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Where have all the coconuts gone?

Sally Herships Jun 27, 2011

Where have all the coconuts gone?

Sally Herships Jun 27, 2011

Jeremy Hobson: In Thailand Extreme drought and heavy flooding have led to a big drop in the export of coconuts. And now that shortage is threatening to disrupt the $200 million coconut water industry here in the U.S.

Sally Herships has the story.

Sally Herships: It can be hard to catch up with the latest trends.

Eric Helms: Pomegranate juice, Acai. We thought it was going to be Yerba mate, that really never happened, that never really crossed over.

Eric Helms owns Juice Generation, a fresh juice bar with five New York City locations. He says this year’s newest food fad is coconut. Coconut water is already popular in South American and now giant brands like Pepsi and Coke are trying to cash in by selling it here. But Helms says there’s a problem in tropical drink paradise.

Helms: What’s happening is crazy, crazy, crazy shortage of coconuts.

Which is driving retailers like Helms nuts.

Helms: Are the coconuts coming? Are they not going to come? Has customs let them in?

Helms and other juicers get their coconuts from Thailand. And that country’s crops have been devastated by bad weather and some particularly pesky beetles. Helms says his price per coconut has tripled to $3.75. But he’s decided to hold prices steady for coconut drinks even though he loses money on every sale.

Herships: Apologies for the pun, but you’re eating the costs?

Helms: I am eating the costs, yes.

Herships: In a nutshell?

Helms: In a nutshell. Very good.

Harry Balzer: The one thing that gets people to change their behavior faster than anything else is the cost of food.

Harry Balzer works with market research company NPD. And he says Helms is right to shell out all that extra cash for coconuts. If prices go up, he says shoppers will move on — to something else. So Balzer says retailers have to get creative.

Tom Pirko is president of Bevmark, a consultant to the food and beverage industry. He says retailers may be able to use the shortage to their advantage.

TONY PIRKO: A shortage makes people want something more. If it’s not present, people will run around looking for it because they have become habituated.

Pirko says it’s basic marketing and sales strategy. If you have a trend going, like coconuts, even if you take a temporary loss, milk it now — you’ll have a future gain.

In New York, I’m Sally Herships for Marketplace.

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