Jax Coco: Coconuts Conquer the Lifestyle Market
Innovation isn't limited to high tech. Even an ordinary product such as coconut water can be turned into a premium lifestyle product – thanks to an innovative marketing approach. This is the story of Jax Coco.
The "world city" of Hong Kong boasts the most skyscrapers in the world, exquisite restaurants, upscale boutiques, a magnificent peak, and passionate residents who believe in living quality lives ‒ from the tasty snacks at the night markets to the fine lines of a tailored suit. In 2011, what Hong Kong didn't have was premium, pre-packaged coconut water.
Noticing that gap, entrepreneurs Jane and Max Gottschalk, and Hong Kong-based businessmen, Alex and Jason Ing, partnered and founded Jing Holdings Ltd. In 2012, Jing Holdings Ltd. entered the $800 million coconut water market, a market that is forecast by the company to top $5 billion in the next five years, with their brand Jax Coco. In only 3 years, Jax Coco (an amalgamation of the founders' first names) has penetrated 35 markets with 2015 sales forecast by the company at more than $20 million. In 2014, Jax Coco was chosen to be one of eight entrepreneurial companies in Credit Suisse's first Private Innovation Circle, in which companies were chosen "based on the innovative power of their business ideas, their revenue generation potential and the track record of their management." In addition to their business peers, the company has been heralded by celebrities, fashion designers, major fashion publications, athletes, and the United Nations Food and Agriculture Organization.
An Auspicious Start
Jane recalls looking for coconut water on supermarket shelves in Hong Kong, and leaving with empty hands, whereas coconut water in the shells could be bought readily. "Max and I were small shareholders in a coconut water brand in America about two or three years before we came to Hong Kong. We saw an exponential rise in demand for the product in the States. When we moved to Hong Kong, it was hard to find good quality packaged coconut water, " Jane remembers.
Alex and Jane concur that in establishing the company there was "no sleep," despite Jane and Max's hedge-fund trading experience, and Alex and Jason's business expertise. She notes, "It's always easy to underestimate how hard it is to build a business, both in terms of raising capital and having a lot of people invest in you;" despite this, they managed to place their coconut water on the market in less than one year, with an "admittedly small budget of personal investments," by concentrating their resources on extensive research and development; observing other Chinese companies' business models as guides, and consulting with Coca-Cola representatives who advised them about conducting business in Asia. Through "stubbornness" and determination, they decided to "give it a go," and have since attracted celebrity shareholders, like megastar Elton John.
Different from the Pack
Jax Coco's concept of elevating the natural drink to one of sophistication sets the brand apart from the numerous others. Jane states, "We positioned Jax Coco coconut water as a lifestyle product. Our competition has mainly focused on the sporting sector. We expanded into art, music, and lifestyle." The company has sponsored Elton John concerts, a charity performance by Chinese classical pianist Li Yundi, and English rugby player Chris Ashton.
Jane highlights another branding difference that sets Jax Coco apart from the rest ‒ the glass bottle. This is unique in the coconut water market, and has been geared toward premium food and beverage clientele, as it's a sophisticated step up from a Tetra Pak. Restaurants, clubs, bars, hotels, and first class lounges of Eurostar trains stock Jax Coco's glass bottle; in addition, retailers, Whole Foods, Amazon, Vitacost and Starbucks (Hong Kong) carry both the bottle and Tetra Pak. Cathay Pacific, awardee of Skytrax's 2014 Airline of the Year, and Asia's largest international carrier, has reported that it too will offer Jax Coco's coconut water in its lounges and on selected flights.
Another crucial element that differentiates the Jax Coco brand from its competitors is that the coconuts used are grown in the tropical Philippines where they are reportedly irrigated with ocean sprays, in contrast to the coconuts of competitors that are just irrigated by rainwater in other coconut-growing regions.
Growth and Diversification
Alex asserts that Jax Coco holds a significant share of the pre-packaged coconut water market in Asia, which many would view as a formidable hold, but the company plans to drive sales through further market penetration in Asia and overseas expansion in North America, Australia, and the Middle East, where early results have been favorable. Plans include growth of its coconut water line, as well as diversification into a gamut of other coconut edibles: milk, sugar, chips, ice-cream, frozen yogurt, and coconut oil. The company also aims to extend its children's line, Jax Coco Kidz ‒ a range of healthy products for children, with pure fruit puree and no added sugar. In a food and beverage market apparently clamoring for coconut-based products, the co-founders confirm that they want to focus their efforts on "all things coconut." The company anticipates that it will require a further round of financing to achieve its growth and diversification goals.
The company judges its success not only on its sales, but on its ability to help economies in coconut-growing regions, like the Philippines, thereby elevating the lives of farmers and locals. As Alex states, "We want to move into our own production facility and directly work with the farmer on the supply side, and coconut supply through the whole supply chain to the customer;" thereby recognizing that the sustainability and success of Jax Coco lies in its complete, hands-on control from the coconut farms of the Philippines to the hands of its customers worldwide.
Investing in Premium
Jax Coco's entrepreneurs, a quartet who recognized a gap and capacity for growth in the premium-beverage market, and strove to make further inroads in a market considered saturated, could write a recipe for business success: recognize the gap, create and develop a quality product, focus on the premium end, invest and find investors, and give back. The hard work, determination, and passion exhibited inspires business-minded sophisticates everywhere to raise a glass of coconut water to entrepreneurship.