Nick Erker: Hey, there. Welcome to Get the Scoop with Smirks Podcast, where bulk ingredient conversation happens. We’re sharing our knowledge and expertise as bulk ingredient importers, tapping into the latest trends we are seeing and commenting on what that means for natural food businesses as they approach ingredient purchasing, product development, and marketing. You’ll hear the latest market reports, ingredient specifications, and product applications from Smirk’s in-house experts, as well as origin stories from our growers and processors around the world. Listen in for the scoop on what’s happening with bulk ingredients.
Nick Erker: Hello, and welcome to our Get the Scoop with Smirks Episode 3. In this episode, we’re going to talk about some of the trends and insights that we saw at Expo West and the general buzz that Smirks felt at the show. Next, we’re going to do a deep dive into a product category, this time focusing on coconut products. And in our third segment, we’ll wrap up the show with our market report. So, for those of you that may not know, Expo West is the largest natural products trade show in the United States, held in Anaheim, California. Every year, thousands of companies from across the globe come together to showcase their latest products and innovations. Last month at Expo West there were over 65,000 people in attendance and some 3000 companies that were exhibiting. Today I’ve got Donny Edson and Jessica Warden with us who both attended the show. Smirks had ten people from our team at the show this last year. So Donny and Jessica, what was the general vibe at Expo West this year and how did it compare with the previous shows?
Donny Edson: I thought it was a great show this year. Certainly, a lot more confidence for everybody, a little bit more certainty in what’s going on inside of the industry. Last year was really the first Expo West coming off COVID no one really knew what everything was going on. Everybody was just trying to get their bearings a little bit. But this year it seemed a lot more focused. We saw more innovation happening this year as well and just the general vibe of everybody was really good. It was a busy show. It wasn’t too busy in 2019. That’s the busiest show I can remember, and it was almost too many people because you were shoulder to shoulder everywhere so it was hard to have a focused meeting with somebody. There was just so much going on. I thought it was just the right amount of people. We started off in the organic marketplace or fresh ideas tent this year and that’s the very first thing that opens to start the show. And the amount of retail buyers that we saw was up a lot compared to years past, so it was really nice. It’s meant to launch your brand or get your brand out there in front of the retailers. It’s a retail show, right? So, if you have a product and you’re trying to get on the store shelves, that’s the purpose of going. Smirks still likes to go because although we don’t sell a packaged good to the retailers, we sell to a lot of the companies that are there. So, we get to at least understand some of the innovation that’s happening, see some trends that are happening in the industry, meet with customers. We do meet with retailers there as well, but that’s not our purpose of being there. But it’s good for the exhibitors when there’s a big retail presence there because the more stores that carry their products, the better it is for everybody in the industry. So, I really thought it was a productive show. Again, the vibe was so much better than a year ago. It rained, so that was a little bit unpleasant, but what are you going to do? But overall, I really thought everyone was doing a good job and I did see some innovation happening there as well. We’ll talk about some of the trends here a little bit later on.
Jessica Warden: Yeah, I definitely think I would echo all of Donny’s comments. For me, it’s pretty interesting and unique in that even though I’ve been with Smirks for almost four years now, this was only my second expo because I started kind of right ahead of the pandemic. So I really only have one other year to compare it to. And I would definitely echo what Donny said, where people just seem to have a really great attitude and vibe about what was happening, whereas last year it was still kind of everybody was dusting off the cobwebs and getting back into trade show shape. And I don’t know how many people even this year were just like, man, I forgot what it’s like to be at Expo. It’s so big and it’s so much to walk and take in. So again, for me, only having been there for the second time, I thought it was really great for what I was there for. I got to see several of my customers, meet with folks that I’d been emailing with, maybe met throughout 2022 and really got to meet them for the first time in 2023 or just rekindle those relationships of people we’ve already worked with. So, I think overall, that’s what we go for. And I know a lot of our partners go for those same reasons. And so, it’s very nice to just sit down, have those face to face meetings all in one place and really just get together with things.
Nick Erker: So, Jessica, what was some of the interesting product trends that you noticed there at Expo West this year?
Jessica Warden: One of the things I kind of really thought was interesting is that we’re really seeing a lot of that functional food element really kind of over the last several shows has kind of been a presence since the pandemic, right? People are wanting to as they’re snacking, they’re wanting that snack to not just be for fuel and calorie intake, but also to have that health benefit. So, I definitely think this show we were seeing some more of that where I saw a candy company, it was like chocolates. It was decadent, but it was supplements, actually. It was melatonin and different. I think Ashwagandha was one of them. And so it seems like people are really trying to really get that dual element to the things they’re eating. It’s not just for food and sustenance, it’s also for health benefits. I thought that was a major trend.
Nick Erker: You want to have your cake and eat it too.
Jessica Warden: Yeah, exactly. That’s what I definitely think.
Donny Edson: Okay. Yeah. I would say my favorite thing that I saw was the surplus of beverages available because I didn’t have to go very far to get a cup of coffee or a bottle of water handed to me. It was everywhere. I could not believe how much coffee and water was there. It was actually pretty incredible. But aside from that, some of the things that I kind of took, that I made note of almost, was it almost had a feel like people were trying to create nostalgic things, maybe in an innovative manner. So, when you think of we all grew up with peanut butter cracker sandwiches, right? But saw a nut butter company that was using making an oat cracker and putting peanut butter into it as a layered sandwich on there. I saw peanut butter and jelly all over the place, whether it was a new version of an uncrustable or it was a peanut butter and jelly chocolate bar or whatever it was. Maybe that’s just because that’s what I was directed towards. But it also felt like, as people were trying to do, maybe they had a new chip that was made out of it was a protein focused chip, but it was meant to be more like a Dorito. It seemed like to me that there was that kind of nostalgic feel that people geared towards things they grew up with a little bit more. And maybe that was just what I noticed too in some of the things. But certainly plant based proteins were still very prevalent at the show. I don’t know if they’re as big as they were in the past, but they were still very prevalent there as well.
Vegan was still a very big topic that we saw everywhere. A lot of people doing that, but then a lot of social responsibility things that are going on too in the industry right now. I know everybody wants more sustainability, want to be able to tell the story of their product, trying to do their part to make things better for what we leave behind us. So, there was a lot of stuff with carbon neutral or carbon accounting going on. A lot of transparency with certifications and audits and ways to fight climate change with that as well. So, we definitely saw that, which is not unusual, that’s the mindset of everybody at this trade show, so that’s not unusual.
But I did also notice a lot of innovation going on with nuts and seeds as well too. So, making crackers out of seeds or nuts. Saw a lot of innovation going on with walnuts, which is encouraging because I think it’s a great time to innovate with walnuts anyways. But we saw several different brands that were using walnuts, whether they’re making a walnut crumble that’s kind of a meat substitute, to just a flavored packaged walnut as well. So that was really cool as well.
And then still the plant-based beverages were very prevalent. I saw more innovation happening with coconut milk as well. A lot of brands were using coconut milk, which I think is great. It’s one of the most sustainable, easily sourced, price, effective ingredients you can get in that plant-based beverage market. One of the cool things we saw was more tetra packs of the coconut milk or coconut cream as well. And I think that the applications for those are really good when you look at things like aside from having at your house to make your coffee with every morning. But when you think about food service whereas coconut milk or coconut cream oils came in a giant tin can before and you had to cut it open and then figure out how to use it. Or it came in a big bag and you had to cut it open, figure out how to use it. With these tetra packs or these resealable packages like this, if you’re a restaurant, you can get them and shake it up, pour out what you need, screw the lid on it, put it back in the refrigerator until your next application for it. So, I think that we’ll continue to see things happening along with those as well.
Also snacking, I know that it’s a trend, it’s a lifestyle now. I think a lot of people in our generation probably snack more than they go out for meals as they’re busy. So, a lot of snacks, a lot of things geared around that.
And then also I saw a lot of stuff with fruit. I really think that it’s still got a lot of upsides in the fruit category and the innovation that’s happening with fruit. Whether it’s a dried fruit that’s crunchy, whether it’s a fruit that’s been ground up and extruded into a bar, whether it’s a fruit jerky, people like fruit and they like single ingredient fruit where there’s not sugar or other fillers or junk added to it, it’s just fruit. It’s sweet and tasty by itself. So, I think people are going to continue to find ways to get their daily fruit intake in, but in more innovative ways as well.
Jessica Warden: And hearing you kind of recap some of those different things, I would definitely tag on to the sustainability piece where we’ve started to see a lot of that upcycled trend and that’s certainly not going away. So we’re seeing a lot of as far as that storytelling aspect, people taking the byproducts or things that would typically be byproducts and finding really innovative ways to use them. And I don’t think that will really go away. I think basically that will just continue to gain momentum as we go from show to show and from brands just again kind of anchoring their whole product line on what people before would consider an afterthought or a byproduct. So that’s been really encouraging in the sustainability realm.
And then from the plant-based perspective, I think for sure it’s not going, you know, to Donny’s point where maybe not as prevalent as it might have been in the past. But I think the reason that maybe it doesn’t feel as prevalent is because it’s becoming more of a household term, right? It’s not this new term anymore. It’s kind of just every day and then we’re also seeing instead of it just being tied to meat alternatives or a dairy alternative, it’s now being launched into these other categories. So, plant based, that’s how it’s kind of seeing its innovation is. It’s tackling other categories like dips and dressings and things that weren’t the obvious, like let’s have a chicken nugget made out of seeds. Now it’s like let’s have a mayonnaise made out of whatever. And so, it’s kind of neat to see those continue along. And then from the dried fruit perspective, I think what was really encouraging about that is the Smirks itself kind of decided ahead of the show to really feature a single ingredient snack type option and we get to the show and it felt very in line with what the industry was calling for and demanding. And so that was really encouraging from our standpoint of we’re really trying to foster and bring things to market that seem like everybody else is clamoring for.
Nick Erker: So, was there any surprises that you guys saw at the show? Whether it was a conversation or a product or something that really stood out? Did you have any surprises this year?
Donny Edson: I was shocked at how much waters there were, and it could be just there was a hop flavored water, almost like you’re trying to taste an IPA, but it’s water with a lot of waters, a lot of different beverages from that side of stuff. So, a few years ago it was energy drinks, right? It used to be all the energy drinks that came out. This year it was just water for different kinds of sparkling waters and applications with that I would say was very interesting.
Jessica Warden: Also, just stuff to put in the water, right? So, it’s like the water category is growing and different ways to consume it, but then it’s the powders, the hydration powders and different things. And I think there’s one brand that’s like a tablet that you put inside the water to make it fizzy. So instead of it being the sparkling water as a finished good, it was let’s have tap water and make it something more. And so, I thought that was pretty interesting and innovative.
Donny Edson: I did see a lot of functional food applications too. A lot of mushrooms being used in things as well. A lot of probiotics being used in things as well. Again, where they’re just adding it in to get more probiotics inside of it. But I do think that they’ll continue to see that happening, especially in the snack categories where they’ll start to add the stuff in. Mushrooms were in jerkies, juices, creamers, coffees. So, the mushrooms were happening a lot inside of there. Boba tea was really popular too, with tapioca pearls. We even saw where you can they make a gummy, a boba style gummy out of like a coconut gel as well too. So, you can get that too, where it’s a different application. But boba seems to be trending, at least with my younger niece, who’s obsessed with boba and all of her friends right now. So, I think a couple of generations under us are really into boba right now. I’ve seen it pop up everywhere. Even I picked up some cup of the mandarins for my kids, and they have them now with the tapioca pearls inside of there too. Little boba pearls just for the mainstream cups of food that we’re seeing in the grocery store here too. So that was interesting.
Nick Erker: Well, thanks for giving us a recap on that, guys.
Coconut Product Feature
Nick Erker: Donny, what do you say we talk a little bit about coconut products.
Donny Edson: Now it’s time to do a deep dive into a product. I thought it would be fun to highlight some ingredients that were prevalent at Expo West. While there’s so many to choose from between nut seeds, dried fruits, and gluten-free flowers. I thought it’d be really good to talk about coconut.
Coconut is one of the main ingredients that Smirks works with. In 2022, we sold over 20 million pounds of coconut products. Granted, there are a lot of products when you talk about coconut. Coconut is actually known as the tree of life. You can use every piece of the tree to do something with. For Smirks, our biggest ingredients with coconut are coconut sugar, coconut milk powder, coconut cream, and coconut oil. Coconut milk and coconut cream are definitely one of the items that are trending right now. And we continue to see a lot of innovation happening and a lot of growth with. What’s nice about coconut milk and coconut cream is that it is a plant-based beverage. It is a non-dairy beverage. It is very versatile. In addition to that, when you look at some of the other plant-based beverages, whether it be almond milk, cashew milk, or oat milk, those are all items where you have to take an ingredient after it’s been harvested and processed and completely reprocessed further down the line to get to the finished product. Where with coconut milk and coconut cream, It’s just part of the processing. When they make these ingredients, all they do is take the coconut meat, they grind it down and out comes the coconut cream. So, you might be asking what’s the difference between coconut milk and coconut cream? And truly all it is the fat percentage. When you grind coconut down, the fat level is between 30 and 32% fat. The most common item used is coconut cream which is considered at 24% fat. Coconut milk is somewhere between 17 and 18% fat. All this is the base that’s 30% fat with water added to it to make it a little bit thinner depending on what your application is.
Some of the cool things we’re seeing happening with these are Starbucks keeps it as a mainstay right now that you can use inside of your coffees or your lattes. Ice creams and yogurts are very popular with them. They react very well when making these things. They make a nice smooth, creamy texture. And again, you can vary with how much fat you have inside of it to make it a runnier one or a thicker one depending on what your application is. So that’s some of the really good stuff that we see made out of coconut milk and coconut cream. In addition to that now it’s just fun to cook with. It makes really good soups, it’s really nice in the vegan world as well, but it’s great for people who just want a different flavor inside of their products too.
Some of the origins that we see that primarily the coconut milk and cream come from are Indonesia, Vietnam, Sri Lanka, and the Philippines. The packaging options are endless. Our bulk users use it anywhere from 2000-pound totes down to 400-pound drums down to 44-pound cases. That’s just a bag in the box. Now they have, as we mentioned, the tetra packs with anything from a 16-ounce up to a 32-ounce package that’s really good for food service but also just really good to put in your house and use. And again, the beautiful thing about this is it’s made into coconut milk or coconut cream at origin, packaged in the tetra pack and shipped to the United States. It’s not having to go through two or three different factories, be handled two or three different times. It’s very, very sustainable because there’s so many coconuts. So, it’s a really, really ingredient to look at using.
Another big item for Smirks is coconut oil. There are several different kinds of coconut oil. There’s RBD coconut oil, which stands for Refined Bleached and Deodorized. How RBD coconut oil is made is they take a crude coconut oil and run it through a refinement process to make it white, to make it odorless. When they run it through it removes all the impurities. So it also has a very high smoke point. One of the interesting things about RBD coconut oil is during the refining process it actually removes the coconut allergen as well. You’ll see RBD coconut oil and all kinds of stuff on the store shelves that you might not know about. It’s very, very popular for making popcorn. RBD coconut oil is the top oil that people like to use to make popcorn with because of its high smoke point and its neutral flavor. You’ll even see RBD coconut oil in your ordinary ice creams. If they take the RBD and they mix it in with a milk, it comes out to a product that’s just like heavy cream without having to pay the premium for heavy cream from the dairies. So, they’ll use RBD coconut oil to give you that rich texture that makes ice cream so creamy and so delicious as well. We sell a lot of RBD coconut oil to companies that cook potato chips in it, cook popcorn in it, that use it in their baking applications for cookies. We also sell a lot of it into the cosmetic sector. So, a lot of soaps and shampoos and lotions and other beauty products are made with RBD coconut oil inside of them.
Another kind of coconut oil is virgin coconut oil. Virgin coconut oil is made simply by taking desiccated coconut. So, if you can imagine the kind of coconut you just see in the store shelf that maybe you go home to make a coconut cream pie with or a coconut cake. They take the desiccated coconut and they run it through an expeller and out comes the virgin coconut oil. There’s nothing added to it. There’s not any heat added to it. The only heat that’s produced is from the friction of the expelling machine. The interesting thing is that the byproduct of making virgin coconut oil is coconut flour. So, if you’ve ever seen coconut flour, that is the byproduct of making virgin coconut oil. So, every piece of the coconut is used when they make virgin coconut oil. Whether it’s used as oil or it’s used as a coconut flour, applications for virgin coconut oil are endless.
And as you go to different parts of the world, you’ll see that they use it for different things. The Philippines, there’s research that shows that it helps with Alzheimer’s. There’s research that shows that it helps with being bald. I haven’t tried it yet. People will use it to brush their teeth with. Personally, I like to use it if I get a sunburn. If I put a little bit of virgin coconut oil on my sunburn, it instantly soothes it and it seems like it goes away really quick. It’s one of my favorite things to use it with. But it’s also great if you’re just looking to cook something and you want a light coconut flavor inside of it as well. Another coconut oil is MCT oil. MCT oil is a fractionated oil which is liquid at room temperature.
Jessica Warden: It’s the coconut that does math problems, right?
Donny Edson: Yeah, exactly. Yeah, fractionated. Good joke. Jessica forgot you were there.
Jessica Warden: That’s what I’m here for, for the jokes.
Donny Edson: Most coconut is solid at room temperature because it’s so high in fat. Coconut oil is usually between 65 and 68% fat, so it is solid at room temperature. The fractionated coconut oil is liquid. So probably the most popular thing you’ll see it in is coffee. People like to pour it into their coffee. It’s very popular for the keto diet, and so that’s one of the main applications we see it go into. In addition to that, it’s very popular in the hemp world for when you’re making hemp oils, you can extract into the MCT, or also in the marijuana industry, too when you’re making the THC oils as well. So that’s what that one is.
Then we have one more oil that is referred to as unrefined coconut oil. Essentially what that is is a coconut pairing oil. So, it’s made in the same way that virgin coconut oil is made. When you’re processing a coconut, there’s really three elements to it. There’s a shell that gets removed. Then there’s a paper-thin brown membrane that we call a coconut pairing on the outside of the coconut, and they peel it off with a vegetable peeler, and they peel that off. About 60% of it is coconut meat. 30% to 40% of it is the pairing. So, they’ll take that and they’ll dry it and they’ll desiccate it, and they’ll run it through an expeller and then end up with the pairing oil. The interesting thing with the pairing oil is it has all the same characteristics and nutrients that virgin coconut oil has, but it’s darker in color, so it doesn’t look real good on a retail shelf. But it’s also a lot less expensive than virgin coconut oil. So, people who are baking something with it choose to use the pairing oil. So, if the color doesn’t matter, but you want the flavor of the coconut and you want the health benefits, that’s when you’ll choose to use the pairing oil or the unrefined oil with that.
Some of the other coconut products that Smirks specializes in would be coconut sugar. Coconut sugar is very, very popular right now. It’s very popular because it’s very sustainable. It gives back directly to the farmers who produce it, and it’s unrefined sugar that tastes delicious. Coconut sugar primarily comes from Indonesia and the Philippines, and the applications are anything you would use sugar in, you can substitute coconut sugar.
Nick Erker: What does it tastes like, Donny?
Donny Edson: It has a nice caramel flavor to it, almost like brown sugar, but a little bit more caramel flavor, to me, is how I like it. What do you think, Nick?
Nick Erker: Yeah, I think brown sugar. I use it a lot in baking recipes. I’ll substitute it for brown sugar, and it’s very nice. One of the other things, coconut sugar was one of the first coconut products that I really got excited about. And the thing that I think, in addition to the characteristics you already mentioned, is that it’s also a low glycemic index complex carbohydrate. So, it’s not like any other sugar out there. Even though you can use it as a replacement, that low glycemic index complex carbohydrate makeup adds some of that health benefit to it. To play off one of my puns earlier, it allows you to have your cake and eat it too, so don’t have to feel guilty about it.
Jessica Warden: Yeah, I mean, I eat it by the spoonful just sitting here at my desk, so it’s great.
Donny Edson: That’s why they call you the sugar mama.
Jessica Warden: Yeah.
Donny Edson: And so, some of the applications, though other applications that we see going into are straight retail packs for people who want it for the store shelves that way. But also works really well to make vegan caramels out of. People will use it with coconut cream and make a caramel sauce out of it. We see it go into cookies a lot, into granolas a lot, cereals, even into bars as well. Jessica, what else do we sell coconut sugar for?
Jessica Warden: Yeah, I was actually I was thinking of our cereal manufacturers who kind of pair it even with some of the other, I guess, hardier, healthier items that make them taste a little bit better. Going back to the whole healthy food, used to taste like cardboard, and now it really doesn’t because of ingredients like coconut sugar. And some of the different innovations with those types of items. Even coconut milk and cream make things just taste fantastic, and they’re still really healthy for you.
Donny Edson: We’ll do a whole podcast on coconut sugar one time when we can bring on a couple of our processors to tell you the stories live from Indonesia and how they got into it because it’s such a cool ingredient, how it’s made. It’s just a really innovative product and seems to be trending up still too. We continue to see a lot of demand for it, and we see a lot of brands that are switching to it or trying to find ways to use it as well. Seen it a lot in chocolate applications, too. Now they’re starting to make a lot of chocolate with coconut sugar, too, and other things they’re doing with it. They’re making it into a syrup or a nectar as well. You can use it when you want a liquid form for something.
And then probably one of the hotter products that’s come out in the last few years is coconut aminos. Coconut aminos is where they make syrup and then they let it ferment and they add sea salt to it. And it has that real, umami, flavor very much like a soy sauce without the soy allergen and also without refined sugar or anything else added to it. So, people who are using the coconut aminos, I’ve seen it anywhere from you can put it in soup and it gives you that really rich flavor that you’re looking for because it’s sweet and salty, but also people making beef jerky out of it where they don’t want to use soy sauce anymore. As to marinades, dressings, and sauces, it’s a really cool product to use as well, the coconut aminos are.
Jessica Warden: I think the great application for it, like you mentioned, is like a barbecue sauce category or a marinade category because those are items where it calls for sugar. But again, if someone’s trying to build a brand around a healthier alternative, it could be a really great option for that. And I don’t know how much it’s really taken off as far as full steam like some of these other items, but I think some of our projects have called for a more powdered or more fine granulation or something that’s maybe a little bit more soluble. So maybe there’s still some innovation yet to be had about drink category with this and mixing it in with different drink mixes or powders on the nutraceutical side I see go in there often as well.
Donny Edson: Yes. And then of course, the last coconut we deal with is desiccated coconut, which desiccated coconut is used every day in everything from granola bars to cereals to baking applications, cookies, macaroons, pet food, you name it. So desiccated coconut is very prevalent and still a very popular category as well, although most of the innovation we see happening right now pertains mostly around coconut milk, coconut cream, and the coconut sugar products. One thing I didn’t mention with the coconut milk and coconut cream is the quick rise of coconut milk powder. And coconut milk powder is made by taking the coconut cream and spray drying it into a powder. And that is being used in anything you can dream of. But a lot of coffee creamers are using it, a lot of nutraceutical things are using it. We even see in oatmeal cups where you put the powder in there, you add your hot water, and now it’s instantly creamy as well. So coconut milk powder has been a category that we’ve seen explode in the last, really three or four years. And we continue to see more companies come online and use it, even in chocolate manufacturing as well, too. They’re using coconut milk powder and chocolate manufacturing too. So that’s what I’m pretty excited about, that we continue to see a lot of growth in as well.
Jessica Warden: Yeah, I definitely think it came on into the market from the processing perspective at a fantastic time relative to the pandemic, right? So, everybody needed shelf stable alternatives as they were going to the grocery stores and kind of making all of the shelves just be wiping everything out, right? Everybody needed just all kinds of different things for their pantry. And I feel like coconut milk powder is a three-year shelf life, so it’s a great dairy option that really packs a punch as far as shelf stability goes. And then it’s also very versatile because of the fat content where you can change it up a little bit depending on the application. It can be creamier and sweeter, or it can kind of have less of the additives and just be more of that straight single closer to that single ingredient.
Donny Edson: Yeah, I agree. And I’ve seen some brands even take coconut milk powder and add coconut sugar and cacao powder to make a hot chocolate mix out of it as well too. So been really cool products that are happening with it.
So, as you guys can mean coconut again for us, it’s a really big ingredient for Smirks. It’s one of our favorites probably because we really like travel into these cool destinations where it’s made. Nick and I have been to the Philippines several times to see factories there. We’ve been to Vietnam; we’ve been to Indonesia six or seven times. We’ve been to Sri Lanka as well. I don’t know about Nick. My favorite part of Sri Lanka is going to the elephant. What would you call it, Nick?
Nick Erker: Elephant refuge.
Donny Edson: Yeah, the elephant refuge. Yeah, where there’s hundreds of elephants and you get to watch them march down to the river and then they march back up through this town and then they poop, and then they make stuff out of the elephant dung, and then you buy it as gifts for everyone in the office. At least that’s what we do anyway.
But coconut has really been an item that we’ve attached ourselves to and we know really well. And again, the applications are really endless with it, and we see a lot of growth in that category still as people continue to innovate with it. And when it comes to plant-based beverages or non-dairy beverages, I really think the coconut milk and the coconut creamer are so versatile and so accessible as well. The price points are really good on them that it’s something to really consider using. If you’re doing any innovation on it right now, it’s going to be readily available and there’s multiple origins to get it from. It’s just a really cool ingredient, and the innovations can continue to happen with it, too. Can you see other innovations happen with coconut milk, like we have with coconut milk powder that’s come on so well in the last few years as well, too. But again, so there’s coconut milk, coconut cream, coconut oil, desiccated coconut, coconut sugar, coconut milk powders, and coconut flour. So those are all the different ingredients that we deal with on the coconut side of Smirks.
Nick Erker: So, if you’re wanting to include coconut in your products, reach out and we’ll help you find a way to get coconut into your next ingredient, into your next product. Oh, thank you, Donny. Appreciate that update and informational episode on coconut. So, without further ado, let’s dive into our Get the Scoop with Smirks market update.
Smirk’s April 2023 Monthly Market Report
Donny Edson: Here’s our Get the Scoop with Smirks Coconut Market Report for April.
Today, we’re going to talk about the different origins that coconut comes from and what’s going on inside the market. So, to begin with, four countries that Smirks tracks coconut from are the Philippines, Sri Lanka, Indonesia, and Vietnam. Pricing from origin to origin can vary from time to time depending on harvest time, weather currencies, and demand from other origins. For example, Sri Lanka has long been a supplier to the EU, so when their demand is up, Sri Lankan prices are up. Vietnam has long been a supplier to China, so the same thing holds true. So overall, different factors can make pricing different from different countries.
The real question today is, has coconut hit bottom? Looking back on the last five years, we’re still not at the historical lows that we saw in Q3 and Q4 of 2019. After we hit those historical lows, the market went up nearly 50% in 2020 and rode all the way through 2022. Now we’re seeing the declines of the pricing. We’re currently trading around 20% above the lows that we saw in 2019. The reasons the lows are happening right now is after COVID, everybody had way too much coconut everywhere in the world. Most of the factories were behind on production three to five months and they all caught up at the same time and they all shipped coconut at the same time and all the importers are holding coconut at the same time. So, the market’s a bit of a mess right now. You’ll see different offers for different pricing, for different quality, for different aged product in the market right now. There’s still a fair amount of product that’s over a year old in the market that people are looking to offload. The quality of year-old coconut is not that bad if it’s been kept in refrigeration and buyers can still feel safe to use it. Now is also an excellent time to get your coverage on coconut through the end of the year and end of 2024, if anybody will give it to you. We don’t see many reasons the pricing is going to go any lower than it is today.
Smirks is considering ourselves to be back to just in time purchases, which really means that we need about three months to plan to buy something and get it into the country. Most of the main processors are booked out through May and June already as they’ve presold their inventories. The only issues we’re watching right now that could have an influence on the market are the drought conditions in the Philippines. There is some concerns that the drought could happen in Q3 and that could have an effect on the crop going into Q4. Some processors aren’t willing to offer anything past August for shipment right now. We have not seen the RBD oil drop as low as the desiccated coconut has right now. However, it’s still a really good price compared to where it’s been the last couple of years.
On the coconut sugar front, not much has changed at origin. The main thing that still comes into play is that there is a tariff on importing it from Indonesia. There’s still been rumblings that maybe that tariff is going to go away, but we haven’t seen it happen yet. For the most part, coconut sugar is pretty stable. The biggest difference is a lot of people were holding a lot of inventory the last couple of years. Most people work through that inventory and they’re keeping a lot less product on hand. Means it could be a little bit more expensive as people aren’t going to be discounting it to get rid of it right away. However, ocean freight from Indonesia has dropped considerably. We’re seeing some of the lowest levels we’ve seen for as long as we’ve been dealing with coconut sugar. It’s a great time with coconut sugar to get your coverage booked through the end of the year. Coconut cream and coconut milk are following with what desiccated coconut is doing right now and we’re seeing some of the lowest pricing we’ve seen in a really long time. Probably also important to note that before COVID there weren’t as many manufacturers making coconut milk and coconut cream. So, there’s a lot more options available when you look at Sri Lanka, Indonesia, Vietnam, and the Philippines. So, this has led to a little bit more competition in the market and better pricing, seeing some of the best pricing we’ve seen in a long time for coconut milk and coconut cream.
So overall right now, our thought with coconut is it’s an excellent time to buy and book out as far as we can. We really don’t see any reason the market is going to drop any more than it has. We think it’s a good time to take advantage of the cost savings that you’re going to see. In some cases, you might see stuff a dollar a pound cheaper than you did a year ago, mostly because of the price of the product dropping, but also because a year ago people were paying $20,000 for ocean freight. That today is $2,000 to ship. So, you’re going to get a lot of cost savings off the ocean freight side. You’re going to get a lot of cost savings off the commodity side as well.
Nick Erker: So, we appreciate you joining us on this episode of Get the Scoop with Smirks. Look forward to seeing you next time.
Nick Erker: So that’s it for this episode of Get the Scoop with Smirks podcast, where we bring you the latest market reports, insights into bulk ingredients, and their origins, as well as in-depth product information. So, if you have any questions, or feedback, or just want a sample to taste for yourself, visit the smirks.com website or email us at whatsnew@smirks.com. Never miss a future episode. Be sure to hit the subscribe button wherever you listen to your podcast. Thanks so much for tuning in.