US investor Jim Rogers outlined his view on where the world’s next boom will come from in the Economic Times in 2011. A well-regarded financial commentator and a co-founder of hedge funds with billionaire financier George Soros, Rogers is extremely bullish on food. “Agriculture is going to be the big thing in the next 20 years,” he said. “The best thing you can do is to become a farmer; that is where the money is going to be made. Farmers are going to be driving [Lamborghinis] in the next 20 years, stockbrokers are going to be driving taxis.”
A few years ago it would have been difficult to find coconut products outside of tropical climates, except at high-cost health food stores. Today, coconut water and milk can be conveniently purchased at grocery stores and big-box warehouses around the world, a vivid testimony to the growth in the demand for these basic nut-based items. New products are in constant development, including offshoot food & drink items and a host of non-food products such as clean fuel sources and fiber products.
No longer limited to niche marketing via health-food outlets, coconut water has recently received the attention of big businesses, such as Coca-Cola (Zico), PepsiCo (O.N.E.), several major grocery chains and big box giant Costco, who are involved in large-scale bottling and distribution of the product. With more than 200 brands sold worldwide, Vita Coco is the largest selling brand in the United States with 2013sales around $250 million. Sales throughout Europe are equally as large. These efforts have made the product readily available to consumers and have increased the appreciation and demand.
Ironically, as the demand for these products skyrockets, the projected near future supply is in danger of disrupting these industries. The Asian-Pacific areas produce 90 percent of the world's coconut products. Global demand for these products is growing at more than 10% a year, but the present rate of production growth is reported at only 2% annually. Aging trees in coconut producing countries like the Philippines, Indonesia and India are simply past their prime with no aggressive plans for the future. Modern managed plantations are needed to turn the tide.
The good news is that coconut trees don’t care whether markets are up, down or sideways; they don’t follow the news or whether political debates are negative or positive or what parts of the world are at war. They grow and produce nuts regardless of the broader investment marketplace and for risk- adverse investors that’s as refreshing as the coconut itself!
The coconut has become an alternative crop many savvy investors are adding to their portfolios for long-term income. Contact us for more information.