sales of coconut water experienced double-digit growth of roughly 25 percent in 2017, driven by innovations and new competitors in the market. This growth was based on two key factors:

  • Health-conscious consumers: people were looking for low or no-added-sugar options over juices and smoothies.
  • Superior nutritional benefits: with fewer calories, less sugar, and lots of natural vitamins and minerals, coconut water appeared to have superior nutritional benefits over the other options.

Australian shelves in Coles, Woolworths and IGA reflected the extraordinary growth of the coconut water trend. Two years ago, they displayed large planograms with five or more brands, which included different sizes and flavours.

Then: stores with full coconut water displays two years ago

The trend’s influence, however, has not lasted as long as everyone was expecting. Recently, this category has fallen rapidly in consumer demand, which has partially migrated to beverages such as kombucha and flavoured water.

We asked James Sykes, the marketing director at Nexba, to comment on this migration. He said:

‘Kombucha is more a logical development of soft drinks and water – it has lots of different tastes, flavours, occasions, plus of course the health bonus soft drinks don’t have. Coconut water was a bit of a one trick horse, and its flavoured iterations struggled to stick’. 

Now: stores with half displays of coconut water

Despite the current performance of kombucha, the beverage is not immune to the “rise and fall” episodes of its industry. At the moment, the category is in the consumer and retailer spotlight based on the same factors that enabled coconut water: nutritional benefits and consumer demand for healthier options.

One way kombucha has been able to stand out in the market is by offering an additional functional benefit to consumers: gut health. This unique feature, coupled with various innovations and new flavours almost every month, has allowed the category to grow rapidly in the past year.

The point-of-sale has reflected this growth, dominating the chilled section and squeezing other categories – such as juices, smoothies and carbonated drinks – out of the way.

Kombucha already has full displays in the chilled section at different Woolworths

Sykes commented further:

‘Nexba’s Kombucha is flying off the shelf, and if anything tracking ahead of category, which we put down to our deliciously approachable taste. So while we’d agree the coconut analogy is helpful it only goes so far. Nevertheless, we’re already working on our next big ideas, never happy to rest on our laurels because today’s Kombucha explosion won’t last forever’.

That being said, the similarities between the coconut water trend and the kombucha trend are too strong to ignore. In this industry, it is especially important for brands to find ways to get ahead of the market and transition with consumer preferences.

Luckily, there are ways to understand consumer preferences and avoid surprises with your brand. The three main dimensions to be aware of are shelf space, consumer and retailer behaviour, and competition space.

  • Shelf space: monitor the category frequently and professionally. That means monitor per region, retailer and store size. Use metrics such as facings count to track your space, your competitors’ space and the category’s space. This dashboard will help you monitor and track the category trend over time. You will be in a great position to see how the market is performing and changing.
  • Consumer and retailer behaviour: if you are not the category champion, you probably don’t have a direct influence on the retailer’s planogram strategy. In that case, it’s important to monitor the planogram changes in your category. Retailers always make changes based on consumer behaviour, so be sure to keep an eye on things.
  • Competition space: observe your competitors’ innovations over the months and track where they are taking the category. Beyond that, stay tuned with products that can substitute or correlate with yours as well. You need to track all those categories, since they could be sourcing your consumers.

If you want to monitor your brand and category, sign up for Aglo Community Galleries. You will see hundreds of photos from different categories in minutes.

Aglo Community Galleries

Community Galleries is an industry database containing thousands of photos of in-store photos captured in retailers across Australia. 

  • Australia’s largest repository of store photos
  • Crowdsourced & updated daily by shoppers
  • Search/Filter by region & store easily

Use the store photos to see how your product is presented.


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