Strategy: Coca-Cola wants to dominate a $7 billion industry with a new type of beverage that's taking over the world (KO)

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Coca-Cola is turning to a new beverage to win over customers as anti-sugar shoppers ditch soda. Coconut water is estimated to become a $7...

Coca-Cola is debuting new flavors for its Zico coconut water brand.

Coca-Cola is turning to a new beverage to win over customers as anti-sugar shoppers ditch soda.

  • Coconut water is estimated to become a $7 billion market globally by 2021.
  • Coca-Cola wants to own the category with its Zico brand, debuting flavors like jalapeño-mango and a new line of coconut water that's blended with cold-press juices.
  • Healthy options are increasingly important to beverage giants like Coca-Cola and PepsiCo — making Zico and other drinks like it key to understanding Coke's future.

Coca-Cola is turning to a new beverage to win over customers as anti-sugar shoppers ditch soda.

Zico, Coca-Cola's coconut water brand, is emerging as a bright spot in the beverage giant's portfolio.

"Coconut water is — and is perceived to be — a better-for-you product," Tom Larsen, Zico's general manger, told Business Insider.

By 2020, Coca-Cola executives estimate that coconut water will be a $1.5 billion category in the US. Globally, market-research firm Technavio estimates that the market for coconut water will go from roughly $2 billion in 2016, to more than $7 billion in 2021.

That's not to say that taking a new beverage from niche to mainstream isn't without its complications. While coconut water's popularity is exploding, it still takes new customers some getting used to.

"The taste can be a bit polarizing for some," Meghan Seidner, Zico's vice president of marketing, said.

According to Seidner, it can take customers six to seven times drinking coconut water before they're "really digging it." The best way to fix that is to get them hooked on new flavors, which is one of Zico's biggest focuses recently.

In addition to unflavored coconut water, Zico also comes in flavors such as chocolate, watermelon-raspberry, and jalapeño-mango, the most recent addition.

On Friday, the brand unveiled new organic juice-coconut water blends, called ZICOCocoLixir. The new beverages — which allude to their veggie-stuffed status with names like Unbe-leaf-able and Turn Up The Beet — tap into two of the fastest-growing beverage categories: coconut water and cold-press juice.

Fusing together two health-centric drinks may seem like a stretch for Coca-Cola, a company best known by casual shoppers for its signatures colas. However, Seidner and Larsen say that Coke's backing and Zico's position in its "Venturing and Emerging Brands" category is crucial to setting the drink apart from the competition.

"We're going to be a total beverage company across the globe," Larsen said, citing Coca-Cola CEO James Quincy's oft-repeated mission for the company's future.

The better-for-you beverage category is increasingly crucial in the beverage category, as PepsiCo and Coca-Cola acquire and invent new brands to win over health-conscious shoppers. Pepsico, for example, launched a new sparkling water brand called bubly in February, with hopes of cashing in on the $1.2 billion sparkling-water category.

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