Ex-Trader Spurns Hedge Funds to Market Coconut WaterBei Hu
When former hedge-fund trader Jane Gottschalk went back to work in Hong Kong after having five children, the finance world wasn’t her top pick.
Her more-dynamic choice: coconut water.
Jing Holdings Ltd., the company she founded with her husband and two Hong Kong-based businessmen, attracted Elton John as a shareholder and now sells its Jax Coco brand of coconut water in 30 markets worldwide. After debuting in June 2012 in London’s Harvey Nichols department store and Hong Kong’s City’supermarkets, Jax Coco can be found in Whole Foods Market Inc. in the U.S., the first-class lounge of Eurostar trains, a Nobu restaurant in London and the Upper House, Peninsula and Four Seasons hotels in Hong Kong.
“It’s a super-premium player in super-premium markets,” Julian Mellentin, director of London-based research firm New Nutrition Business, said in an e-mail.
Starbucks Corp. shops in Hong Kong will soon add Jax Coco to its drinks cases, according to Gottschalk. Cathay Pacific Airways Ltd. lounges and select flights will also stock it, said Toby Smith, general manager of product at Asia’s largest international carrier.
Jing Holdings’ revenue could reach $20 million this year as the company expands to include children’s drinks and coconut oil, milk, sugar and chips, according to Gottschalk.
“We’re small, but we’re making a lot of noise,” Gottschalk, 41, whose kids range from eight months to 10 years, said in an interview. “To become a name within the coconut-water market is definitely a target.”
A former junior associate at a private-client stock brokerage, Gottschalk spent two years as an equity trader in London at hedge fund Cheyne Capital Management (UK) LLP, which was started by two former Morgan Stanley bankers and now oversees $6.5 billion of assets.
In 2002, she bid farewell to her Bloomberg screens to marry and start a family. About six years ago, the Gottschalks made a small investment in one of the largest U.S.-based coconut-water brands, which she declined to identify.
When she and her family moved to Hong Kong in 2011, they couldn’t find packaged coconut water in stores, Gottschalk said. In Asia, people typically consumed coconut water sold while still in the shell. The Gottschalks said they grew impatient waiting for the U.S. brand they invested in to reach their new home, so they began to plot their own business.
They teamed up with local entrepreneur Alex Ing and his son, Jason. Alex serves as chief executive officer, in charge of production in the Philippines and delivery around the world. Gottschalk handles sales, marketing, branding and product development, while her husband advises on budgets and strategy. The company is trying to raise a third round of financing.
Sales of coconut water grew more than 23 percent last year in the U.S. and Europe combined, surpassing $800 million, according to New Nutrition Business. Global hedge-fund assets, by contrast, expanded an annualized 6 percent in the six years to the end of 2013, according to Chicago-based data provider Hedge Fund Research Inc.
“The coconut-water industry has been growing much faster from a small base of $10 million in 2008,” said Max Gottschalk, her husband who also co-founded the fund-of-hedge-fund business under Gottex Fund Management Holdings Ltd., which has more than $8.5 billion of fee-earning assets.
Jane Gottschalk said her years as the lone woman on the 12-person trading floor of Cheyne Capital gave her an ability to seize opportunities quickly.
“There are plenty of people,” she said, who are eager to say “why it won’t work, what you are doing wrong or how great the competition is.”
The financial community she eschewed has embraced her products. A global bank, a U.S.-based hedge fund and a North American pension-fund manager are among those that stock Jax Coco in their Hong Kong offices. All of them asked not to be identified to avoid appearing to favor the brand.
Jax Coco has sponsored athletes such as English rugby player Chris Ashton, events including Elton John’s China concerts and a charity performance by Chinese classical pianist Li Yundi. Alasdhair Willis, husband of Stella McCartney, fashion-designer daughter of Paul McCartney of The Beatles, designed the Jax Coco logo.
Jax Coco was selling today at the City’super market in Hong Kong’s International Finance Center, a Central commercial complex housing financial institutions such as UBS AG and luxury stores such as Bulgari SpA, at HK$20 ($2.58) for an 8.4-ounce (250-milliliter) bottle.
The most-expensive of three brands in a refrigerated case, with others in cans or Tetra Paks selling for HK$14 or HK$16, Jax Coco was among the top picks for customers, with two purchasers in a 10-minute period.
“Our fridge is full of it,” said Steve Colvin, 34, a lecturer originally from London, who cited the convenience of the Jax bottles. “It’s good for digestion, doesn’t upset the stomach, and compared to those sports drinks, those are supposed to be good for you, but they’re full of crap.”
When she worked in finance, Gottschalk said, she had to rush to be in the office by 6:30 a.m. for morning meetings and came home moody when she lost money.
“I am not tied to a desk and can have flexible working hours even if this means working late into the night and early mornings before the kids get up,” said Gottschalk, the daughter of a British diplomat who grew up in New Delhi, Kuala Lumpur and the U.K and also lived in Germany and Switzerland. “Balancing a young business and young children is the hardest job in the world. The stress of running a business far outweighs that of trading.”
Sales of coconut water have been surging globally for five years and will become a $2 billion business in the U.S. and Europe in the next five years, Mellentin of New Nutrition Business said.
The naturally sweet beverage, with vitamins and minerals including potassium and magnesium, has been drawing sporty crowds seeking a more-natural alternative to “those bright green or blue formulated sports drinks,” Mellentin said. Women ages 25 to 45 make up more than 60 percent of buyers, he said.
New coconut-water products more than quintupled in the five years starting 2008, according to a May 2013 report by London-based market-research company Mintel Group Ltd.
The market has attracted beverage giants such as PepsiCo Inc., which in 2009 acquired Brazil’s largest producer, Amacoco, and has since added California-based O.N.E. Coconut Water. Coca-Cola Co. then bought Zico Beverages LLC of Hermosa Beach, California. Pop icon Madonna invested in New York-based Vita Coco in 2010. With estimated sales of $300 million, it’s the world’s biggest coconut-water maker, with about 200 other, mostly small, brands vying for share, said Mellentin.
“For most new entrants, it’s a little late,” he said. “It’s hard to create a point of difference, if not impossible.”