FOCUSING on developing non-traditional coconut products, such as coconut water, milk and cream, among others, could help boost the billion-dollar industry in Philippines, a think tank said.
According to the University of Asia and the Pacific (UA&P), the market for coconut products had undergone a transformation in the past 15 years, mainly influenced by supply and demand factors. From the dominance of coconut oil as the main product for export, the market profile has shifted into a multi-product industry, with non-traditional coconut products gaining popularity, especially with the growing concern for health and wellness.
While the Philippines is the second largest coconut-producing country, it is also the largest exporter of coconut products. The country exported a total value of $2.3 billion in 2017.
In its industry report titled, “The Coconut Industry: Local and Global Perspectives,” the UA&P said while the industry had been dominated by traditional coconut products, particularly coconut oil and copra, there had been a 10-percent decline in its share of total coconut exports.
The think tank also noted that the share of non-traditional exports had increased, driven by the increasing global consumer preference for organic and healthy products, fueled mainly by coconut water.
“Coconut water is one of the fastest growing beverage categories in the global market. Its exports significantly grew by 154 percent per year on volume and 159 percent per year on value over the past 10 years,” the think tank said.
In 2018, coconut water exports totaled 63 million liters — valued at $89 million — to different parts of the world, with the United States as its biggest market, data from Philippine Statistics Authority showed.
Vita Coco, the global leader in coconut water with 26 percent of the global market, has a market volume of 120 million liters per year supplied by nine manufacturers, including Philippine companies Axelum Resources Corp. and Century Pacific Agricultural Ventures. Vita Coco is targeting 150 million liters in 2019.
UA&P noted that coconut water has vast export possibilities. Based on estimates by market research company Technavio, the global coconut water market is projected to grow from 536.9 million liters in 2016 to 1.331 billion liters by 2021, for a compounded annual growth rate (CAGR) of 26.75 percent.
Non-traditional coconut products
Aside from coconut water, other non-traditional products also offer promising new export opportunities. Coconut milk, for example, is now an alternative coffee creamer in the United States, while gluten- and dairy-free coconut milk is a growing and acceptable substitute to cow’s milk for consumers who are lactose-intolerant. Local company Axelum is now packing and selling the product in the United States.
“Coconut milk powder exports have also been growing by 38 percent per year on volume and 60 percent per year on value with the Netherlands, Japan, the United States, France and Australia as its main markets,” the think tank said.
The global virgin coconut oil market demand, meanwhile, is projected to reach $780 million by 2025, according to the August 2018 Professional Survey Report based on a CAGR of 2.3 percent in 2018 to 2025. It was estimated that exports from the Philippines might have reached 193,000 tons in 2018.
Desiccated coconut, already among the country’s top agricultural exports, continues to grow and is projected to increase by 8.6 percent per year from 2019 to 2023. In 2018, exports amounted to 145,100 tons valued at $338.4 million in the same year, with the US, the Netherlands, Australia, United Kingdom and Canada as the leading destinations.
Axelum, a major exporter of desiccated coconut, is experiencing a high double-digit growth of 28 percent per annum in export values. It is getting more market share from other players with its advantage of having operations in the US.
“[T]he key trends that will drive the industry include: health and wellness concerns; increasing preference and premium for organic products; the need for certifications and audits from different certifying bodies, especially for big markets like the United States and EU (European Union); traceability down to the farm and production practices; and the growing concern for the environment, especially the campaign for a plastic waste-free world,” UA&P said.