In the past 11 years, Jason Brand and Robert Dawson have helped build Ko Hana Hawaiian Agricole Rum into a full-fledged distillery with a burgeoning market for liquor it makes from heirloom sugar cane varieties grown here in Hawaii. Now Ko Hana is embarking on a new project: expanding its product line to include daiquiris bottled and sold as ready-to-drink cocktails.
If all goes well, the boozy beverages could also play at least a small role in boosting Hawaii agriculture — not only local sugar cane but also produce like pineapple and lilikoi that Ko Hana mixes with its rum to make the cocktails. Ko Hana has spent a year creating what it calls “mixologist quality” formulas that will remain stable on store shelves. It’s tweaked the product packaging, going with frosted glass bottles that Brand says make the pastel colors of the cocktails pop.
Now, Ko Hana faces perhaps the most important step: getting the product prominently displayed in stores – something that’s not easy even for a small, Hawaii-made brand in a locale where people are often willing to pay a premium to buy local.
“It absolutely is a challenge,” says Will Davis, president and co-founder of Vitalitea, a Maui-based kombucha company that now sells in major retail stores such as Whole Foods and is branching out to ABC Stores.
“You’re really up against bulk things coming in from the mainland,” Davis said.
Chad Buck is founder and chief executive of the Hawaii Foodservice Alliance, a major local distributor. Getting products to store shelves is key to building economies of scale for local companies and making Hawaii more self sustainable, Buck said.
“If Hawaii farmers and producers are not able to get their product to the shelves where people shop, they will never reach the economies of scale necessary to succeed against mainland competition – and Hawaii will be unable to move toward a more sustainable and food secure future,” Buck said in an email.
Hawaii Foodservice Alliance works closely with more than a dozen local brands, including Honolulu Meat Co., Kauai Cowboy & Cattle Co., Waipoli Greens Salad Mix and Redondo’s Sausage.
When Ko Hana launches its daiquiri line on Thursday, Brand said, Ko Hana won’t need to scale up to keep its product on the store shelves. “We’re ready to compete on prices and we know that we already beat them on quality and flavor,” he said. “But it took us a year of preparation to do that.”
Value-Added Products Support Farmers, Create Jobs
Value added products using Hawaii produce – like Brand’s rum and Davis’ kombucha made with Hawaiian pineapple – provide a key market for the state’s agriculture products, says Meli James, a co-founder of Mana Up, a business accelerator for small local companies.
While the buy-local movement often focuses on local produce bought to eat at home, or restaurants marketing “farm-to-table” cuisine, consumer packaged products including food items and cosmetics also create demand for farmers. “It’s not two conflicting industries,” James says.
In fact, she said, value-added products can provide supplemental revenue for farmers. For instance, Davis said Vitalitea uses juice made from Maui Gold-brand pineapples not pretty enough to be sold in grocery stores.
And it’s hardly the only one of Mana Up’s companies supporting local agriculture. The accelerator has helped grow 45 companies that locally source their ingredients, including cacao, macadamia nuts, turmeric, lilikoi, taro, mango and ginger.
In addition, value-added agriculture products often have shelf lives far longer than fresh produce, which makes them easier to export – something that can bring new money into the state, James said. Finally, adding value to raw products — by processing sugar cane into rum and bottling it, for instance — creates jobs.
So how does a company like Ko Hana break into a booming market for pre-made cocktails — and store shelves — already occupied by ready-to-drink items from brands like Bombay Gin and Absolut Vodka?
As is often the case in Hawaii, it helps that Ko Hana has existing relationships. For example, Jason Fukeda, store director at Fujioka’s Wine Times, said he has known Ko Hana’s general manager, Kyle Reutner, for nearly a decade. That gave Ko Hana’s ready-to-drink cocktails an entrée, Fukeda says. But it’s the products that count, Fukeda said. “Obviously it has to be good quality,” he said. “And they definitely make sure everything they put out is quality.”
A grapefruit juice-based daiquiri called “The Hemingway” is the informal frontrunner so far based on informal taste tests, Fukeda said. But generally, he said, all four flavors – classic lime, pineapple, lilikoi and the Hemingway – share a common attribute. They’re not too sweet and have a kick. “They’re no joke,” he said.
Fastest Growing Segment
One way to solidify or build relationships with retailers is through a distributor. Brand says such middlemen are essential in the liquor business. While perhaps less essential for other products, a good grocery distributor can be an enormous help, Davis says. For example, Davis says, Hawaii Foodservice Alliance helped Vitalitea get into military commissaries and exchanges. More important, Davis said, HFA has proven to be a dependable partner that can get items onto store shelves reliably and efficiently.
Retailers need to know that the products in their locations will be serviced, rotated, and in-stock at all times, Buck said. For producers, Buck said, “This is difficult to do when you are busy baking or making your value added products.”
Still, Davis said, the distributor can do only so much; Vitalitea still has to make a quality product and maintain connections. “We still don’t just hand them the account and say, ‘Do it all for us,’” he said.
For its part, Ko Hana appears to be launching its product at the right time to catch a big market wave. The San Francisco-based market data firm Grand View Research recently estimated the ready-to-drink cocktail market to be $782.8 million in 2021, with a compound annual growth rate of more than 13% from 2022 to 2030. Brand said the growth estimate seemed correct but not the current market size. “I think its bigger than that as a category,” he said.
The idea is to sell the bottled daiquiris as premium products competing with a brand called On the Rocks, which sell for about $13 for a 12-ounce bottle. Ko Hana wants to give Hawaii a local option.
As for marketing to the mainland, Brand says it’s often a matter of promoting the romance of Hawaii, more than the verdant aina that makes the islands such an ideal place to grow things. In addition to growing sugar cane for rum, Brand also operates one of Oahu’s largest lettuce farms adjacent to Ko Hana’s distillery in Kunia.
“As a farmer, I know we have some of the best growing climates and soils, so we can produce better ingredients than most spaces,” he says. But, he adds, that can be hard to distill into a marketing campaign. “It’s much easier to market the romantic side of Hawaii than the quality of our soil,” he said.
FULL ARTICLE BY STEWART YERTON →
