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New firm enters Kona market with high expectations.

New firm enters Kona market with high expectations

Hawaiian Isles Enterprises expects to acquire and distribute more than 50 percent of the Kona coffee crop produced on the high eastern slopes of Big Island of Hawaii this year, Michael Boulware, president of the company has announced.

"We intend to fulfill the increasing demand for Kona coffee by providing a large supply at extremely competitive prices," Boulware said. "We can do that this year because Kona coffee yields are expected to increase from last year's supply. We've been buying coffee in Kona since April, when usually, harvest season starts in late August or September through January. If the weather continues to cooperate, we'll be enjoying a bumper crop of premium Kona."

The increased supply is a bonus in a time of high demand for Kona coffee due to the small amounts of Jamaican Blue on the market. Hurricanes devestated Jamaica's coffee crop two years ago. That was about the time when Hawaiian Isle Enterprises decided to open its Kona Coffee Company division, originally to find a direct source for its growing office coffee service business. The office operation, along with a full line of vending machines and a distribution system that supplies some 6,000 restaurants, grocery stores, and hotels statewide, generate more than 55 million in annual sales for the company.

Breaking into the tightly-knit Kona coffee farming community has not been an easy task, according to Lo Marvin Fukumitsu, vice president of sales and coffee buyer for Hawaiian Isles.

"People in Kona want to know who you are and if you're going to be around next year," Fukumitsu says. "Kona farmers are leary of buyers who come in during boom times, then disappear when the market is slow."

Being a local company has been an advantage for Hawaiian Isles. With a Kona-based facility last year, the company was able to procure 25 percent of the Kona coffee crop, Fukumitsu reports.

It also helps that Hawaiian Isles pays farmers premium prices for their produce. It now pays $1 per pound of cherries, about 30 percent more than last year's prices. "We pay farmers what they deserve," Fukumitsu says of Hawaiian Isles' buying policy. "We entered the market with the intention of assuring the farmers that we will pay the best price and that we will maintain that price."

Because its doesn't use middlemen, Hawaiian Isles can offer bagged green coffee to roasters at extremely competitive rates. The company is seeing increased interest in Kona coffee from Asian buyers, especially the Japanese.

Hawaii's Department of Agriculture estimates that there are some 600 farmers who plant and harvest coffee on the slopes that rise over 4,000 feet above the Kona shoreline. Some farms and processing plants are open to the 700,000 tourists who enjoy the Kona Coast's sunny weather and its diverse attractions each year. In November, coffee coops hold an annual Kona Coffee Festival with parades, Hawaiian games, and cultural shows.

Kona coffee experienced a boom after World War II, but slumped in the 60's when world prices were low, land prices and labor costs were up, and droughts plagued the Kona area. Coffee farms, which collectively occupied more than 6,000 acres shrunk to fewer than 2,000, with many farmers opting for share crops such as macadamia nuts.

When interest in gourmet coffees escalated in the 1980's, the Kona coffee market revived. During the 1988-89 crop year, coffee production rose 11 percent, according to the Hawaiian Agricultural Statistics Service. Receipts rose 22 percent from the year before despite a drop in world prices. The high prices commanded by Kona coffee last year have encouraged farmers to increase coffee planted areas to 2,600 acres, the highest total since 1974. Industry experts project acreage in production to triple by 1995.

Aside from offering bagged green coffee, Hawaiian Isles Kona Coffee Co. also has begun roasting Kona blends as well as 100 percent pure Kona using a fully computerized Probat roaster.

"We've invested $3 million in coffee inventory as well as our processing plant," Hawaiian Isles president Boulware says. "There's a bright future in Kona Coffee."
COPYRIGHT 1989 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1989 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Hawaiian Isles Enterprises
Publication:Tea & Coffee Trade Journal
Date:Oct 1, 1989
Previous Article:Kona farm prices soar as green prices drop.
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