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Red Bull China to Acquire 25 percent Stake in Vita Coco

Date:15-07-2014

Vita Coco which is the biggest seller of coconut water in the United States, has agreed to sell a 25 percent stake in itself for around $166 million to the owner of Red Bull China.

The deal values the parent company of Vita Coco, All Market at around $665 million. Around the world, as soda sales weaken coconut water continues to gain in popularity.

Coca-Cola owns Zico, the second-largest coconut water brand. However Vita Coco has emerged as the industry leader with a 40 percent market share, and it will now be available in China for the first time.

Vita Coco was founded by Ira Liran and Michael Kirban in 2004. Since then, the company has established a sophisticated supply chain throughout the tropical region, allowing it to efficiently harvest, process and package coconuts. Both Liran and Kirban continue to own significant stakes, along with a Belgian private equity firm, The Verlinvest.

Coconut water which is derived from the clear liquid inside young coconuts is pitched as a natural sports drink which helps to rehydrate the body and prevent muscle cramping. Coconut water is rich in potassium and doesn't have fat.

Coconut water which is pasteurized and sold in cartons is practically nonexistent in China. Reignwood plans to sell Vita Coco in major Chinese cities this fall, initially focusing on high-end supermarkets and gyms and then expand distribution if consumers develop a taste for it.

Celebrities including Matthew McConaughey, Demi Moore and Madonna also own small stakes in Vita Coco. The deal will allow some early investors and employees to cash in on the soaring value of the brand by selling shares to the parent company of Red Bull China, the Reignwood Group.

Red Bull China is a separate company from the Austrian company behind the popular energy drink, Red Bull. Red Bull China purchased the rights to sell Red Bull products to Chinese consumers in the early 1990s. With an aggressive marketing and distribution operation the company was successful in increasing sales of the energy drink in China to over 2.5 billion a year.

Red Bull China went looking for other brands it could sell alongside its staple energy drink. Reignwood Group’s founder and chairman, Chanchai Ruayrungruang wanted to secure an equity stake in Vita Coco, believing that over time the value of the company would continue to rise.

Mr. Ruayrungruang said that in China, they immediately recognized the potential for the Vita Coco brand. They are confident that health-minded Chinese consumers will remain loyal and quickly embrace the Vita Coco brand.

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