Coconuts are already being produced in vast quantities (60+ million tonnes[1]) for their meat and oil. I imagine the coconut water manufacturers are just using the water which would otherwise be thrown away, which is why the coconut water market has been able to grow so rapidly without increasing global coconut production.
Not necessarily true. The coconuts used for oil and meat are picked much later than the coconuts used for water. Of course that's only the case if you're talking about pure coconut water -- coconut brands who use concentrate are probably making the concentrate from the mature coconuts that are used for their meat and oil. gross stuff.
[1] http://en.wikipedia.org/wiki/Coconut#Cultivation