Thanks to a significant rise in the usage and popularity of coconut-based food and beverage products, the ASEAN market has seen a steep increase in demand. In addition, there is also additional demand for cosmetic products derived from coconut oil. In 2012 the coconut products market was worth $12.75 billion but is expected to rise to $31.1 billion in 2026 which is an increase of 143%.
Countries in the Asia-Pacific region account for the highest volumes of the world’s coconut production, with the Philippines in first place, followed by Indonesia, Vietnam and Malaysia. Whilst the increase in usage of coconut-based products in food, beverages and cosmetics has ignited the growth of the world’s coconut products market, a slight decline in coconut production in comparison to rising demand is hindering market growth. The signs are however that an increase in demand for coconut-based products and the consumption of processed food products due to increases in urban populations are expected to create profitable opportunities in the not-too-distant future.
Why have coconut-based products become more popular?
Coconut is a very versatile product which is suitable for a wide range of uses and offers a number of health benefits. Increases in demand for coconut products such as coconut water, coconut oil and coconut milk in the food and beverage industry are major factors driving the global market.
Consumers are increasingly switching to towards foods which help to improve fitness and health. As such there is a preference for products which are low in sugar or caffeine free, resulting in an increase in demand for coconut water as a natural alternative to carbonated drinks, for example. In addition, coconut oil is widely recognised as being beneficial for skin and hair and is now used in many cosmetic and personal products such as soaps, shampoos and oils. Coconut milk is widely used as an alternative to dairy products and has become increasingly popular thanks to its high nutritional content, whilst desiccated coconut is often used as a substitute for grated fresh coconut in dishes such as curries or in baked goods.
Which market segments have seen the biggest growth?
In 2019 the coconut oil segment accounted for approximately half of the world’s coconut products market because it is used in a huge range of skin and hair care products across the globe. On the other hand, it is the coconut water segment which has been forecasted to register the fastest compound annual growth rate (CAGR) of 23.8% due to a rise in the trend towards health and fitness, alongside an increasing demand for natural alternatives to sugar-based and caffeinated energy drinks.
In 2018 the cosmetics segment accounted for the largest share as it contributed to around three-fifths of world’s coconut products, due to an increase in the use of coconut-based hair and skin products, combined with an increasing trend towards the use of organic ingredients in beauty products. The Asia-Pacific region held the largest share of the global coconut products market in 2018; accounting for almost three-fifths of the market. Furthermore, it is anticipated that the Asia-Pacific region will register the fastest CAGR of 14.3% in the period up to 2026.
Who are the key players in coconut agriculture?
Vita Coco, a US-based company and The Coconut Company which is based in the United Kingdom and specialises in organic coconut products, are amongst the key players alongside Bangladesh’s Marico Limited and Metshu Exports, a Sri Lankan based company. Key players in the Asia-Pacific region include Indonesia-based Sambu Group, Universal Coco Indonesia, Thai Coconut Public Company Limited and Harmless Harvest.
The problems faced by coconut farmers
Things aren’t always plain sailing for the coconut producers though as small-scale farmers are facing threats from rapid expansion of the palm oil industry – an issue we covered in a previous blog post – and low prices for their coconut crops. Indonesia and the Philippines account for the majority of the world’s coconut production. However, as the palm oil industry rapidly expands, helped in part by generous government subsidies, small-scale coconut farmers are finding it hard to adapt. Whilst the low price of palm oil has given it the edge, demand is continuing to rise for high quality coconut oil products, appreciated for their comparative health benefits and advantages in sustainability.
Also on the positive side, thanks to a growing demand for high value coconut products in Europe and North America, a number of ventures are now in place to promote sustainable coconut farming. For example, the German development agency, GIZ, has partnered with the Rainforest Alliance, a US-based non-profit organisation, and Cargill, an agribusiness giant, to develop a scheme to create a sustainable, certified coconut oil supply chain, resulting in over 1,500 farmers being certified.
Another such project is the Vita Coco Project, founded by US-based Vita Coco, who work with coconut farming communities in the Philippines to help them face the challenges posed by weak infrastructures and outdated farming practices.As such, the farmers involved are now reporting increased productivity and higher incomes. Although there’s no doubt that schemes such as this are meaningful, the West’s demand for high-value coconut products only accounts for a tiny fraction of coconut production in Indonesia and the Philippines.
Recruitment for the coconut agricultural sector in the Asia Pacific region
Looking to the future it will be very interesting to see whether the popularity of coconut-based products will continue and how farming communities across the Asia-Pacific region adapt to meet demand. There is likely to be continuing demand for recruitment in the Asia-Pacific region, particularly of candidates with expertise in supply chains, manufacturing, agricultural commodities and plant nutrition.
About Peak Recruitment
We are industry recruitment specialists to the Food & Beverage, Animal Agriculture and Crop Agribusiness markets in the Asia Pacific region.
Because of this specialism, we aim to build close relationships with aspirational clients as well as creating a talent pool of the strongest candidates in the industry.