The Vita Coco Company (COCO), a coconut water brand, revealed it has lost a major private label customer. Vita Coco says the decision was mutual, indicating terms demanded by the unnamed customer were too stringent and contrary to the company’s long term margin targets.

Vita Coco did not specify exactly when it will stop making product for the customer but revealed it:

“...expects a significant decline in its private label net sales over the next 12 months with potential impact beginning as early as the fourth quarter of 2023.”

The private label segment accounted for approximately 20.8% of Vita Coco’s revenue in the latest quarter.

Vita Coco says the loss of private label business could result in a mid-single digit percentage decrease in net sales as compared to net sales in 2023 as the company’s brand growth initiatives will not fully offset the loss of the private label business.