Because Pixar liked it

"Pixar is nothing if not casting a wide net for so many things, so we try on every outfit in the closet multiple times, for sure," producer Darla K Anderson told Digital Spy when we asked her about the title.

"But we kept gravitating back towards the name Coco. It's a little bit mysterious, it's got a warmth to it, it's got lots of different meanings, but mostly we liked the idea that it's named after the great-grandmother who's the matriarch of the family and spans the generations and connects everything together. We really hung on to that."

^Source

But that's not the whole story

The original title was to have been Day of the Dead / Día de los Muertos and...

Disney made a request to trademark the phrase "Día de los Muertos" (in Spanish, the holiday is properly called Día de Muertos) for merchandising applications. This was met with criticism from the Mexican American community in the United States.

...

Disney cancelled the attempt, with the official statement saying that the "trademark filing was intended to protect any title for our film and related activities. It has since been determined that the title of the film will change, and therefore we are withdrawing our trademark filing

^Wikipedia

Because later on in the movie, you'll hear how while the great great grandma says "we both loved music, and we would sing beautiful songs. But then we had Coco, and it became something more important to me" or somewhere along those lines.

Coco is a story about following your dreams, but also know that dreams change. values change. people change. and that's ok.