I told Mary Beth that I imagined Maura and myself as the key consumers. “Okay,” Mary Beth said, “so we’re looking at the twenty-five to forty-year-old age group. People who are active and healthy and want to keep that up. People with disposable income.”
“Right,” I said. “Except maybe for that last part. Disposable income is not something we had, or most people do, at twenty-five.”
“Then I think we’re looking for visual images that are more about aspirations,” she concluded.
Two package designs were both simpler and cleaner than the rest. One was green with a reference to the classic yin and yang symbol. The other leveraged the beautiful deep blue of a tropical sky over the lighter blue of the ocean, with the deep green of a single palm tree at the top and the palm’s distinctive shadow at the bottom. The Zico name ran vertically along the left side in all caps in a simple bold font that Mary Beth had created herself. I was leaning toward the green one because I felt green resonated with environmentally conscious consumers. Maura loved the simplicity and clarity of the blue one, though she wasn’t crazy about the palm tree since anything remotely tropical usually had palm trees all over it. Adamant about the power of minimalism, Mary Beth then captured the essence of the brand by removing the image of the tree and leaving only its shadow.
A month later, when I was visiting Mary Beth in Chicago, we took mock-ups of the two packages to a local supermarket not far from her home late at night. We put all the mock Zico containers in a shopping cart and waited near the beverage aisle until we were alone. As fast as we could, we pulled other products off the shelves and replaced them with Zico containers. (If anyone was watching the security cameras, they were too puzzled or amused to sound the alarm.) We wanted to see exactly what our product would look like on actual store shelves.
I had to admit the blue ones stood out on the shelf much better—you could readily identify the brand from fifty feet away. But I still thought both packages were viable. It wasn’t until a few months later in a small New York City usage test that my final decision was made. When a beautiful young Indian student at New York University was asked what she thought of the product and the two packaging options, she immediately picked up the blue one and said, “This one is beautiful, it reminds me of a beach back in India but I think it’s modern and cool, I can totally imagine hanging with my friends, carrying it around and saying, ‘I got my Zico, you got your Zico?’” Blue it would be.
Be the Brand
Creating a culturally innovative brand that is driven by your personal values and communicates authenticity to today’s savvy consumers is easier said than done. It’s easy to get off track at every step along the way, to forget your reason for starting, or to drift away from your values and early mission. When finances run low and things get scary, you can easily lose confidence. You begin to think: What’s the easiest way to appeal to the largest consumer market? I’m not necessarily saying that focusing on such a question might not be the right way to go. And indeed, you may make a lot of money doing so, but you won’t have a unique, impactful, potentially enduring brand that stands out because it represents your singular, personal vision, values, and contribution to the world.
CHAPTER 5
IT WILL NOT BE THIS WAY
Just over a year after we had decided that coconut water was our big idea, I flew with Maura to New York in June 2004 to introduce Zico to the world at the Fancy Food Show. The annual show featured over 180,000 products from 2,400 exhibitors targeting gourmet, health, and specialty food and beverage distributors and retailers. As best we could tell, no other coconut water had yet signed up for the show, so we would be the first and hopefully only. But how, we wondered, could our new little brand get noticed among all the others?
On the plane, Maura and I talked about the coming few days. A pallet with 250 cases of the first commercial production of Zico was—hopefully—waiting at the Jacob K. Javits Convention Center along with the makings of a new exhibit booth, boxes of branded T-shirts, hats, beach balls, and more that Mary Beth designed to create a larger-than-life Zico experience at the show.
We had accomplished an incredible amount in a short period of time leading up to the Fancy Food Show, and I believed we were well positioned to successfully launch Zico. I had also learned a ton personally and thought I was finally ready to be an entrepreneur. As a couple, that period pushed our marriage as close to the brink as we had ever been and I hoped ever would be. I didn’t think it could get any more intense. I figured if the show went well and I could quit IP and focus on Zico full-time, life would be a breeze, and I took to telling Maura, “This is as tough as it will get.” I would soon find out what tough really meant.
The lights came on, that little bell rang, and the captain told us we were descending into New York. Tomorrow was our chance to see if this Zico thing was for real or not.
OUT ON A LIMB
Just four months earlier, in March of 2004, we had learned about the Fancy Food Show scheduled for that June. It was the perfect time and place to launch, except for two problems.
First, we didn’t have the $50,000 in the business that we estimated it would cost to launch it right, including to: run a minimum production quantity (even though we only needed fifty cases for the show, we would have to produce at least two thousand at a time), rent and build the booth, travel, make T-shirts, hats, business cards, and more. Most of the early investors had verbally said they would invest more if the business plan looked viable and the terms acceptable. We were set to meet in April to review the full plan but this decision on the trade show couldn’t wait until then. We had the money personally, but just a few months earlier I had drained our personal bank account to pay for the design and marketing research and the legal and other fees, and barely got reimbursed by our first investors in time to cover Christmas expenses with Maura’s family in town.
The bigger problem was we didn’t have any product to show. And we weren’t close to having it: We didn’t have coconut growers or processors, or packaging or even the final design. We had only ninety days to figure those pieces out and then convince everyone involved to get it done on a short timeline. There was still a massive amount of work to do and real uncertainty that we could make it happen in time.
As Facebook founder and CEO Mark Zuckerberg said, “The biggest risk is not taking any risk . . . In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” So instead of waiting another four months for the next show or making sure I had money in the Zico bank account, we committed to the trade show and started the wheels in motion to get everything we needed. What’s the worst that could happen? Our bank account would be back down to zero and we’d take a trip to New York and sit in a beautiful booth with no product to sample? That didn’t sound so bad. Plus, we were on a mission now and nothing could hold us back.
IT’S WHAT IS ON THE INSIDE THAT COUNTS
With Zico, we wanted to create something that captured as close as possible the experience of drinking out of a freshly open young coconut. The problem, I quickly realized, was determing what type of coconut? From what country? The taste profile and nutritional properties could vary dramatically among the dozens of varieties available in the eighty-five tropical countries around the world that grow coconuts. How would we determine which was best?
A few months earlier while researching online, I came across Professor Charles Sims, an expert in the University of Florida’s Food Science and Human Nutrition department (ironically the same university that developed Gatorade). Professor Sims specialized in understanding what production factors influence the sensory characteristics of fruits and vegetables. Since coconut water wasn’t on the scene yet, Sims didn’t have all the answers, but he was happy to help define the right questions.
On the phone, he peppered me with questions about what characteristics we were looking for, like taste or nutritional content; what c
ountry had coconuts that met those requirements; and what scale of production we would need. Were there issues about the sustainability of coconut production? What would be the best packaging for coconut water? Would it need to be pasteurized? My head was spinning with all these questions so I decided to fly to Gainesville to meet with him in person. His team of researchers and I brainstormed how to approach these questions and roughed out a series of experiments to help us get answers. I had a few dozen varieties of coconuts of varying maturities from different countries sent to their lab (customs officials seem to be more tolerant of produce shipped to university labs). In addition, I shipped him every coconut water product from every overseas producer we could get ahold of. Sims and his team did a series of nutritional, sensory, and other tests on the products and then rounded up a roomful of students from different ethnic backgrounds (primarily Hispanic, Caribbean, and Caucasian) for taste tests.
What we learned was that though the Hispanic and Caribbean students were familiar with coconut water and had a positive association with it, they thought the pure, plain coconut water was not sweet enough. We came to understand, like Ruiz and Gonzalez had speculated, that though this demographic in the U.S. had heard tales of coconut water’s benefits from parents and grandparents, most had only tasted the canned coconut water with added sugar, if anything. I knew from my beverage packaging days that most beverages in Latin America have more added sugar than in the U.S. (Even packaged coffee in Costa Rica sold for the local market at the time often had 10 percent added sugar.) Most of the Caucasian students were not familiar with coconut water at all, expected it to be milky, and often didn’t like the taste. I fundamentally disagreed with adding sugar but thought adding natural juice or other familiar flavors might enhance the off taste of the plain coconut water. As best we could tell, no one in the world had brought flavored coconut water to market. Our Salvadoran friends thought this was sacrilegious: you didn’t mess with coconut water. But it seemed obvious to me that we could use natural flavors or a small amount of juice as a way to overcome a taste profile that many Americans would likely not enjoy.
The most important learning was the level of inconsistency between the sources and even from batch to batch. The level of pH (acidity), brix (natural sugars), color, and other measures were significantly different from country to country and producer to producer, and even from batch to batch for some producers. For one of the main viable producers from Brazil, the conclusion of the University of Florida team was that given the level of difference between batches, they couldn’t draw any conclusions at all. That was scary. Another supplier from Brazil, Amacoco, had the most consistent taste and nutritional profile and a higher taste appeal than the others. Professor Sims and his team also validated my assumption, after years of working with beverage packaging, that by using specialized processing and packaging, we could capture a taste much closer to fresh coconut water than canning or bottling and do so without adding sugar or preservatives.
No matter what type of coconut water we picked, however, I had to face the fact that a large percentage of consumers wouldn’t like it on the first try. The Onion would have fun with that hard fact a few years later with the headline: “President Obama puts the U.S. economy in the hands of the geniuses behind Zico coconut water, who must know what they’re doing because they are bringing in millions on a product that tastes like ass.”
I prefer to say that for some people, coconut water in its plain, unadulterated state is an acquired taste, but call it what you will—we had a taste challenge on our hands. Coconut water is just so different from most beverages American consumers drink, which are highly sweet and tartly acidic. That combination, I learned, creates a particular sensation in the mouth, and we have grown used to it. Coconut water has a sort of smooth taste sensation, which comes mainly from the fact that its acidity level is so low: it doesn’t have that acidic bite of most beverages.
We knew we weren’t the first to face this challenge. The natural foods industry is full of products that take some learning to love but deliver a functional benefit: think kale, soy milk, or kombucha. The central claim for all these products isn’t taste; it’s functionality. The off-putting taste could be a selling point—as a “if it tastes that bad, it must be good for me” sort of logic.
We had no question that our main product would be 100 percent pure coconut water. We knew some consumers would know it and love it and want it unadulterated. But launching with that product alone had a major downside. We might never get a second try with some people and could turn off millions of potential consumers. Red Bull may have gotten away with only having one flavor for their first twenty years, but I believed we needed a different approach. We figured we’d need to come up with two or three natural flavor blends that would appeal to a wider audience and help introduce people who weren’t wild about the taste of plain coconut water to its benefits.
The process started with us mixing at-home concoctions of coconut water with guava, lychee, star fruit, passion fruit, hibiscus, and some of the more exotic fruit available in Salvadoran markets. Our operations consultant Juan Carlos Rojas then guided us through the process of figuring out how to safely and cost effectively do this on an industrial scale once we decided where we would produce. In late March, Maura, Mary Beth, Juan Carlos, and I flew to Mexico to tour the facilities of Firmenich, a Swiss global ingredient and flavor company, to conduct taste testing on potential mixtures. By the end of our second day, we had narrowed it down to three flavors we thought were winners: mango, passion fruit–orange peel, and lemon-lime.
PLANTING A GLOBAL SUPPLY CHAIN
Figuring out where and how we were going to source coconut water was our next big step. Eighty-five countries grew coconuts. The U.S. (with small-scale exceptions in Hawaii and Florida) and Europe weren’t among them, of course, which meant we’d be building a supply chain in some of the most challenging business environments in the world. I had personally witnessed International Paper, a major multinational with teams of lawyers, advisers, and experts, lose millions of dollars in the currency crisis of Brazil, the economic meltdown of Argentina, and the political crisis in Venezuela. One of the main territories for coconut production in the Philippines was so dangerous that I learned my life insurance policy wouldn’t pay out if I died while traveling there.
Because of already established markets in the U.S. for coconut meat and oil, supply chains existed that we could learn from. As I had learned earlier, the water inside coconuts was often just a waste product in these manufacturing processes. Getting the water seemed easy until I learned that in many countries the farmers opened the coconuts at the farm and let the water drain right there on the ground to lighten their shipment of the more valuable coconut meat to the factories. Others grew coconuts to a maturity perfect for meat or oil but less ideal for water. I had heard rumors of one factory in Asia that processed one million coconuts per day for the meat, meanwhile letting the water run down the drain. That alone could supply a $200 million annual coconut water business! Research articles suggested dozens of extraction and processing techniques for the water, but there were very few producers in the world with the equipment and experience to actually do it—which was bad news, but also meant narrowing my search some.
I also realized we would have to make a series of decisions and potential trade-offs. For example, which was more important: higher electrolyte content of the coconut water or taste? We also had to figure out how we’d control for quality and consistency from batch to batch, season to season, and year to year. How could we ensure our supply chain had minimal environmental impact and maximum positive social impact? What were the trade-offs of sourcing from small farmers or cooperatives where we could perhaps establish a direct connection with them and support their development versus working with larger companies that had more resources and know-how? None of these questions had easy answers and I would struggle with many of them for most of the next decade. My goal in eve
ry case was to find the answer that was both best for the viability of the business and the one that represented our values. That solution was often available, but it was rarely obvious or easy to find.
We quickly concluded that our “backyard,” Central America, was too small in coconut production and that the infrastructure was not developed enough. Most countries in Asia were geared toward meeting huge production for coconut meat and oil, and we believed it might be tough to switch them toward water right away other than low-quality canned coconut water.
Brazil showed promise. Though much smaller in total coconut production than Indonesia and the Philippines, Brazil’s production was large enough to support huge growth. The major players there already had experience, and the total market in Brazil for packaged coconut water was over $30 million at that time, from zero just a few years earlier. That made it the largest market for higher-quality young coconut water in the world at the time. I was comfortable with the culture in Brazil, sort of knew the language, and had at least a few connections. Brazil had another advantage. Their currency, the real, was weak versus the U.S. dollar at the time, making it favorable to buy there. I couldn’t know if that exchange rate would stay advantageous over time (it wouldn’t) but at least in the short run it looked like a big advantage. Also, though Brazil was a large and fast-growing country, it had a large rural poor population, and the additional agricultural investment and growth was needed and welcomed to help the country develop further.
High-Hanging Fruit Page 7
