IPO for Coconut Water Maker Vita Coco Company (COCO) Opens Modestly Higher after Weak Pricing, Valuing Co. at ~$850 Million

Today's IPO for The Vita Coco Company, Inc. (NASDAQ: COCO), the maker of coconut water, opened for trading at $15.37 after pricing 11,500,000 shares of common stock, of which 2,500,000 are being offered by The Vita Coco Company and 9,000,000 are being offered by certain selling stockholders at a price to the public of $15.00 per share, below the expected $18-$21 price range.

The valuation based on the opening price is $853 million.

Goldman Sachs & Co. LLC, BofA Securities, Credit Suisse and Evercore ISI are acting as lead book-running managers for the offering. Wells Fargo Securities, Guggenheim Securities, Piper Sandler and William Blair are acting as joint book-running managers.

For the year ended December 31, 2020, the company reported net sales of $311 million, representing a 9% increase from $284 million for the year ended December 31, 2019. For the six months ended June 30, 2021, the company reported net sales of $177 million, representing a 15% increase from $154 million for the six months ended June 30, 2020 primarily driven by a 29% increase in net sales of Vita Coco Coconut Water during the same period. For the year ended December 31, 2020, the company generated gross profit of $105 million, representing a margin of 34% and a 13% increase from $93 million for the year ended December 31, 2019. For the six months ended June 30, 2021, the company generated gross profit of $53 million, representing a margin of 30% and remaining relatively flat in absolute dollar terms compared to $53 million for the six months ended June 30, 2020.

The company operates in the large and growing non-alcoholic beverages industry, which consists of bottled water, carbonated soft drinks, juice, ready-to-drink coffee and tea, energy drinks, sports drinks, drinking milk products and other non-alcoholic beverages. Global non-alcoholic beverages on-and-off combined retail sales exceeded $952 billion in 2020 and are expected to reach $1.36 trillion by 2025, representing a CAGR of 7%, according to Euromonitor. The United States, which is our largest market, generated retail sales of over $119 billion for the 52 weeks ended May 16, 2021, according to SPINS. In line with retail, foodservice also represents a significant opportunity for the company, which they believe expands the total addressable market even further.

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