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Entering the European market for desiccated coconut

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Takes 35 minutes to read

Food safety certification, frequent laboratory tests, white colour, and good flavour create a positive image for desiccated coconut exporters to Europe. Sustainable production and social responsibility standards are becoming increasingly important for European buyers. The strongest existing competition comes from Southeast Asia, with the Philippines and Indonesia being the leading European suppliers. In those two countries, processing is quite concentrated, and most desiccated coconut is produced by a relatively small number of very large companies.

1. What requirements must desiccated coconut comply with to be allowed on the European market?

Our study on buyer requirements in the European processed fruit and vegetable market provides general information about buyer requirements for processed fruit and vegetables in the European market. The section below deals with specific details related to desiccated coconut.

What are the mandatory requirements?

All food products, including imported desiccated coconut, sold in the European Union must be safe. Only approved additives are allowed, and there are maximum levels for harmful contaminants, such as bacteria, viruses, pesticide residues and heavy metals. It should also be readily obvious from the labelling whether a food contains allergens.

Contaminant control

Food contaminants are unwanted and harmful substances in food that can cause illness. The European Commission Regulation sets maximum levels for certain contaminants in food products. This regulation is frequently updated and, in addition to the limits set for general foodstuffs, it also sets a number of specific contaminant limits for specific products. The most common requirements regarding contaminants in desiccated coconut are related to the presence of pesticide residues and microbiological organisms.

If a product contains more contaminants than allowed, the product will be withdrawn from the European market. These cases are reported by the European Rapid Alert System for Food and Feed (RASFF). Although it does not happen often, some of the main reasons for market withdrawal of desiccated coconut are contamination with Salmonella and excess sulphite contents. For example, in January 2020, desiccated coconut from Indonesia was removed from the Polish market as it contained two times more sulphites than the allowed maximum limit.

Pesticide residues

The European Union has set maximum residue levels (MRLs) for pesticides in and on food products. The European Union regularly publishes a list of approved pesticides that are authorised for use in the European Union. This list is frequently updated. Products containing more pesticide residues than allowed and products containing pesticides that are not approved will be withdrawn from the European market.

However, excessive residues of pesticides are not very frequent in desiccated coconut. When used, pesticides are applied to palm tree leaves and the outer husk of the coconuts, so small quantities can penetrate into the edible part of the coconut. Still, many European importers will request a detailed test on the presence of a large number of pesticides (sometimes more than 500).

Microbiological contaminants

The most common type of microbiological contaminant present in desiccated coconut is Salmonella. Contamination of desiccated coconut may occur due to several reasons, such as insufficient distance between husking and processing areas, infected water used in processing, dirty hands, dirty processing equipment (especially knives for shredding and cutting), the presence of animals in processing facilities, infected workers, dirty packaging materials or storing facilities, or excess moisture content (above 3%) in the final product.

Most European buyers will require a laboratory analysis to check for the presence of microbiological contaminants. The laboratory analysis must show a complete absence of Salmonella. The presence of other microorganisms must be below certain limits in line with the European regulation on microbiological criteria for foodstuffs or in line with national legislations of the European Union member countries.

Heavy metals

The European Union’s regulation on food contaminants sets restrictions for lead, cadmium, mercury and tin. Heavy metal residues may penetrate coconuts from the soil or from pesticides, but they are not frequently found in desiccated coconut. Still, European buyers will commonly require tests to check for the presence of heavy metals.

Chlorate and perchlorate

One of the most recent changes in EU regulations regards the allowed level of chlorate. It is set at 0.05 mg/kg for most fruit and vegetables (including coconuts). Legislation on chlorate levels entered into force in June 2020. Chlorate is no longer approved as a pesticide, but it can come into contact with food by the use of chlorinated water during processing. Another source may be the use of chlorinated detergents used to clean facilities and processing equipment.

Product composition

European authorities can reject desiccated coconut if they have undeclared or unauthorised materials, or if the levels of these materials are too high. European consumers prefer desiccated coconut without any additives, although sulphites are widely used as preservatives. If you are soaking coconut kernels in a solution of sodium metabisulphite, you should control the amount of preservative and the soaking time. The maximum content of Sulphur dioxide in the final product must be below 50 mg/kg – ppm. Organic products must be preservative free.

Be aware that the use of citric acid as an antioxidant is not allowed in desiccated coconut according to the European additives regulation. This should not confuse you, as Codex Alimentarius standard allows the use of citric acid. Codex Alimentarius is not a law, whereas the European regulations are laws that all suppliers need to comply with.

Packaging requirements

Packaging used for desiccated coconut must protect the organoleptic and quality characteristics of the product, protect the product from bacteriological and other contamination (including contamination from the packaging material itself) and not pass on any odour, taste, colour or other foreign characteristics to the product.

The most common types of packaging for desiccated coconut in bulk are craft paper bags with inner sealed polythene bags to keep out atmospheric moisture. The most common standard bag size is 25 kg, but bags of 8 kg and 10 kg are also used. Packed products should be stored in a clean, cool and dry place with room temperatures of 26° C or lower. In normal storage conditions, the shelf life of desiccated coconut treated with sulphites should be 12 months, while the shelf life of organic products should be 9 months.

Retail packaging includes plastic bags, carton packaging, plastic containers and foil bags. The bags are packed on Euro pallets (80 x 120 cm) and further transported in 20 ft (500 bags of 25 kg) or 40 ft (1000 bags of 25 kg) containers.

Labelling requirements

For bulk export packaging, the name of the product should be ‘desiccated coconut’, preceded or followed by the common or ordinary name legally accepted in the country of retail sale. When applicable, the name may indicate the oil content, the sizing and form of the product (such as fine, medium, coarse or chips) and crop year. More detailed information for export bulk packaging can be given in accompanying documents, but the product name and storage instructions must appear on the packaging. Information such as lot identification, the name and address of the producer, packer or trader may be replaced by an identification mark.

In the case of retail packaging, product labelling must comply with the European Union regulation on the provision of food information to consumers. This regulation defines nutrition labelling, origin labelling, allergen labelling and a minimum font size of 1.2 mm. Desiccated coconut is not included in the allergen list of the regulation, but sulphites must be indicated as potential allergens if they are used as preservatives. Retail packs must be labelled in a language that can easily be understood by consumers in the European target country, so generally in the country’s official language. This explains why European products often carry multiple languages on the label.

New European rules require you to label the origin of the product. For example, if desiccated coconut is packed in the Netherlands, the origin of product must also be indicated. This can be done by indicating a specific country (such as Indonesia), by indicating ‘non-EU’, or by declaring ‘desiccated coconut does not originate from the Netherlands’.

Tips:

  • Refer to the Codex Alimentarius for the Code of Hygienic Practice for Desiccated Coconut and for Low Moisture Food. By following recommended good manufacturing practice schemes, you can meet the requirements of the European food safety legislation.
  • Be sure to perform laboratory tests only in ISO/IEC 17025:2005-accredited laboratories.
  • Store your desiccated coconut in proper conditions (low humidity, cool temperatures) during and after production to avoid the development of microbiological contaminants.
  • Make sure that the water you use in your coconut processing facilities is safe and of drinkable quality.
  • Read our Organising Export tips to learn more about customs procedures, payment, logistics and documents used in the export of processed fruit and vegetables.

What additional requirements do buyers often have?

Quality requirements

Specific quality standards for desiccated coconut have not been officially defined by the European Union authorities. European buyers most often refer to two international standards. One is the Standard for Desiccated Coconut published by Codex Alimentarius and the other is the Standard for Dehydrated Coconut Kernel Pieces (new version currently in development) by the United Nations Economic Commission for Europe (UNECE). Several producing countries have set their own standards, such as Tanzania, the Philippines, Malaysia and Sri Lanka. The Asian and Pacific Coconut Community has also introduced a standard for desiccated coconut.

The industry has defined several criteria for quality, but some of them, such as taste and odour, are subjective and cannot be easily determined by physical and chemical characteristics. The basic quality criteria for desiccated coconut are:

  • Oil (fat) content: Oil content is one of the main quality characteristics of desiccated coconut. Desiccated coconut produced by the drying of kernels (as described in our market potential study) are defined as high-fat (or 'full-fat') products. They have 60% oil or more and fetch a better price on the international markets. Low-fat desiccated coconut, which has less than 60% m/m of oil, is the dehydrated form of white coconut meat after the extraction of coconut milk. The fat content of this product can vary but is usually in the range of 45–55%. The Philippine standard defines desiccated coconut only as a full-fat product. If it is produced as a by-product of coconut milk/cream production, it must be labelled as “reduced fat dehydrated coconut” instead of desiccated coconut.
  • Colour: natural white to light creamy, but some forms may allow partial visibility of brown skin.
  • Texture: free-flowing and free from yellow specks.
  • Flavour: distinctive coconut flavour without off flavours due to deterioration or absorption of extraneous substances.
  • Odour: the characteristic odour of the product, not mouldy or cheesy, smoky, fermented or rancid, and no undesirable odour.
  • Form: regarding the size of sieves, coconut pieces can be classified into “extra fine” with a diameter of less than 0.85 mm, “fine” (0.85-1.4 mm), and “medium” (1.4-2.8mm). Other forms include different cuts such as flakes, strips, chips, shreds, cubes or chunks.
  • Quality classes are optional and can be determined by the allowed percentage of defects. Desiccated coconut can be classified as “Extra”, “Class I” and “Class II”.

Food safety certification

Although food safety certification is not obligatory under European legislation, it has become a must for almost all European food importers. Well-established European importers will not work with you if you cannot provide some type of food safety certification.

Most European buyers will ask for a certification recognised by the Global Food Safety Initiative (GFSI). For desiccated coconut, the most popular certification programmes recognised by GFSI are:

Please note that this list is not exhaustive and food certification systems are constantly developing.

Although different food safety certification systems are based on similar principles, some buyers may prefer one specific management system. For example, British buyers often require BRCGS, while IFS is more common for German retailers. Also note that having a food safety certification is only a basic requirement to start exporting to Europe. Serious buyers will usually visit or audit your production facilities in the first few years of your relationship.

Private safety and sustainability requests

Although most European retailers will support the above listed certification schemes, many of them will have additional requirements. Many supermarket chains will contractually oblige suppliers to meet comprehensive quality assurance requirements, including unannounced inspections at processing facilities.

One of the more recent trends is to ask for laboratory tests proving that specific pesticide residues are present in significantly lower quantities than legally required. Some buyers may provide a list of pesticides and a specific integrated pest management programme that must be followed if you want to export to specific clients (for example for the baby food industry).

Many importers will ask you to follow their own specific code of conduct. Most European retailers have their own codes of conduct, such as Lidl, Rewe, Carrefour, Tesco and Ahold Delhaize.

Tips:

  • Get food safety certification. Carefully select a certifying company and consult with your preferred buyers about their certification preferences.
  • Do a self-assessment through the producer starter kit from the Amfori BSCI website.

What are the requirements for niche markets?

Organic desiccated coconut

Organic certification schemes are increasingly popular in Europe. Although organic production was until recently reserved for niche markets, organic products are now becoming mainstream. However, certain types of organic certification such as ‘biodynamic’ (Demeter or BDA) can still be considered niche requirements.

To market desiccated coconut as organic in Europe, they must be grown using organic production methods as defined by European legislation. Growing and processing facilities must be audited by an accredited certifier before you are allowed to use the European Union’s organic logo on your products, as well as the logo of the certifying organisation, such as the Soil Association in the United Kingdom and Naturland in Germany.

Importing organic products into Europe is only possible with an electronic certificate of inspection (e-COI). Each batch of organic products imported into the European Union has to be accompanied by an electronic certificate of inspection as defined in the regulation covering imports of organic products from third countries. This electronic certificate of inspection must be generated via the Trade Control and Expert System (TRACES). Be aware that the new EU regulation on organic production is expected to enter into force in 2022. The new rules will allow for mixed farming and combined conventional and organic production, provided that the two are sufficiently separated.

Sustainability and Corporate Social Responsibility (CSR) certification

Sustainability is a broad term with many aspects and there is still no recognised sustainability certification covering all aspects. Until recently, sustainability certification was aimed at special niche buyers on the market, but it is now becoming a mainstream request, similar to organic certification. One increasingly used aspect is to publish CO2 emission rates on products, but it is difficult to have reliable measurements for those claims. However, some private certification schemes to do this are in development. Currently, the most well-known certification schemes focus on environmental impact and ethical (CSR) aspects.

Companies have different requirements for corporate social responsibility. Some companies require adherence to their code of conduct, or one or more of the common standards, such as the Supplier Ethical Data Exchange (SEDEX), Ethical Trading Initiative (ETI), and Business Social Compliance Initiative code of conduct (BSCI). Keep in mind that ethical practices in the coconut processing industry are related to animals too. Using monkeys for coconut harvesting is not appreciated by European buyers and it is forbidden in most CSR certification schemes.

Fairtrade and Rainforest Alliance, although widely recognised certification schemes, are not very frequently used for the certification of desiccated coconut. Fairtrade International has developed a specific standard for oleaginous fruit, including coconuts, and a standard for prepared and preserved fruit and vegetables for small-scale producer organisations, including dried coconut products. Currently there are around ten Fairtrade-certified coconut cooperatives in Asia. Fairtrade standards define the minimum and premium price for coconut for drying, specifically for Pacific and other regions. They also define minimum and premium prices for whole coconuts with shell, specifically for Southern Asia, South America and West Africa.

Ethnic certification

Islamic dietary laws (Halal) and Jewish dietary laws (Kosher) propose specific restrictions on diets. If you want to focus on the Jewish or Islamic ethnic niche markets, consider implementing Halal or Kosher certification schemes.

Tips:

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

Most desiccated coconut in Europe is used by the food processing industry, but the share of retail products such as snacks is growing, driven by plant-based and healthy snacking trends.

How is the end market segmented?

Although there is no exact data, industry estimates are that approximately 70-80% of all desiccated coconut imported into Europe is used by the food processing industry and foodservice, while the rest is re-packed and sold by retailers for home consumption (Figure 1). The share of low-fat products in retail sales is increasing in order to decrease the calorie content of the product and make ‘front of pack’ labelling more attractive. Organic certification is also one of the main trends for retail-packed desiccated coconut.

Figure 1: End market segments for desiccated coconut in Europe

nd market segments for desiccated coconut in Europe

Source: Autentika Global

Food Industry Segment

The food industry segment is the main user of desiccated coconut:

  • Chocolate and confectionery – These are the largest users of desiccated coconut as fillers for chocolate and candy bars, and as ingredients and toppings for cakes. Leading chocolate producers in Europe include multinationals such as Mondelez, Nestlé, Mars, Hershey, Ferrero, and Lindt & Sprüngli. Aside from the internationally famous brands, each European country has domestic chocolate producers making their own and private label chocolate and confectionery coconut products. Examples from the leading markets include Tony's Chocolonely (the Netherlands), Atkins (the Netherlands, the United Kingdom), Ritter Sport (Germany), Natra (Spain, Belgium, supplier of private labels), Eurohansa (Poland) and Gerlinea (France).
  • Bakery – This is one of the largest users of desiccated coconut in Europe. Many companies use desiccated coconut in products such as pastries, cookies or cakes. Some of the large bakery company groups on the European market are Finsbury Food Group, Associated British Foods, Le Duff, Aryzta, Jab Holding, Kingsmill, Lantmännen Unibake, and Gruppo Bimbo.
  • Coconut snacks are relatively new products offered as ingredients (for example for home breakfast cereals) or as ready-to-eat sweet treats. Some examples include Farmer’s Snack (coconut chips), Nurture Brands (coconut bites) or Cocomi (organic coconut chips).
  • Other users of desiccated coconut include breakfast cereal producers, the ice cream industry, producers of savoury Asian dishes and producers of various food ingredients (such as fillings, toppings and other preparations) for the bakery and confectionery industry.

Retail

There are two types of retailers for desiccated coconut sales. The first type is supplied by packing companies and sells desiccated coconut for home consumption, usually packed in bags of 100 and 200 g. These retailers include supermarkets and independent shops. The other retail type sells finished products where desiccated coconut is used as an ingredient. Those include bakeries, pastry and ice cream shops. It is not always easy to make a clear distinction between retail and industry users, considering most European supermarkets also have in-store bakeries. Still, most in-store bakeries are supplied with “ready-to-bake” products by specialised suppliers.

In most cases, retailers do not import directly from developing countries. They are usually supplied via intermediaries, such as specialised distributors. A recent development is the polarisation of the retail sector into discounters and high-level segments. Consolidation, market saturation, strong competition and low prices are key characteristics of the European retail food market. Currently, online retail sales of desiccated coconut are increasing at a rapid rate to meet increased home consumption demand due to the lockdown measures imposed during the COVID-19 pandemic.

Sub-segments (points of sale) of desiccated coconut in Europe include:

  • Retail chains – The main trend in retail chains is the increasing share of private label products including desiccated coconut. Another trend is the introduction of innovative snacking products. Retail chains with the largest market shares in Europe are Schwartz Gruppe (Lidl and Kaufland brands), Carrefour, Tesco, Aldi, Edeka, Leclerc, Metro Group, Rewe Group, Auchan, Intermarché and Ahold (Delhaize, Albert Heijn).
  • Organic food shops - Some organic shops are part of specialised organic food retail chains. Specialised organic retail chains have their strongest market presence and market share in Germany, but they are also present in other European countries. Organic desiccated coconut is also sold in drugstores, such as dm and Rossmann.
  • Ethnic shops – Ethnic shops provide specific opportunities for entering the market without having to compete with the leading retail brands. There is a strong presence of shops selling Asian cuisine-related foods including desiccated coconut.
  • Ethical stores – This is a niche segment that provides opportunities for suppliers of desiccated coconut that are certified Fairtrade or have some other ethical or sustainable certification. Sales of Fairtrade certified products are particularly strong in the United Kingdom and Scandinavian countries.
  • Online retail – Often part of the offer of existing retail traders or specialised shops, online retail grew dramatically during 2020 with the impact of the COVID-19 pandemic and the lockdown measures imposed in many countries in Europe. Online sales are expected to continue to grow in comparison with previous years. Usually, leading online retailers are the same as the physical ones, but several have developed with an online-only offer, such as the British Ocado, French La Belle Vie or Dutch Picnic.

Food service

The food service channel (hotels, restaurants and catering) is usually supplied by specialised importers and wholesalers. The food service segment often uses unbranded bulk packaging of 1kg, but other packaging sizes are used too. Consumer interest in trying new cuisines, healthy food and just simply enjoying food are the major driving forces in the food service channel in Europe. The fastest-growing business types are likely to be new, healthier fast food, street food, pop-up restaurants and international cuisines.

The use of desiccated coconut in the food service segment drastically declined during 2020 due to the influence of COVID-19. However, many restaurants managed to keep their sales due to their pivot to home delivery services and the use of applications such as Deliveroo, Uber Eats, Just Eat Takeaway and Glovo.

Tips:

  • Diversify your offer to supply different market segments. Most coconut processing factories can offer a wider range of coconut products such as coconut milk, water or oil next to desiccated coconut. Desiccated coconut with a high fat content will also fetch better prices with European importers.
  • Understand the pressure by retailers for sustainable products and make yourself more competitive by investing in different certifications, such as corporate social responsibility (CSR), organic or food safety. Food safety certification is the minimum requirement if you want to reach the retail segment.
  • Stay informed about developments in the bakery and snacks industry segment by reading the specialised market information portal Bakery and Snack.

Through what channels do desiccated coconut reach the end market?

Specialised importers of food ingredients (including buyers of dried fruit, nuts and spices) seem to be the best point of contact for exporting desiccated coconut to the European market. This is specifically relevant for new suppliers, as supplying the retail segment directly is very demanding and requires a lot of quality-related and logistical investments. However, for well-equipped and price-competitive producers, packing for private labels and direct export to sweet snack producers can be an option.

Figure 2: European market channels for desiccated coconut

European market channels for desiccated coconut

Source: Autentika Global

Importers / wholesalers

In most cases, importers act as wholesalers and resell desiccated coconut to either food processors or packers. Some importers have packing equipment, so they can also supply the retail and food service channels directly.

The higher requirements from retailers determine the supply chain’s dynamics from the top down, putting pressure on importers and food manufacturers. This pressure forces prices down, but also brings more products to the market that have value-added qualities, such as sustainable, natural, organic, and fair trade. Transparency in the supply chain is also a key requirement. To achieve this transparency, many importers develop their own codes of conduct and build long-lasting relationships with preferred suppliers from developing countries.

Importers of desiccated coconut often also import other types of ingredients, such as dried fruit, edible nuts, cocoa and spices, so offering other products in addition to desiccated coconut can increase your competitiveness. There are also ethnic desiccated coconut importers, specialised in supplying to ethnic (mostly Asian) shops. Some of the notable desiccated coconut importers in the largest European markets include: Catz International (the Netherlands), Theha (the Netherlands), August Topfer (Germany), ReformKontor (Germany, organic), TM Duché & Sons (the United Kingdom) and Atlanta (Poland).

Food processors

Food processors are a large segment within the desiccated coconut market. Some companies from this segment import ingredients including desiccated coconut directly, but most of them are supplied by importers and specialised wholesalers. Specific segments within the processed food channel are discussed in the previous chapter.

Tip:

  • Work on establishing long-term cooperation with well-established wholesalers. Dealing directly with European processors will bring added value as there will be no margin taken by connecting traders. Many confectionery companies, however, do not normally buy directly and usually source desiccated coconut from well-established traders.

What is the most interesting channel for you?

Specialised importers are the best contact for exporting desiccated coconut to the European market. Importers usually have a good knowledge of the European market and they monitor the situation in the desiccated coconut producing countries closely. They are your preferred contact, as they can inform you about market developments in a timely manner and provide practical advice for your exports, which is especially interesting for new suppliers.

In addition to specialised importers, food ingredient suppliers are also an interesting channel for market entry in this sector. In some cases, exporters from developing countries can supply to other segments directly as well. However, be aware that supplying to, for example, the retail segment directly is very demanding and requires a lot of quality and logistical investments.

3. What competition will you face on the European desiccated coconut market?

Where are your competitors located?

The main competitors for desiccated coconut suppliers to Europe are in the Philippines and Indonesia, followed by Sri Lanka, Malaysia, Vietnam and Costa Rica.

Philippines: leading coconut processor

The Philippines is the second-largest coconut producer in the world, with a production of 15 million tonnes. The largest quantities are produced in Luzon, Southern Mindanao and the Eastern Visayas. The coconut processing industry is one of the most important sectors in the Philippines, providing employment for many people, including 2.5 million farmers. Coconuts are processed in many forms, but virgin coconut oil is the leading value-added export product, followed by desiccated coconut. Other important Philippine coconut products include coconut milk, coconut water, coconut shell charcoal and oleochemicals.

Over the last five years, the export of desiccated coconut from the Philippines has steadily increased at an annual growth rate of 12%. In 2020, exports of desiccated coconut from the Philippines reached 145 thousand tonnes and a value of €224 million. The main export destination was the United States of America, followed by the Netherlands and the United Kingdom. Export to Europe represented a 32% share of the total exported quantities. In Europe, the largest market for desiccated coconut from the Philippines is the Netherlands with a 46% share, followed by the United Kingdom (19%) and Germany (14%).

The coconut sector in the Philippines is supported through activities of the Philippine Coconut Authority (PCA). The main issues the sector is facing are old trees and trees that were destroyed by typhoons and other natural catastrophes. PCA has launched the Accelerated Coconut Planting and Replanting Project with the aim to replant 70% of the old coconut trees.

Indonesia

Indonesia is currently the largest coconut producer in the world, with a production of 183 million tonnes. Most of the country's coconuts are produced in the province of North Sulawesi. Indonesia is also a significant processor of coconuts and the second largest exporter of desiccated coconut. Together with desiccated coconut, Indonesian processors produce several value-added products such as oil, milk or water. Indonesia is home to the International Coconut Community.

Over the last five years, the export of desiccated coconut from Indonesia increased at an annual rate of 13%. In 2020, Indonesian exports of desiccated coconut reached 128 thousand tonnes and a value of €157 million. The main export destination was Singapore, followed by Germany and the Russian Federation. Export to Europe represents a 21% share of the total exported quantities. In Europe, the largest market for Indonesian desiccated coconut is Germany with a 33% share, followed by the Netherlands (18%) and the United Kingdom (10%).

Sri Lanka

Coconut accounts for approximately 12% of all agricultural produce in Sri Lanka. The most important coconut products are desiccated coconut and coconut brown fibre. The main sector support organisation is the Coconut Development Authority, which issues export certificates to ensure the quality of desiccated coconut. Currently, there are nearly 70 processing facilities producing desiccated coconut in Sri Lanka. The annual production capacity of Sri Lanka is around 60 thousand tonnes.

According to the Sri Lanka Development Authority, Sri Lankan exports of desiccated coconut fluctuated over the last several years and reached a quantity of 29 thousand tonnes in 2020. This was a large decrease compared to 2019, when the country exported 49.7 thousand tonnes. The main reason for this decreased export was a lower production volume and the impact of COVID-19. Many coconuts were harvested before they reached full maturity, which led to a lower amount of desiccated coconut being produced. Sri Lanka is facing the problem of old trees, like other coconut production countries, and there are several initiatives to renew plantations including the use of dwarf varieties.

Around one quarter of Sri Lanka’s exported desiccated coconut goes to European markets. Export to Europe fluctuates, but on average, has decreased since 2016. From 11 thousand tonnes in 2016, exports decreased to 6 thousand tonnes in 2020, worth €13.2 million. Exports to almost all European countries decreased. The United Kingdom and Belgium were the exception, as Sri Lankan exports to these two countries increased. The largest European market for Sri Lankan desiccated coconut is Germany with a 20% share, followed by Spain (19%) and the Netherlands (16%).

Malaysia

Malaysia is ranked sixth in the global export of desiccated coconut. The main coconut product in Malaysia is coconut oil. Although the country is a large coconut producer, it seems that domestic production is not large enough, so processors are importing coconuts and copra from neighbouring countries. It also seems that significant quantities of desiccated coconut are re-exported, as the country imported more than 11 thousand tonnes of desiccated coconut in 2020.

Exports of desiccated coconut from Malaysia fluctuated over the last five years, reaching 14.6 thousand tonnes and €11.8 million in 2020. Europe is not a main destination for Malaysian desiccated coconut, as most exported quantities go to Pakistan (24%), Singapore (22%) and Turkey (15%). In 2020, Malaysia exported 1.9 thousand tonnes of desiccated coconut to Europe, with the United Kingdom being the main export destination with an 80% share.

Vietnam

Vietnam is the world's eighth-largest producer of coconuts. Most coconuts are produced and processed in the Ben Tre province. In Ben Tre, more than 71 thousand hectares are dedicated to growing coconuts. About 7 thousand hectares are grown as organic. The Vietnamese government supports the development of the coconut water processing sector.

According to the United National Statistics estimations, Vietnam exported 16 thousand tonnes of desiccated coconut in 2020. Most of this (around 25%) was exported to Egypt, followed by Thailand and South Africa. Vietnamese exports of desiccated coconut to Europe increased until 2018, when they reached a peak of 2.2 thousand tonnes, but decreased to 706 tonnes in 2020. The main European market for desiccated coconut from Vietnam is Denmark with a 56% share, followed by France (24%) and Italy (15%).

Costa Rica

The export of desiccated coconut from Costa Rica is relatively small compared to the leading processing countries, but the country managed to maintain a steady increase of exports to Europe. Traditionally, the main export destination for desiccated coconut from Costa Rica was the United States of America, but in 2020, Costa Rica exported a significant share to the Netherlands. According to the European official data, Costa Rica directly exported 615 tonnes to Europe. According to Procomer, the export quantities were three times higher (1.8 thousand tonnes) than official European data. This could mean that some quantities reached Europe via intermediaries.

Tip:

  • Learn from developing country exporters that already have a share of the European import market, such as the Philippines, Indonesia, Sri Lanka, Malaysia, Vietnam and Costa Rica. It is especially important to check the strategies of the emerging suppliers such as Ghana or the Dominican Republic.

Which companies are you competing with?

Many producing, processing and export companies of desiccated coconut supply the European market. Each company has their own strategies for these exports. The examples listed below are illustrations of some of the leading exporters in the industry. Most of the competitors in the desiccated coconut industry produce several other products, and for many of them, coconut oil (crude and virgin) is the main export product.

Philippines

Although the Philippines is the largest producer and exporter of desiccated coconut in the world, the number of processing companies is small. Most of the desiccated coconut within the country is processed in about ten facilities. Among the processing facilities, three companies dominate production: Primex Coco Products, Axeleum Resources and Franklin Baker Company of the Philippines.

The Primex Group of Companies has the capacity to produce more than 60 thousand tonnes of desiccated coconut. They export more than 90% of produced quantities. The company is the world’s largest user of coconut as a raw material, processing an estimated over 8.5 million pieces of coconuts a day. Primex Group has ten different processing facilities, three of which produce desiccated coconut: Primex Coco Products (headquartered in the Calabarzon region), Primex Coco Davao (Davao Region) and Primex Isle De Coco (Bicol region).

Primex is very competitive on the European market and is able to reach different markets segments due to the quality of its products, food safety certification (BRCGS), organic certification (EU and Naturland) and Fairtrade certification. Also, at Isle De Coco, Primex has established a Foundation & Charity to help the Philippine farmers and their families and to encourage the shift from conventional farming to organic farming. Next to value-added coconut products (such as virgin oil, water, or spray dried coconut milk powder), the company also produces banana chips.

Axelum Resources is another company with a very high production capacity. Axelum has the capacity to produce 100 tonnes of desiccated coconut per day. The third of the largest desiccated coconut producers in Philippines is Franklin Baker Company, processing coconuts at two locations and exporting more than 20 thousand tonnes per year.

A best practice example of Franklin Baker is related to improving the sustainability and transparency of the supply chain. In this project, smallholders are supposed to sell their crop directly to Franklin Baker through farmer-owned cooperatives. Franklin Baker in turn will sell the processed coconut to Mars. This way, Mars and Franklin Baker will have access to a fully transparent coconut supply chain up to the farm level, in a cost-efficient manner. A transparent price mechanism will be defined to give more visibility to farmers and Franklin Baker and thus ensure the long-term stability of the supply chain.

Examples of other processors and exporters include: Peter Paul Philippine Corporation, Superstar Coconut Products, Celebes Coconut Corporation and Pacific Royal. For links to the websites of several other coconut processors read our study on coconut water.

Indonesia

Indonesia has a larger number of smaller and medium-sized desiccated coconut processors and exporters than the Philippines.

Indo Pacific Coconut claims to be the largest exporter of desiccated coconut from Indonesia. The company operates seven coconut processing facilities, five of them specialised in desiccated coconut production. They export to all continents and supply 300 clients with desiccated coconut.

Sambu Group is another large Indonesian desiccated coconut producer and one of the largest coconut product manufacturers in the world. The company is headquartered in Singapore, but it has facilities and plantations in Indonesia and the Philippines. The processing facilities PT Pulau Sambu (Guntung) and PT Riau Sakti United Plantations are specialised in the production of desiccated coconut. The company is well known among European importers and certified with different certification schemes, which allows it to reach different market segments.

There are several other desiccated coconut processors and traders from Indonesia. Some notable examples are: Sofi Agro Industries, Unicoconut, Universal Coco, PT Harvard Cocopro, GCO Indonesia and PT Global Berkah Berjaya.

Companies from Sri Lanka

A specific characteristic of the desiccated coconut export sector in Sri Lanka is the presence of a large number of small and medium-sized traders. Unlike the situation in the Philippines and Indonesia, where the largest processors are also the largest traders, many companies in Sri Lanka export but do not produce desiccated coconut. One of the largest exporters of desiccated coconut from Sri Lanka is Adamjee Lukmanjee and Sons, a company specialised in the export of a wide range of coconut products and spices. Other notable exporters are Expolanka, Silva & Sons Lanka (part of Silvermill group) and Stassen Group.

Companies from other supplying countries

Examples of other desiccated coconut suppliers to Europe are:

Tip:

Which products are you competing with?

As desiccated coconut has a unique flavour and other sensory characteristics, there is no real substitute product. The only products that can provide a similar flavour are other coconut products, but many of them cannot be used as real substitutes in the pastry and chocolate industry.

However, several other products are produced from the white coconut kernel and as such, they can be considered competitors. The main value-added product produced from coconut kernels is virgin coconut oil (VCO). An estimated two tonnes of desiccated coconut production capacity are lost for every tonne of VCO being produced. With more desiccated coconut factories converting part of their capacity into VCO production, this will have an increasing impact on desiccated coconut output. A decreasing number of desiccators could therefore mean higher prices for desiccated coconut in the near future.

Tip:

  • Read our study on fresh coconut to understand fresh product competition.

4. What are the prices for desiccated coconut?

Desiccated coconut is considered a commodity, and prices mostly depend on the production situation in the main production countries. Particularly, the crop and harvest situation in the Philippines and Indonesia most significantly influence global price developments. When the harvest of those two leading suppliers decreases, it usually means an automatic increase in prices, but if stocks are high the price change may not be significant.

During 2020 and 2021, prices of desiccated coconut increased due to the COVID-19 pandemic and a lower supply. For example, in the Philippines, the annual average price of desiccated coconut was 28% higher in 2020 than in 2019. This price reached a peak in January 2021, when it was the highest since September 2017. The Indonesian price was 44% higher in January 2021 than in January 2020. In Indonesia the price was 48% higher in 2020 than in 2019, in Sri Lanka 44%.

Figure 4: Average monthly export price of desiccated coconut, FOB, US$/tonne

Average monthly export price of desiccated coconut, FOB, US$/tonnen

Source: International Coconut Community

Very roughly, the cost, insurance and freight (CIF) price can be estimated at around 35% of the retail price. The best option to monitor prices is to compare your assortment with the largest competitors. The table below shows a very rough price breakdown:

Table 1: Desiccated coconut price breakdown

Steps in the export process

Type of price

Price breakdown

Example (price related to one kg of desiccated coconut)

Whole mature coconut collection (9 nuts)

Farmer price

20%

€1

Processing and packing

Wholesale domestic price

30%

€1.5

Truck transport to port, loading on the container

FOB

32%

€1.6

Shipping and customs clearance

CIF price

34%

€1.7

Intra-European distribution

Wholesale and/or re-export price (including value-added tax) bulk packaging

45%

€2.2

Repacking and sales to retail

Wholesale retail packaging

60%

€3

Retail sales of the final packed product

Retail price (200 g pack)

100%

€5

Source: Autentika Global, compilation based on industry sources

Note: The breakdown of prices above is only intended for orientation and cannot be used as a precise indicator. Aspects that must be taken into account when considering prices are:

  • The final retail price is not very relevant, as most desiccated coconut in Europe is used as an ingredient in the food processing industry.
  • The price paid to farmers for mature whole nuts varies from month to month and between countries. The starting base of this calculation was based on the assumption that 9 mature nuts are used to produce 1 kg of desiccated coconut and that the farmer price for one nut was 6.5 Philippine pesos (equal to €0.11).
  • FOB prices constantly fluctuate. The above calculation is based on the assumption that the average FOB price is 1.5 €/kg.
  • Retail and other margins can vary considerably compared to the example above.

Tip:

This study has been carried out on behalf of CBI by Autentika Global.

Please review our market information disclaimer.

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Catz

Consumer support for sustainable ways of doing business is increasing and this trend is expected to continue in the years to come. Meanwhile, upcoming legislation will make due diligence management mandatory for European companies. Most of the large coconut industries already require suppliers to go through third-party sustainability audits. Considering these developments, we recommend desiccated coconut producers to look into audit programs, such as SMETA, to improve the sustainability performance of their supply chains. As the largest single buyer of desiccated coconut and coconut-related products in the world, Catz International is able to assist producers and inform customers about these possibilities.”

Henk Moerman, Managing Director, Catz International