What Vita Coco (COCO) Said on Its Q3 Earnings Call

Key Points

• Strong Q3 performance: Net sales rose 34% to $244 million, while adjusted EBITDA increased to $53 million. Growth was driven by 15% branded Vita Coco sales growth and a 152% surge in private-label sales, including $29 million from the Copra acquisition.
• Demand remains robust but supply constraints persist: Coconut water sales continued to grow across the U.S. and Europe, though container shortages, port congestion and longer transit times limited shipments and caused retail out-of-stocks. New capacity additions are expected to ease constraints beginning in mid-2027.
• Outlook raised, with near-term margin pressure: Vita Coco now expects 2026 sales of $810 million to $820 million and adjusted EBITDA of $170 million to $175 million. Elevated ocean freight and logistics costs are expected to reduce fourth-quarter gross margin to about 33%, with price increases planned for early 2027.

Vita Coco NASDAQ: COCO reported third-quarter 2026 net sales growth of 34% as strong demand for coconut water and an expanded private-label business lifted results. The company also raised its full-year sales and adjusted EBITDA outlook, while warning that elevated ocean freight and logistics costs are expected to weigh on fourth-quarter gross margins.

Net sales increased $62 million to $244 million in the quarter. Branded Vita Coco coconut water sales rose 15%, while private-label sales climbed 152%, aided by the late-July acquisition of Copra, a producer of super-premium Thai Nam Hom coconut water. Copra contributed $29 million of sales in the Americas during the period, according to Chief Financial Officer Corey Baker.

Net income attributable to shareholders rose to $35 million, or $0.58 per diluted share, from $24 million, or $0.40 per diluted share, a year earlier. Adjusted EBITDA increased to $53 million, representing 22% of net sales, compared with $32 million, or 18% of sales, in the prior-year quarter.

Category Demand Remains Strong

Executive Chairman Mike Kirban said the demand acceleration seen during the first half continued through the third quarter across major markets. Retail dollar sales in the U.S. coconut water category rose 28% year to date, according to the company’s retail scan data, while measured European markets grew 66%.

Vita Coco’s coconut water sales, excluding coconut milk-based products such as Treats, increased 27% in U.S. retail dollars year to date and 54% in measured European markets. Kirban said household penetration remains below that of mainstream juices, sports drinks and other functional beverages, which the company believes leaves room for further adoption.

In the U.S., Chief Executive Officer Martin Roper said the company estimates that more than half of year-to-date branded growth has come from increased household penetration, with the remainder stemming from greater sales velocity per household. The company’s international segment posted a 48% increase in sales, including 57% growth for Vita Coco coconut water.

Roper highlighted growth in Germany, where he said sales were increasing at rates above 100%, while U.K. scan growth was in the 30% range. He said consumption levels in both markets remain well below those in the U.S.

Supply Constraints Limited Shipments

Despite strong consumer demand, Vita Coco said supply-chain conditions constrained shipments during the quarter. Production levels were sufficient to meet demand, but container availability, port congestion and longer transit times caused inventory to build at suppliers and reduced service levels in selling markets.

Roper said retail out-of-stocks in recent weeks had modestly affected scan growth, and Baker said U.S. branded shipment growth lagged retail scan growth of 23% in the third quarter. The company expects shipments to exceed scan growth in the coming months as it rebuilds inventory throughout the distribution system, although executives said the timing depends on container flows.

The company expects capacity utilization to remain high early in 2027. Roper said existing capacity can support a continuation of current volume-growth trends next year, while planned additions beginning around the middle of 2027 should ease constraints later in the year and support growth into 2028.

Vita Coco is also pursuing a more diversified supply network. Roper said the Philippines and Brazil remain its two largest sourcing countries, though the company continues to add factory partners and expand existing relationships. He noted that ocean freight remains necessary for most of the company’s portfolio.

Copra Integration and Innovation Plans

Management said Copra has operated smoothly since the acquisition closed in late July. The business gives Vita Coco a position in the chilled, super-premium segment, which the company estimates represents about 13% of U.S. coconut water sales and carries retail prices nearly double those for shelf-stable products.

Copra is currently operating at capacity, and Roper said Vita Coco is prioritizing its existing private-label relationships while testing branded-market opportunities. Additional capacity expected in mid-to-late 2027 could allow the company to invest more heavily in the Copra brand, he said.

The company also outlined planned U.S. product launches for the coming months, including sports-inspired coconut water flavors in lemon lime, blue raspberry and fruit punch; a six-pack of 8-ounce Vita Coco Kids products; a 310-milliliter slim can designed primarily for food-service accounts; and a Piña Colada flavor for its Treats line.

Kirban said the sports-inspired products are intended to appeal to younger consumers seeking alternatives to traditional sports drinks. He said the company’s messaging around coconut water’s electrolyte content and new familiar flavor profiles could help recruit new consumers and households.

Higher Freight Costs Pressure Margins

Third-quarter gross profit increased $24 million to $93 million, while gross margin held at 38%, broadly in line with the prior year. Lower tariff costs compared with last year were mostly offset by higher domestic logistics expenses and Copra-related mix effects.

However, the company expects fourth-quarter gross margin of about 33%, as the full impact of cost increases that began in early summer moves through results. Roper said much of the anticipated pressure reflects elevated ocean freight costs, which he characterized as unusual and likely temporary, though the company is prepared to take additional pricing if they persist.

Vita Coco has informed distributors and retail partners of planned price increases beginning in the first quarter of 2027. Management said the increases are designed to offset structural inflation in packaging, factory operations and certain logistics expenses, assuming some normalization in ocean freight rates.

The company reiterated its long-term gross-margin goal in the high-30% range, approaching 40%.

Raised 2026 Outlook

Vita Coco raised its full-year forecast and now expects net sales of $810 million to $820 million and adjusted EBITDA of $170 million to $175 million. It continues to expect full-year gross margin of approximately 40%.

• Consolidated Vita Coco coconut water sales are expected to grow at a low-20% rate for the year.
• U.S. branded Vita Coco sales are projected to grow in the high teens.
• U.S. private-label sales are expected to rise 110% to 120%, reflecting category growth, distribution gains and Copra’s contribution.

As of Sept. 30, Vita Coco had $152 million of cash and no debt outstanding under its revolving credit facility. Year to date, the company invested $139 million net in the Copra acquisition and repurchased $62 million of shares. Including purchases made after the quarter ended, it had repurchased $70 million of stock year to date, leaving $11 million under its current authorization.

About Vita Coco (NASDAQ:COCO)

The Vita Coco Company, Inc is a beverage company focused on hydration and wellness products. Its flagship brand, Vita Coco, offers coconut water in a variety of formats and flavors, including original, flavored and pressed coconut water products. The company also markets other beverages under brands such as Ever & Ever, a plant-based water brand, and PWR LIFT, a functional hydration beverage.

Vita Coco products are sold through grocery stores, mass merchandisers, convenience stores, club retailers, e-commerce platforms and foodservice channels.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.