Zico was sold to Coca-Cola in 2013 at the height of the coconut water craze, but now its founder is buying it back

  • Zico coconut water's founder is spearheading an effort to keep the brand alive after Coca-Cola initially laid out plans to eliminate the brand last October.
  • Mark Rampolla, who founded Zico in 2004 and is now a managing director at PowerPlant Ventures, told Business Insider that Coca-Cola failed to provide strong leadership and expand key areas, such as its mainstay coconut water.
  • As part of Zico's sale to PowerPlant Rampolla said a new executive team will lead the business. Ultimately, options including another sale or an IPO are on the table, Rampolla said.
  • Visit Business Insider's homepage for more stories.

In less than a decade, Zico coconut water went from one of the fastest-growing upstart beverage brands to one of hundreds Coca-Cola decided to relegate to the history books.

At least, that was its trajectory until Mark Rampolla read about the beverage giant's reported plans to kick the brand as part of a culling of its portfolio last October.

"I immediately reached out to my contacts at Coke and asked them if it was true, and I let them know that we as PowerPlant might be interested," he told Insider in an interview. 

Read more: Serial food entrepreneur Mark Ramadan secured a $340 million deal with Mondelez for chocolate brand Hu. Here's how he prepped the brand for acquisition in just over a year.

Rampolla had founded the coconut water brand in 2004. By 2013, Zico had helped make the coconut water mainstream, racking up sales and touting it as a healthy alternative to traditional soft drinks. Toward the end of that year, Coca-Cola acquired Zico in full after taking a minority stake for $15 million in 2009. Rampolla ultimately moved on to other projects.

Now a co-founder and managing director at PowerPlant Ventures, which invests in food and beverage companies, Rampolla huddled with his team to see whether they might acquire the company he helped found. Eventually, they made a bid, and Coke agreed to sell the company to PowerPlant. Rampolla did not disclose the price PowerPlant paid for Zico.

A Coca-Cola spokesperson did not say whether the beverage giant had considered selling Zico before confirming plans to phase the brand out in October. The spokesperson said that Coca-Cola "made the decision to shift our priorities away from Zico and focus on brands we can expand globally."

"We are incredibly proud of the work we achieved growing Zico when it was a part of The Coca-Cola family of brands and wish PowerPlant Ventures continued success as they take the Zico brand on a new journey," the spokesperson said.

'I'm surprised that Coke has not done a better job at distribution'

Under the deal, PowerPlant will acquire "the brand, not the business" of Zico, Rampolla said.

The new entity, called Zico Rising, will re-establish relationships with retailers and other customers that sell Zico. "We are in the midst of rebuilding everything from scratch, but with a running start," he said, adding that the ownership transition should be "almost completely seamless for consumers and for retailers."

Coca-Cola attributed its initial decision to phase out Zico to a broader reorganization of the company, which has also involved getting rid of smaller brands like Tab or Delaware Punch. But Rampolla, who left the brand shortly after its sale to the Atlanta-based soda maker, pointed to challenges within Coke's division for emerging brands as well as some strategic decisions as reasons why Zico didn't meet expectations.

Leadership at Cocoa-Cola's Venturing and Emerging Brands unit, which the company says works with up-and-coming brands "with a billion-dollar potential," has changed frequently in the time since Zico joined the company.

"That's difficult," he added. "Having consistent management and oversight of a brand during this critical hyper- and emerging growth period is really important."

Under Coke, Zico introduced new products, such as new flavors, drinks that blended its coconut water with fruit juice, and a special version of Zico focused on rehydration. Meanwhile, Rampolla said, Coca-Cola missed opportunities to grow the distribution of the original product that made Zico famous.

"I don't think they're bad products, I just don't think it was the right thing at the right time for the brand," he said. "There was a lot more work to be done with the core."

"One of the complaints I would hear from people all the time is how limited the distribution was on the core plain coconut water," he added. "I'm surprised that Coke has not done a better job at distribution, and I'm excited to see that there's still a lot of upside just in distribution alone."

Exactly which course Zico charts forward isn't clear yet, Rampolla said. Under PowerPlant ownership, Zico will be headed by CEO Thomas Hicks and CFO Alan George, both of whom have experience turning around and integrating brands at companies including Naked Juice and Monster Energy's former portfolio of natural beverages. The team will evaluate its options over the next year, Rampolla said, including some ideas for growth that were on the table in 2013 but never were pursued by Coke.

In the long run, Rampolla added that he sees several potential fates for Zico, including a combination with another company, an IPO, or continuing to operate as its own business.

"There's a lot more options available today than there were 10 years ago," he said. "What I believe is that healthy beverages are here to last, and there will be consumers, retailers, investors, and owners that support that."

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