February 4, 2018

Harmless Harvest, a San Francisco-based producer and marketer of fresh, minimally processed organic coconut water and probiotic beverages, has secured $30 million in growth capital through a round led by Danone Manifesto Ventures. The round also included Mousse Partners, AccelFoods, and other existing and new shareholders.

Founded in 2010 by Justin Guilbert and Douglas Riboud, Harmless Harvest conducts an ecosystem-based seed-shelf business model, meaning the business is invested in supporting its suppliers and employees, from the coconut growers in rural Thailand to employees in the U.S.  Additionally, it is a Fair for Life certified company, meeting rigorous and independent benchmarks for environmental sustainability, fair wages, healthcare, and well-being.

“Harmless Harvest was developed to force the conventional food industry toward a new set of standards that includes all stakeholders, from soil to stomach, with a demonstrable benefit for all,” said Justin Guilbert, co-founder of Harmless Harvest. “We are excited to reach this milestone and partner with Danone Ventures, Mousse Partners and AccelFoods as we enhance our ability to offer the world more nutritious, organic and delicious food.”

Nuts for Coconuts

Harmless Harvest has become a leader in a rapidly growing consumer category driven by shifts toward plant-based health and wellness.

Coconut water became known to Western societies during World War II. When saline solution supplies grew short, coconut water was a close substitute used in IVs. Today, coconut water has grown to be global industry worth more than $300 million.

Between 2008 and 2012 global coconut water product launches increased by 540 percent, according to Mintel. This growth has been driven in large part to health concerns and the perceived benefits of the product. Coconut sugar has a low glycemic index, is high in electrolytes, and is not only plant-based, but is dairy-free and gluten-free.

Seventy-five percent of production is generated in three countries: Indonesia, India, and the Philippines. In Indonesia coconut exports increased from a value of $800 million in 2010 to $1.65 billion in 2014, according to Samit Chowdhury, head of the Coconut Knowledge Center for Tetra Pak International, in Singapore.

Meanwhile, food and beverage consultancy Zenith Global concluded that the overall alternative water market saw 21 percent growth last year, to reach a value of $2.7 billion, which is expected to double in size to reach a value of $5.4 billion by 2020, reports FoodBev. Meanwhile, coconut water, the category leader, is forecast by Research and Markets to see a compounded annual growth rate of 26.75 through 2020, driven largely by key multinationals such as PepsiCo and Coca-Cola buying in.

Plant-Based is a Plus

Coca-Cola has noted the potential not only in the coconut water category, but the plant-based beverage category as a whole. In 2012 the global giant acquired a minority stake in California-based L.A. Aloe Inc., a producer of certified organic aloe water beverages for an undisclosed amount, through its Venturing and Emerging Brands (VEB) unit.

Created in 2007 as a vehicle through which Coca-Cola could diversify and identify promising brands to back, Coke’s VEB unit’s portfolio includes Honest Tea, Zico coconut water, and Suja Juice. Other recent acquisitions include soy-based beverage company AdeS from Unilever for $575 million and the addition of China’s Culiangwang Beverages for $400.5 million.

As soft drink sales continue to weaken, key plant-based food and beverage categories are widely outperforming their traditional counterparts. Food Business News reports that growth in the plant-based meat, tofu, milk, yogurt, cheese, and cream segments has seen growth exceeding 8.7 percent over the past two years, compared to growth of 3.7 percent for the traditional segments over the same time period according to data from the market research group SPINS.

In the light of such growth, the largest food companies have stepped up their investment interest in startups within the emerging segment. Hormel Foods, AccelFoods, Kellogg, General Mills, and Campbell Soup are just some of the field of rivals looking to capitalize through investments in the natural, free-from and organic food and beverage space.

-Lynda Kiernan