Entering the European market for fresh coconut

The European market for coconuts is relatively small with many potential suppliers. Young and mature coconuts are very different markets, each with its own specifications and requirements. Ivory Coast (mature coconuts) and Thailand (young coconuts) are the main players reaching large sales channels, such as supermarkets. Freshness and sustainable production are key if you want to participate in the European coconut trade.

1. What are the requirements for fresh coconuts to enter the European market?

Fresh coconuts must comply with the general requirements for fresh fruit and vegetables. You can find these in the general buyer requirements for fresh fruit and vegetables on the CBI market information platform. You can also use the Helpdesk, which provides an overview of export requirements for fresh coconuts (code 08011200 and 08011900) per country.

What are the mandatory requirements?

Pesticide residues and contaminants

Pesticide residues are one of the crucial issues for fruit and vegetable suppliers. To avoid health and environmental risks, the European Union has set maximum residue levels (MRLs) for pesticides and other contaminants, such as heavy metals, in and on food products. Products exceeding the MRLs are withdrawn from the market.

Luckily the coconut is relatively well protected by its own shell, which makes it less vulnerable to pests. However, excessive leaf spraying and trunk injections meant to protect the tree can lead to chemicals ending up in the coconut water.

Young coconuts are often bleached or treated with an antioxidant. Be aware that the use of many of these chemicals, such as sodium metabisulphite, has not been authorised in the European Union.

Note that buyers in several EU Member States, such as the United Kingdom, Germany, the Netherlands and Austria, use even lower maximum residue levels than those established by European legislation.

• Check the EU Pesticides database to find all MRLs and those specific for coconuts. Search by product or pesticide and the database to find the list of associated MRLs.
• Use integrated pest management (IPM) in production to reduce the use of pesticides. IPM is an agricultural pest-control strategy that includes growing practices and chemical management.
• Read more about MRLs on the website of the European Commission. Check with your buyers if they require additional requirements on MRLs and pesticide use.
• Make sure that lead contamination in your coconuts remains below 0.10 mg/kg and cadmium below 0,050 mg/kg, according to the maximum levels for certain contaminants in foodstuffs.

Quality standard

There are no official marketing standards for fresh coconuts. But they still must comply with the same basic standards as any other fresh fruit, which means they have to be:

• intact and sound;
• clean, practically free of any visible foreign matter;
• practically free from pests;
• practically free from damage caused by pests;
• free of abnormal external moisture;
• free of any foreign smell and taste;
• able to withstand transport and handling.

A tolerance of 10% in each lot is permitted in number or weight of product not meeting the minimum quality requirements. Within this tolerance, not more than 2% in total may consist of produce affected by decay.

Mature coconuts in the inner shells are normally expected to be:

• brown, uniform and without excessive fibres;
• free from cracks, pests or fungus;
• without sunken or wet mouldy eyes.

For young coconuts (six to nine months old), you can best follow the guideline of the Association of Southeast Asian Nations (ASEAN), which has developed a standard for young coconuts.

Handling

Husked coconuts are susceptible to cracking and weight loss, and have a reduced shelf life. It is important for you to maintain coconuts fresh and prevent them from cracking by:

• taking care of post-harvest handling;
• avoiding quick temperature changes of 8 degrees Celsius or more;
• storing and shipping husked coconuts preferably in cool temperatures between 0 and 16ºC. Mature coconuts are generally shipped at 8ºC to 12ºC. Young coconuts are usually held at 3ºC to 6ºC. Higher temperatures will reduce shelf life significantly.
• Maintain a humidity level of around 80% for mature coconuts and 90% for young coconuts to prevent weight loss and evaporation.
• Make sure to apply sufficient ventilation to prevent mould.

Young coconuts have a softer inner shell and require extra attention at packaging and cooling to ensure shelf life. Mature coconuts also have differences in shell strength. For example, the Port-Bouet 121 has a thinner shell than the West African tall, which gives them a higher risk of cracking.

The main defects observed in coconuts are:

• broken nuts because of poor sack handling;
• nuts wetted by the juice of other fruits, enhancing the growth of moulds;
• germination of eyes.

Size and packaging

Mature coconuts are generally packed in jute bags or sacks, and mostly come in 40 or 50 units per 25 kg bag. Alternatively mature coconuts are sometimes packed in open or closed cardboard boxes of 8 to 20 units.

For young coconuts, you have whole, trimmed or polished fruit. Trimmed coconuts are the most common in Europe. According to the ASEAN Standard for young coconuts the size is determined by the weight of the fruit (see table 1).

Table 1: size codes and weight in grams

Size code	Whole fruit	Trimmed fruit	Polished fruit
1	>2400	>1500	>600
2	1901-2400	1201-1500	451-600
3	1401-1900	901-1200	300-450
4	901-1400	601-900
5	400-900	300-600

Young coconuts are almost always packaged in cardboard boxes.

What additional requirements do buyers often have?

Variety

For mature coconuts, the varieties with high flesh content are preferred, but price also plays an important role. As a producer or exporter, you can get the best returns on high-yielding and disease-resistant varieties, often hybrid varieties.

For young coconuts, the quality of the coconut water is the most important feature. Fresh, young coconuts are meant for direct and natural consumption without processing and they are a luxury fruit. Therefore, the aromatic coconut varieties, such as the Thai Nam Hom, are highly preferred.

Certification

Common certifications for blueberries include GlobalG.A.P. for good agricultural practices and BRCGS, IFS or similar HACCP-based food safety management systems for packing and processing facilities. Management systems recognised by the Global Food Safety Initiative (GFSI) are most recommended.

Coconut production in most countries often involves small farmers. For small coconut producers, for example in Vietnam, the certification costs are high and GlobalG.A.P. is difficult to obtain. But to get your product in major retail chains it is almost a necessity.

Sustainability and social responsibility

Supply chains are becoming more transparent and consumers better informed about environmental and social issues. They expect you to have a sustainable approach to production and processing. Campaigns such as the FairFood coconut campaign underline the importance of social responsibility in coconut production.

Buyers act on this by requiring transparency and certifications from your company. Social and environmental certification schemes include actions to strongly reduce and register the use of pesticides, take action on the safety of employees or even include price guarantees for producers.

For fruit collectors and exporters, it is important to show they are engaged in the well-being of their production sources, both socially and environmentally. The best way to do this is through adopting social and environmental standards, such as:

• Sedex Members Ethical Trade Audit (SMETA)
• Amfori BSCI
• GlobalG.A.P. and GlobalG.A.P. Grasp
• Ethical Trade Initiative (ETI)

Organic can be a requirement in fresh coconuts

Coconuts fit very well in the growing consumer attention to health and natural foods. That is why there is a relatively strong focus from buyers on organic cultivation. Fresh organic coconuts are most in demand by supermarkets and specialised organic buyers. Processed products, such as bottled coconut water and virgin coconut oil, are also popular as organic products. In ethnic channels, organic certification is less required. The demand for organic products is strongest in Germany, the Alpine region and Scandinavia.

For non-European suppliers, it is important to show compliance with the European legislation for organic products. You must use sustainable and organic production methods and apply for an organic certificate from an accredited certifier.

What are the requirements for niche markets?

Consumer labels for sustainable and fair trade coconuts

Health benefits have put coconuts in the spotlight for conscious consumers and food media. But this attention can easily be directed to potential negative sides in cultivation practices, such as concerns with poor labour conditions. Since coconuts are a typical smallholder and labour intensive product, some buyers want to assure to end consumers that their coconut product is socially and environmentally responsible.

Consumer labels such as Fairtrade and Rainforest Alliance are most common for coconut products. You will find them often on processed products, but they also touch the fresh coconut trade as a niche requirement, providing additional value to the product.

For example, the British supermarket Tesco sells Rainforest Alliance coconuts from Ivory Coast under private label. Importing companies, such as AgroFair, commercialise Fairtrade coconuts from Ivory Coast.

2. Through what channels can you get fresh coconut on the European market?

Fresh coconuts are marketed through supermarkets and ethnic or specialised wholesalers. Where your coconuts will end up depends on the type of coconut (mature or young) and the volume you are able to supply.

How is the end market segmented?

The market for fresh coconuts is mainly divided in young and mature coconuts. These markets are very distinctive and not necessarily comparable. Mature coconuts are still the dominant segment, but most growth is to be expected in the young drinkable coconut.

Young coconut is most perishable and is mainly consumed because of the coconut water. It requires more care, and therefore they can be found in a higher segment. Coconut water is also associated with health properties, which can be strengthened by organic certification. Air freight can be used to ensure the freshness of organic non-treated coconuts, but the additional costs of certification and logistics put these young coconuts in an exclusive segment. Supermarkets that offer a variety of exotic fruit will likely also offer young, drinkable coconut, especially throughout the summer. But these coconuts are also appreciated in trendy beach clubs. See the section on buyer requirements above for the marketing standards of young coconuts.

Mature coconut is mainly used for its flesh, not its water. For these products, price is the focal point. Consumers can enjoy a relatively large exotic fruit for a reasonable price. Coconuts are sold to consumers through retailers but are also used for culinary purposes in the food service segment, especially for exotic or ethnic recipes. Supermarkets are extending their assortment with fresh cut coconut, adding extra value and processing costs which are compensated by more efficient logistics.

It is difficult to evaluate the quality of a coconut. For the end market, appearance and size are the most important features for coconuts. When the product has an inferior appearance, it becomes unsuitable for selling it for fresh consumption and can be best used for processing in the origin country.

Figure 1: Market segments for fresh coconut

Through what channels do coconuts reach the end market?

Specialised importers and service providers

Importers play a central role in the distribution of fresh coconuts. These importers are often specialised in exotic or ethnic fruit and vegetables and maintain a wide network of clients in retail and food service wholesale. Because coconuts are a very specific product, importers often have wholesale activities as well.

The introduction of coconut water brought about new businesses that exclusively sell drinkable young coconuts, such as Genuine Coconut in Spain. Other companies, among which the British Coconutty, combine the sales of green or young coconuts with other coconut products, such as oil, cream and flour.

Some importers, such as Nature’s Pride, take the role as service providers, developing concepts for supermarkets and organising the supply chain. They can brand coconuts, provide easy-to-open young coconuts or add consumer labelling with instructions on how to open the coconut. For perishable young coconuts, it is especially important to maintain an efficient and short supply chain.

Supermarkets

Supermarkets are responsible for a large share of fresh coconuts on the market, although it remains a very specific fruit. For many supermarkets, coconuts are a seasonal product, promoted mainly during the summer. Processed products such as canned coconut cream, desiccated coconut and bottled coconut water are standard in every main grocery store in Europe. But as coconuts become a large segment, you can expect supermarkets to make fresh coconut available throughout the year.

Supermarkets would normally use their preferred service providers to source coconuts or hire a brand with an original concept that adds more value to the product. A supermarket that is known for its ample and high quality fresh assortment, for example, is Grand Frais in France.

You will also see more and more coconuts under private label because supermarkets are increasingly involved with sourcing to ensure reliable and sustainable sources. Examples of these private label coconuts include Tesco’s Rainforest Alliance coconut, a ASDA’s Grower’s Selection coconut and Albert Heijn’s organic coconut.

Wholesalers (spot market)

Traditional fruit wholesalers cover the spot market, moving according to trade fluctuations. They supply to specialised and ethnic shops, street merchants and restaurants. In the case of coconuts, import and wholesale sometimes are performed by the same company.

Large, non-specialised cash & carry wholesalers, such as Sligro Food Group in the Netherlands and Belgium, also service food professionals and the food service industry. Importing exotic products is not part of their business, so they depend on the expertise of their partner, in this case the fruit and vegetable specialist Smeding, in which Sligro is a large shareholder.

Figure 2: Market channels for fresh coconut

What is the most interesting channel for you?

The most interesting channels for exporters are supermarkets with an exotic fruit assortment, as well as wholesalers that supply the food service segment. Most important is finding a buyer or importer that knows the fresh coconut business and these different channels. In most cases, you can rely on ethnic or exotic fruit specialists, such as Exotimex, Joko Impex, Kinobé Groupe and Special Fruit.

Working closely with an importer that has wholesale activities can help connect with different users in the end market, such as ethnic shops and juice bars. Cocobomb (fresh and frozen) and SIIM (at Rungis wholesale market) are two of such companies, providing clients with single case deliveries and bulk orders. Direct trade can improve profits, but it is not a guarantee.

For large volumes, you will need large buyers, such as supermarkets. Being part of the supply chain of large retail chains gives you most security and relatively stable margins. However, the requirements are high and the room for negotiation is minimal. The most likely route to become part of a retail programme is to cooperate with a service provider that has a local infrastructure and supply contracts with retailers. Typical importers that deal with exotic fruit and that have the capacity to commit to supermarkets include, for example, Roveg, Nature’s Pride and Greenyard France (formerly known as Katopé).

3. What is the competition like in the European fresh coconut market?

There are many producing countries that could participate in the coconut trade. Production volumes went down in recent years, but new plantations will help meet future demand. In mature coconuts, producers from Ivory Coast will be your main competitors. Ivorian exporters are relatively close to Europe and have dominated the European market with affordable coconuts for a long time. Fresh coconut exporters in Asia are mainly focused on young coconuts. Thailand is best positioned to supply these drinkable coconuts, while Vietnam is gaining ground fast.

Which countries are you competing with?

Ivory Coast

Ivory Coast is Europe’s largest supplier of coconuts, almost exclusively mature brown coconuts in the inner shell. Although Asia is many times larger in coconut production, Ivory Coast has the logistical advantage of being in close distance to Europe.

The Ivorian coconut success is related to large industrial plantations established in the past and a price-competitive supply. Price and distance are the main drivers for European buyers to continue sourcing mature coconuts in Ivory Coast, which makes it less attractive for other countries to compete in the European market. Ivorian exports to Europe are still growing, having reached an estimated 23.8 thousand tonnes in 2018 (see figure 3).

But the reputation of West African coconuts is far from perfect. Infrastructure is insufficient and the sector is poorly organised. The trade is managed by a large number of small collectors and exporters and there is a lack of investment, which may lead to the weakening of the sector.

Thailand

Thailand is the preferred origin of young coconuts for European buyers, especially the aromatic Nam Hom variety. The Thai coconut is often considered superior to other coconuts in Asia.

However, Thailand struggled with crop shortages in recent years and exports to Europe decreased in 2017 and 2018 (see figure 3). This has given Vietnamese producers the opportunity to extend their exports to Europe. Thailand needs coconuts not only for fresh export, but also for local consumption and processing.

Although production volumes went down for two years in a row, according to Nature’s Pride on Freshplaza, more plantations in Thailand have been added since demand for young coconuts increased in China. This means that Thailand will be able to maintain its position as a global coconut supplier.

Vietnam

Vietnam has become practically a new supplier to the European market. In 2018, Vietnamese coconut exports to Europe reached 4.3 thousand tonnes, growing from just 0.3 thousand tonnes in 2014. Just like Thailand, Vietnam’s main coconut export product is young coconut. Vietnamese have already proven to be commercially competitive and exporters are improving their standards to get better accepted in Europe.

Vietnam is traditionally highly dependent on demand from China, but has recently started to diversify its export markets. As the Chinese demand is volatile, prices in Vietnam suddenly dropped when demand slowed down in mid 2018. This likely contributed to the increased exports to Europe.

Currently, the Netherlands and Spain are the main European destinations for Vietnamese fresh coconuts, but in the next few years, expect their presence to become more widespread in Europe. Nevertheless, demand in less strict markets, such as China and the Middle East, will continue to influence the direction of Vietnamese coconuts.

India

India is a relatively stable coconut supplying country. You will find the strongest competition from Indian exporters when working with the United Kingdom. Of all 4.1 thousand tonnes of coconuts India exported to Europe in 2018, an estimated 3.4 thousand tonnes went to the United Kingdom.

The United Kingdom has a long trade relation with India and a large Indian community, suggesting that much of the Indian coconut supply to the UK is directed at the ethnic market, which in turn mostly purchases mature coconuts. A few Indian suppliers have gained market access to mainland Europe, such as INI Farms, supplying fresh cut, mature coconut via their own Dutch distribution channel (see competing companies below). Indian suppliers also offer young coconuts, but until now have not had the same success as those in Thailand and Vietnam.

In the short term, it is unlikely that European buyers will shift their focus to Indian coconuts. But being one of the top three coconut producers in the world, after the Philippines and Indonesia, Indian will remain in the picture as an alternative supplier to Ivory Coast or as a supplier of processed coconut products, such as freshly cut pieces.

Malaysia

In volume and price, Malaysia is not competitive with the major producing powers nearby, such as Indonesia. Malaysia also lacks proper infrastructure to compete in exporting young coconuts. Still, Malaysian producers have exported a stable average of 1.9 thousand tonnes of coconuts per year to Europe between 2013 and 2018.

Many Malaysian coconut farmers are still using old, low productive varieties, such as the Malayan Tall. But the increasing consumer interest in joining the healthy coconut trend started to make some farmers switch to smaller varieties that are easier to harvest, such as the Malayan Yellow Dwarf and Malayan Red Dwarf. These developments can slowly lead to a revival of the coconut business in Malaysia.

Costa Rica

Costa Rica is the fifth largest supplier of fresh coconuts to Europe. While the coconut production in Costa Rica is not large — less than 15 thousand tonnes in 2017 according to Faostat — producers in the country profit from their commercial experience in other tropical fruit, such as pineapples and bananas. Costa Rica also has an advantage in organic coconuts, because it is one of the few developing countries that have standards considered similar to those of the European Union, allowing it to perform inspection and certification at origin.

Costa Rican exporters cannot compete with the prices of Ivorian exporters due to higher costs of production and transport, but for some European buyers the larger sized coconuts from Costa Rica can make up for the difference.

Future competition

Indonesia, the Philippines and India are the world’s largest producers of coconuts and dominate the supply of desiccated coconuts and coconut oil to Europe. In 2018, India produced 11 million tonnes of coconuts, the Philippines 14 million and Indonesia 19 million tonnes. The Philippine government announced a push to stimulate a massive replanting of coconut trees, which should be enough to maintain the country’s position as the second-largest supplier of coconut derivatives.

The distance between these leading producing countries and Europe makes it more difficult for their exporters to compete with fresh sea-freighted coconuts. But improving preservation techniques and logistics can potentially improve their competitive position. Until now, these countries have not convinced European buyers of the quality of their fresh coconuts, but with such large production volumes it is important for you to monitor them.

Other supplying countries that are relevant to monitor as potential competitors include Sri Lanka, Brazil and Ghana. Brazil and Sri Lanka are large volume producers yielding close to 3 million tonnes a year. The Sri Lanka King coconuts are famous for their sweetness and high liquid content, while Ghana’s exports are growing every year, having reached 600 thousand tonnes in 2018.

Some of the countries may in reality be larger suppliers than they seem, because exporters often refer to dry or desiccated coconuts, which have a different statistical code, when they offer mature coconuts. Accounting for this would substantially augment the export volumes of Ghana and Sri Lanka.

Who are your competitors?

The large and growing number of coconut producers means competition in coconuts is fierce. However, only a few companies really manage to get large volumes to Europe. Their success shows that as an exporter you must not only stand out in quality and presentation, but you also need a dedicated partner or presence in the European market.

Zatwa Impex

In Ivory Coast, the leading source of mature coconuts to Europe, it is important to stand out as an exporter. This is what the relatively young company Zatwa Impex has achieved by sourcing fresh, mature coconuts of the GOA and Hybrid varieties in an efficient way and using only reefer transportation to assure quality.

No less important, Zatwa Impex’s communication makes them easily found by buyers. Their website provides easy-to-access information about the company and their products. They publish news about their coconut assortment on the news site Freshplaza and they are active on LinkedIn. These initiatives help them build a good reputation and show they are open to communicating with potential buyers, both of which are crucial in the fresh trade.

INI Farms

INI Farms has a branch office located in Amsterdam to service customers in Europe. From there, INI Farms works closely together with Sous Fresh to commercialise their freshly cut coconuts.

Although it is not necessary for you to have your own office in Europe to sell coconuts — and not always wise, as importers may see you as a competitor — having a trusted partner is all the more relevant.

Besides integration with the market, the supply side is also important. INI Farms works with contract farming and small growers, which creates an extra challenge for them in grower management. Although small farms are common in the coconut trade, having your own production is always an advantage.

Import Coconut

Thaliand’s Import Coconut specialises in trading coconuts and related products. In 2015, they launched the premium brand Coco Wilson to market raw organic coconuts in Europe. According to their website, 35% of their exports go to Europe.

A well marketed brand will attract attention and give your product exposure, but you must not underestimate the investment and effort that such a project requires. To market a branded product, it is important to have an entity that can represent your product in Europe. Import Coconut decided to do the marketing through an office in Spain.

The limitation of Import Coconut is their sole focus on coconut water. They do not have another product to fall back on, which is recommended for any business.

Which products are you competing with?

As an exotic product in Europe, fresh coconut competes with other exotic and tropical fruit, such as mango and papaya. Especially mango is much more known to consumers in Europe and consumed in large volumes. Familiarity plays a role in the European consumer’s decision to purchase exotic fruit. However, none of the exotic fruits in the market have the same characteristics of coconut.

Coconut is unique. Besides having an exotic image in the minds of European consumers, the coconut has a unique combination of pulp and liquid. Another strength of coconut is the price per kilo, which is lower than most other tropical fruit. See Fruitrop’s comparison of trade volumes and prices between different exotic fruits.

In addition to fresh coconut, there are many other coconut products available, including canned coconut cream, desiccated grated coconut and bottled coconut water. There is the possibility that one day processed products may come to replace fresh coconuts, but the growing availability of coconut products will have a positive effect on consumer awareness and generate more attention to both fresh and processed coconut in the future.

4. What are the prices for fresh coconuts on the European market?

The market for fresh coconuts is relatively stable, although prices fluctuate due to availability. According to import volumes and values, the average calculated price per kilo varies between €0.78 and €0.85, but that is not a reliable range because the trade data includes a mix of different types of coconuts (young and mature) and origins.

Timing and origin are relevant factors for coconut prices. Prices in the European summer are generally higher, because of increased demand. During the European winter, some coconut importers plan promotions in the weeks around Christmas and New Year’s. Prices also depend on origin: According to the economic analysis of Fruitrop, mature coconuts from Dominican Republic, Costa Rica and Sri Lanka cost approximately €19 per sack of 40 units, while those from Ivory Coast cost approximately €11.50 euro per sack, due to higher transport costs and larger fruit size.

The import prices for mature coconuts are approximately €14 to €15 per bag of 50 units and €11 to €12 euros per bag with 40 units. When sold in boxes, prices are slightly higher. Young coconuts are almost always sold in boxes and get trade prices of approximately €0.80 to €1 euro per piece (FOB). Young coconuts can be shipped by sea freight when well stored, but occasional air freight can significantly increase the price of young coconuts in Europe. Importers generally keep a profit margin of 8% over the sales price, excluding handling costs.

In Europe, wholesale prices for mature coconuts vary depending on quality and demand. Wholesale prices of large boxes with 15 to 16 units generally range from €8 to €11. Smaller boxes of approximately 8 units go for €5 or €6.

In retail, consumer prices for fresh, mature coconuts vary between €1 and €1.50 per piece. For young coconuts, the consumer price varies between €2 and €4 euros per piece. As an exporter, you have to be aware that there is not always a direct relation between trade prices and consumer prices.

This study has been carried out on behalf of CBI by ICI Business.

Please review our market information disclaimer.