Sunday, December 26, 2004

"If it were all about the money and the highest profit, we wouldn't be here."

Mattson Davis
Kona Brewing Co.managing partner

Bartender Danby Armstrong pours a Lavaman Red Ale at the Kona Brewing Co.'s bar in Kailua-Kona. Hawaii's largest brewery now boasts nearly 90 distributorships in 10 states, including more than 50 in California.

A pint of paradise

The Big Isle's Kona Brewing Co.
has grown to become the nation's
51st largest brewery

KAILUA-KONA » The six-foot map of California behind Mattson Davis' desk was supposed to be peppered with red pins indicating where to find Kona Brewing Co.'s beers.

Hawaii's largest brewery now boasts nearly 90 distributorships in 10 states, including more than 50 in California, and Davis doubts the map could take that much punishment.

"Anyway, I still don't have any pins," the brewery's managing partner laughed.

Forget maps. Downstairs, at the Kailua-Kona Brewery & Pub, kitchen noises and smells spill into the bar area where patrons are treated to nine draft beers, all brewed and prepared in a warehouse vacated 12 years ago by the local newspaper's presses.

A mahogany log lifted from the shores of Kailua Bay and rusty corrugated tin from an old distillery helped transform the ink-smudged pressroom into a little hops-flavored oasis, Davis said.

Tiki torches lit each night and a sunset that turns the sky pink-purple over this old fishing village on the Big Island's western coast add to the ambiance.

Behind the kitchen, the doors of the warehouse stand open, a dozen huge stainless steel vats sparkling in the sunshine as they churn out gallons of golden ale and dark porter.

As of mid-December, the brewery had pumped out nearly 1.5 million gallons -- or 11.5 million pints -- of beer.

The goal is to offer a taste of Hawaii 16 ounces at a time, Davis said.

Back in December 1996, Davis was managing a restaurant in Portland, Ore., when he was called to a diner's table.

"I thought maybe he had a complaint or comment on the menu or something," he recalled.

Instead, regular customer Cameron Healy had a question -- would Davis consider moving to Kailua-Kona and helping with a new business venture?

Two years earlier, Healy, founder of Kettle Chips, and his son, Spoon Khalsa, caught the island spirit and dreamed of creating fresh, locally made brews in the same vein as the microbrewery explosion in the 1980s and 1990s in the Pacific Northwest.

"Something reached inside him and rubbed his heart," Davis said of Healy. "He just loves the energy here."

Fast forward eight years, and Davis, now a shareholder with Healy and Khalsa, oversees production of six draft beers and three bottled beers and operation of two pub/restaurants that employ nearly 150 people.

Currently, the Kona export is available in California, Oregon, Washington, Idaho, Montana, Colorado, Arizona, New Mexico and Alaska.

In 2002, the company added Japan to its list of distribution points, and this year, the numbers show 61 percent growth in sales there.

Of course, new customers also arrive by the planeload to Hawaii every day.

And many of them like souvenirs of their vacations. Putting Kona beer on grocery shelves and behind local bars means they don't have to lug home this particular spirit of aloha.

"Now Kona Brewing Company's beer lovers can enjoy a pint of paradise without having to get on a plane," Davis said.

What visitors won't find at home are the three award-winning beers -- Castaway IPA, Black Sand Porter and Hula Hefeweizen -- sold exclusively at the Kona pub.

Seasonal specials also are on the brewpub's menu. Two favorites are Lilikoi Wheat Ale, flavored with fresh island passion fruit, and Da Grind Kona Coffee Imperial Stout.

The morning of a new brew, a mound of Kona's world-renowned bean is ground by a local roaster. The coffee is then dunked into the vat like a giant tea bag.

The latest creation is Koko Loco Coconut Milk Stout, unveiled this month to celebrate the first anniversary of the Koko Marina Pub on Oahu.

Kick-starting a new business in Hawaii can be daunting, but Davis and his partners were determined to build it right.

Finding the right team of employees was key, Davis said. He recruited a co-worker from Portland, installed nearly 150 employees in the two restaurants and has a staff of seven in the brewery.

"That's a tough position to fill here," Davis said. "It is really challenging to find specialty labor in Hawaii's market."

The cost of doing business on one of the most isolated islands in the world also was a challenge.

In 1997, for example, it cost $2.14 to ship a case of empty bottles to Hawaii and just $1.47 to import a case of beer. So, it was either build a $1 million bottling plant in a non-manufacturing region or find a mainland partner.

"That was about survival," Davis said. "We are committed to getting our product to customers at the best price and still maintaining our unique Hawaii flavor."

The company could make up to 35 percent more if its beer were all brewed on the mainland.

"If it were all about the money and the highest profit, we wouldn't be here," Davis said. "It's made right here in Hawaii and that's really important."

After several alliances, Davis said, in 2001, the company settled into "a symbiotic and creative" partnership with Widmer Brothers Brewing Co.

The deal included bottling the Kona brew at Widmer's Portland, Ore., plant, which helps keep down production and distribution costs.

In April 2003, Kona Brewing Co. joined the Anheuser-Busch distribution system, a switch that produced immediate results -- a 35 percent increase in sales that month.

Now the nation's 51st largest brewery and targeting a top 40 slot next year, Kona Brewing Co. claims 10 percent of draft sales in Hawaii and 1.5 percent of the state's total beer market.

"And we've had double-digit growth over the last 10 years," Davis said, noting the company now has some 900 accounts in Hawaii.

With the growth has come a slew of brew accolades.

Most recently, the Black Sand Porter claimed the silver medal at the 2004 Great American Beer Festival Competition, the largest national beer competition.

Additionally, four ales and lagers were dubbed the Best of the Northwest/Pacific at the 2004 Beer Testing Championship Summer Competition, giving it more honors than any other brewery. Castaway IPA, Longboard Lager, Hula Hefeweizen and Lilikoi Wheat Ale were named tops in their categories.

Davis said he gets great satisfaction from providing a premium product to his community and beyond.

"If you are going to drink a beer, drink a good one and if you are here, drink a Hawaii beer," Davis said. "We all deep down have some sort of fantasy about lying on a nice beach with a cold, golden, hand-crafted, slightly carbonated beverage, don't we?"

Kona Brewing Co.

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