Coconut water company The Vita Coco Company (NASDAQ: COCO) announced better-than-expected revenue in Q3 CY2025, with sales up 37.2% year on year to $182.3 million. Its GAAP profit of $0.40 per share was 34.6% above analysts’ consensus estimates.

Is now the time to buy COCO? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Vita Coco’s third quarter was marked by significant sales growth and a positive market reaction, as management credited strong consumer demand and effective execution in both the U.S. and international markets for the results. CEO Martin Roper highlighted the impact of improved inventory levels and two price increases in the U.S., explaining that these actions enabled the company to meet rising demand while navigating cost pressures. Management also pointed to the acceleration of the coconut water category in key regions, with Executive Chairman Michael Kirban noting, “coconut water remains one of the fastest-growing categories in the beverage aisle, growing 22% year-to-date in the U.S. and 32% in the U.K.”

Looking ahead, Vita Coco’s guidance reflects management’s expectation that category momentum will continue, supported by ongoing investments in brand development and supply chain flexibility. The company is closely monitoring the evolving tariff environment and is prepared to adjust pricing or sourcing strategies if needed. CFO Corey Baker stated that future margin performance will depend on the duration and scale of tariffs, as well as the company’s ability to offset cost increases through pricing and logistics efficiencies. Management emphasized that additional price increases would be considered only if tariffs remain elevated, while also seeking tariff relief through trade negotiations and supply chain adjustments.

Key Insights from Management’s Remarks

Management attributed the quarter’s outperformance to robust category growth, successful pricing actions, and increased international penetration, while also flagging tariffs and logistics as key areas of focus.

• Category Expansion Drives Growth: The coconut water category showed strong growth in both the U.S. and international markets, with particularly high momentum in Europe. Management noted that the U.K. and Germany are in earlier stages of category development, providing a long runway for growth.

• Strategic Price Increases: Two U.S. price increases in 2025—a mid-May adjustment for inflation and a mid-July adjustment for new tariffs—helped counteract higher costs. Management reported that price elasticity (the degree to which demand changes in response to price) has been within expectations so far, but continues to monitor for further shifts.

• Walmart Distribution Reset: The company expects a mid-November reset of its Walmart juice aisle presence, which is anticipated to increase total distribution points above previous levels. However, management acknowledged uncertainty around competitive dynamics and shelf space allocation with this reset.

• Private Label Dynamics: Vita Coco’s private label business remains strategically important, despite some lost regions earlier in the year. Management highlighted new private label wins set to start in early 2026 and noted increased retailer inquiries as the category accelerates.

• Tariff and Freight Volatility: The company’s cost of goods was affected by new U.S. tariffs, with a blended tariff rate estimated at 23% by year-end. Management is pursuing supply chain adjustments, such as diverting production to other regions, to mitigate tariff impacts, and benefits from softening ocean freight rates could provide further cost relief.

Drivers of Future Performance

Vita Coco’s forward outlook centers on sustaining top-line growth while managing input cost volatility, especially tariffs and freight rates, and sustaining brand investments.

• Tariff Mitigation and Pricing Actions: Management is prepared to implement additional price increases if tariffs remain high, but will evaluate the competitive landscape and potential trade relief before moving forward. Plans are underway to diversify sourcing away from Brazil to limit exposure to the highest tariffs, and the company is actively engaged in trade discussions to seek tariff exemptions.

• International Growth Investments: The company is increasing investment in Europe, especially in the U.K. and Germany, where coconut water consumption per capita remains below U.S. levels. Management sees the potential for these markets to eventually match U.S. sales, citing favorable demographics and health trends.

• Product and Channel Initiatives: New product launches, such as Vita Coco Treats, are driving incremental consumer engagement. Management expects further distribution gains for Treats and expanded shelf presence at major retailers, while also leveraging multipack strategies to boost household penetration and repeat purchases.

Catalysts in Upcoming Quarters

In the coming quarters, StockStory analysts will be monitoring (1) the pace and effectiveness of Vita Coco’s tariff mitigation strategies, including sourcing diversification and potential trade relief; (2) the execution and impact of expanded distribution, especially the Walmart set reset; and (3) sustained international growth, particularly in Europe as brand-building investments continue. Additional focus will be on the performance of new product launches and the balance between volume growth and pricing power.

Vita Coco currently trades at $45, up from $42.29 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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