If coconut water impacts the Hong Kong Stock Exchange: How 46 employees sold 160 million USD?

The Thai coconut water brand if, which has exploded in the Chinese market, is planning to go public.

On April 9, IFBH Pte. Ltd. (hereinafter referred to as IFBH), the company behind if coconut water, submitted its listing application to the Hong Kong Stock Exchange, with CITIC Securities serving as the sole sponsor.

The listing entity IFBH was spun off from the international business of Thai beverage manufacturer General Beverage and primarily operates the two brands if and Innococo.

IFBH's business scope covers the global market, but the vast majority of its performance comes from the Greater China region, with mainland China accounting for 92.4% and Hong Kong accounting for 4.6%.

Since 2020, if coconut water has maintained the top market share in mainland China, with a market share of 34% in 2024, surpassing the second-largest competitor by more than seven times.

The booming Chinese market has propelled IFBH to the position of the second-largest coconut water company globally.

In 2024, IFBH achieved revenue of $157.6 million and an annual profit of $33.316 million, representing year-on-year growth of 80.3% and 98.9%, respectively.

However, this sizable beverage company has no factories and no warehouses, instead adopting an extremely light asset model.

As of the end of 2024, the company had only 46 employees.

During the same period, IFBH had inventory valued at $1.044 million, all of which were goods in transit, with an inventory turnover period of only three days.

Apart from purchasing finished products, operating costs are mainly concentrated in advertising and marketing, as well as logistics and transportation, totaling approximately $11 million, accounting for about 6.4% of total sales.

This alleviates the two major concerns of price fluctuations and inventory backlog, but also creates a situation of external dependence for both upstream and downstream.

In 2024, transactions with the top five suppliers and customers accounted for 96.9% and 97.6%, respectively.

In the context of increasing competition in the coconut water market, can IFBH's operating model help it go further?

Extreme Light Asset

In 2013, founder Pongsakorn Pongsak established the if brand in Thailand and has been operating it through General Beverage, which he controls.

With sales growth in markets outside Thailand, in 2022, General Beverage launched a business restructuring, spinning off its international business into what is now IFBH.

However, the connection between the two companies remains very close.

In terms of equity, General Beverage is the controlling shareholder of IFBH, holding 71.11% of its shares before the IPO.

Co-controlling person Pongsakorn Pongsak holds a staggering 91% stake in IFBH and serves as the CEO of IFBH.

Since IFBH does not directly participate in production, warehousing, sales, and other heavy asset segments, it is only responsible for brand development, marketing, and international distribution.

The company continues to procure coconut water from its controlling shareholder General Beverage, which constitutes a large amount of related party transactions. From 2023 to 2024, the amount of related transactions reached $12.4 million and $18.1 million, respectively.

Between 2025 and 2027, the agreed product purchase limits for both parties are $26.5 million, $34.5 million, and $45 million, corresponding to increases of 46.4%, 30.2%, and 30.4%, respectively.

In addition to being the main supplier, General Beverage is also the authorized agent for IFBH in the Thai market, paying a licensing fee of 2.5% of total sales annually.

Outside of Thailand, IFBH is expanding its market through partnerships with distributors, similarly showing a high dependence on third parties.

In 2024, the top five customers accounted for 97.6% of sales, with the largest customer contributing nearly half of the performance.

The company strengthens its ties with major distributors through equity binding.

Before the IPO, New Heat (Hong Kong) Industrial Co., Ltd. and Guangzhou Yuanlian Supply Chain Management Co., Ltd. held shares of 1.09% and 1.02%, respectively.

Both are currently mainly responsible for IFBH's sales in e-commerce channels, convenience stores, and supermarkets in mainland China.

However, IFBH seems intent on changing the current situation of high dependence on upstream and downstream.

By the end of 2025, the goal is to reduce General Beverage's procurement share to below 70% of total coconut water demand.

At the same time, it aims to expand its business in Australia, the Americas, and Southeast Asia, and does not rule out acquiring new health and functional beverage or food brands in the aforementioned regions.

Price War Imminent

For a long time, Chinese consumers had a low acceptance level of coconut water.

The well-known American coconut water brand Vita Coco entered the Chinese market as early as 2015 through the brand operator of Red Bull in mainland China, Huabin Group.

The following year, Coca-Cola's Zico opened a flagship store on Tmall, focusing on e-commerce channels.

During this period, coconut water was mainly packaged in large sizes and Tetra Pak, and its relatively high price failed to successfully open up the mass market.

It wasn't until 2022 that the explosive popularity of Luckin Coffee's coconut latte ignited interest in coconuts, providing a market opportunity for accelerated penetration of coconut water.

In May 2022, if coconut water first appeared in Li Jiaqi's live broadcast, selling out 50,000 items that night, and the next day it was exposed in Liu Genghong's live broadcast.

Driven by live e-commerce and KOL effects, the sales of the if flagship store increased nearly tenfold year-on-year and over 300% month-on-month.

The market explosion quickly attracted many players to join, and by 2025, there were more than 50 mainstream coconut water brands on the market, an increase of over 40% compared to two years ago.

Accompanying this is an escalating price war.

In the first quarter of 2025, the average selling price of coconut water in China was 1.46 yuan per 100 milliliters, a significant decline of 23.5% compared to 1.91 yuan two years ago.

Many 1-liter packages of coconut water claiming to be "100% coconut water" are sold for only 9.9 yuan, even below cost price.

Lu Shengzhen, general manager of Heihuo Marketing Planning Company, explained to Xinfeng: "Currently, coconut water is in the early stage of a market with incomplete policies and regulations, and some companies are sourcing lower-quality old coconuts from Southeast Asia as raw materials to reduce costs." "In order to reconcile the taste issues caused by insufficient raw materials and to avoid excessive bacterial colonies in coconut water due to processing techniques, we will add flavoring agents and preservatives to the products," said Lu Shengzheng.

The industry is also under pressure from rising raw material costs.

In 2024, the main production area in Southeast Asia experienced a significant reduction in output due to high temperatures, leading to a notable increase in the price of fresh coconut water.

In August of the same year, if coconut water agent Guangdong Hengyu Food Trading Co., Ltd. issued a price adjustment notice, stating: Due to a substantial increase in raw material prices, the cost of goods has risen, and operating costs have increased, suggesting a price increase of 20%.

Against the backdrop of rising costs and declining average prices, the profit margin for coconut water is narrowing, which is an established trend.

In 2024, the gross profit margin of coconut juice beverages under Huanlejia (300997.SZ) decreased by more than 5 percentage points year-on-year.

If the terminal sales price of coconut water remains relatively stable, the gross profit margin increased by 2 percentage points to 36.7%, and the net profit margin rose by 1.9 percentage points to 21.1%.

IFBH also stated that if existing or potential competitors offer products at lower prices or engage in "aggressive or predatory pricing" to increase their market share, their revenue may decrease, and profit margins may be significantly adversely affected.

If it can accelerate the search for growth opportunities outside the Chinese market through fundraising from the IPO, it may be a better choice for IFBH