[ INSIDE HAWAII INC. ]
Kauai coffee GM shows
off product to visitorsI understand from your annual report that a world oversupply of coffee is pushing down prices to record lows. Can you tell us about that?
Donn A. Soares
>> Age: 37>> New job: Promoted to general manager of Kauai Coffee Co. from national sales manager.
>> Background: Originally from Oahu, Soares left for college on the mainland in 1985. He joined Kauai Coffee in 1996 as manager of eastern sales, was promoted to national sales manager in 1998 and relocated to Kauai last year.
Since the late '90s world coffee prices have tracked low, below the cost of production in most producing countries. What's happening in the industry is you're seeing three really large producers emerge that basically represent about 60 percent of total production. It's Brazil, Colombia and the newest is Vietnam. They're really low-cost producers and the market is flooded. One of the things that we're trying to do is to look at government programs, military, as an option, to sell an American-made product.
What's the impact of coffee dumping?
I think what you're seeing are a lot of the higher-quality, high-cost producers in central America are struggling. So while this trend puts coffee industry in a difficult position, it does represent a great opportunity for specialty coffees, specialty estate coffees. More and more we're seeing issues such as traceability (the ability to trace a coffee's origins) become important in Japan and Europe. We can document a coffee all the way back to what variety it is. Our coffee is all 100 percent estate-certified.
What's the price impact on the broader market?
The larger commodity market with low pricing makes it a bit more challenging to put forward large programs because of the price between our coffee and the alternatives, but we've been fairly successful over the last two years developing national programs, through Trader Joe's, Cost Plus World Market and Sam's Club. Those customers now represent a good chunk of production.
What else is happening?
The other trend that is happening is that our retail side of the business is growing and our strategy is to move away from being dependent on roasters and producing a value-added finished product in-state. So our visitor center is part of that strategy. We built a roasting plant, which is on the farm. The coffee represents 7 percent to 10 percent of production. It's growing every year. The long-term plan is to get it larger. It has a tremendous impact in terms of revenues and the bottom line.
Kauai Coffee roughly broke even in 2003. What's the forecast for 2004?
It's a little premature, but our specialty business has grown and we're anticipating selling out early this year in terms of mid-level and specialty grains. Our 2003 crop was 3.3 million pounds. I think our goal was 3.5 million, so it was very close. Two weeks ago we had a beautiful flowering, 65 percent of the farm flowered. We're anticipating a harvest in mid-September.
What's new at Kauai coffee?
One of the nice things about having a visitor center is we have a very successful coffee club. Those varietals that they buy at the visitors centers we provide at a coffee club. Right now we have 1,600 members in our coffee club. The price is a 10-ounce bag monthly for $13.50 or two 10-ounce bags monthly for $24.50.
What differentiates your coffee varieties?
The catuai varietals represent about 80 percent of our production. They have a tendency to be very smooth. Typically we'll roast them in a medium to medium dark level, so a little lighter than the other varietals. They're well balanced. The blue mountain and mundo novo we roast at a darker level and it affects the body, very smooth, but they're fuller flavored coffees. Two of the varietals we have such small production, they are only available at the visitor center: That would be mundo novo and the blue mountain. We'll see an average of 120,000 to 130,000 visitors at the visitor center.
Inside Hawaii Inc. is a conversation with a member of the Hawaii business community who has changed jobs, been elected to a board or been recognized for accomplishments. Send questions and comments to business@starbulletin.com.
