Madonna is Crazy for Coconut Water
Apparently, Madonna liked the juice of green coconuts so much, she's throwing marketing ideas to the Vita Coco management, and is talking about making a follow-up investment, according to The Post.
Coconut water has been gaining trendiness over the last couple of years, moving out of inner-city bodegas, where its main audience had been immigrants from the Caribbean and Latin America, and into the realm of hipster chic. With Madonna's seal of approval, it could go mainstream.
The market could be ripe for growth -- no pun intended. Several companies are already promoting coconut water as both a healthy substitute for sports drinks and a trendy mixer for cocktails. Vita Coco has reportedly turned down overtures from both Pepsico (PEP), which already owns two brands of coconut water in Brazil, and Coca-Cola Co. (KO). A rival coconut water brand, Zico, last year sold a minority stake to Coca-Cola, and another brand, O.N.E., signed a distribution agreement with Pepsi.
Lucky Stars? In High-Profile Investments, Not Always
But keep in mind, celebrity investors are not the same thing as investment celebrities. Madonna is nothing like Warren Buffett.
Any number of celebrities have put their money and fame behind various ventures -- U2 frontman Bono co-founded Elevation Partners, a Silicon Valley tech fund, and Bruce WIllis just signed up as an investor in distiller Belvedere SA -- but a having celebrities attached to your business is no guarantee of success. The company has to live and die by its own product.
Remember Planet Hollywood? The chain of restaurants was supposed to take on the Hard Rock Cafe, and it was a natural fit for movie stars like Willis, Arnold Schwarzenegger and Sylvester Stallone. For a while, it was flying high, and spawned imitators like the Fashion Cafe (models) and the All-Star Cafe (famous jocks). Then it overreached, opened too many restaurants and ended up with a trip to bankruptcy court, followed by a couple of sequels. Star power turned out to be no substitute for prudent management.
The investors apparently learned their lesson -- except perhaps for Arnold, who's trying to bail out California. Willis got a 3.3% stake in Belvedere in exchange for promoting its vodka, and his ex-wife Demi Moore -- another former Planet Hollywood investor -- made a smaller investment in Vita Coco than Madonna. Even stars sometimes have to start small.