Sweet, Sticky Success

The family business behind Malolo syrup has changed dramatically over 80 years

There was a time in Hawaii, in the ’60s and ’70s, when clan picnics and community bazaars were common weekend social events and you could always count on there being a punchbowl or cooler of red or orange “juice” made from strawberry, fruit punch or orange-flavored syrup mixed with water. Longtime local syrup manufacturer, Malolo Beverages & Supplies Ltd., was there in the thick of this sweet refreshment.

The 80-year-old family business has come a long way from its birth as a soda company in 1927. The surprising thing is that, as Malolo has evolved to survive, it’s become less and less about the syrups for which it’s most recognized and more and more about supplies for the food-service industry. Today, the Sand Island company bills itself as “Hawaii’s premier food-service and [janitorial/sanitation] supplier.” Not quite what comes to mind when you mention “Malolo” to a local.

The Business Starts to Bubble

Malolo’s chairman of the board, 85-year-old Tom Young, was just 6 in 1927, when his brother-in-law Chang Chow decided to become a soda-pop manufacturer and started Malolo Soda Works. Young joined the family business in 1947 at the age of 26. There were about a dozen soda bottlers in Hawaii at the time.

Young says that, in those days, everybody worked a six-day week. He usually spent three days on sales and three days making deliveries. “I would make deliveries in the morning to the various picnics in the parks and then, in the afternoon, about 4:30, when they disbanded the picnic, I had to collect all the soda-water bottles because they were a very expensive thing to lose,” he says.

His son, Malolo’s president, Sanford Young, often went with him. Sanford says, “When [Tom] said he had to go and deliver to the picnics and carnivals and bazaars, I remember going up to the old Pauoa ice house and picking up ice at the place because you had to chill your soda-water bottles in these old iron coolers. In fact, one year, while we were building a home, we lived behind the [Kalihi-based] office, so the playground was the warehouse.”

YOUNG BLOOD: Malolo Beverages & Supplies Ltd. President Sanford Young succeeded his father, Tom Young, who is now the chairman.

In the early 1950s, Malolo began to manufacture the syrups used in their sodas. In 1955, after Young was approached by a representative from Lily Tulip Cup Corp., the company started to distribute disposable paper goods for the food-service industry.

Remember, if you will, that the soda fountains of that day all used washable wares. “We had to educate people to use throwaway items like paper cups,” says Sanford. After the cups came napkins, straws and other paper goods.

In 1956, the company incorporated, with Chang Chow, Tom Young and Clarence Yim as its major shareholders.

A Setback for Soda

After the Korean War, Coke and Pepsi engaged in a huge marketing push that ended up shuttering Hawaii’s soda manufacturers. Malolo stopped making soda around 1958.

“Coke, Pepsi and 7 Up were the big kingpins, and no one survived. It was fortunate that we decided we were going to get out of the soda-water competition with the big boys and continue to push our syrups, because the syrups were still very popular in the supermarkets,” Sanford says. “Economically, our syrup was still pretty good and compatible with the paper line, so we started to push the disposable food-service products.”

Malolo serviced a wide range of family-owned food establishments. Tom Young landed Scotty’s, Hawaii’s first walk-up drive in, and the venerable Rainbow Drive In, one of his oldest customers. Malolo syrup is still used in Rainbow’s slush floats today.

Sanford remembers the growth of the disposable paper-goods side of the family. “Our family activity at nights was to repackage poi bowls and tapa-print food trays. There was a production line with my sisters, myself, my father, my mother, my grandfather — that was evening entertainment,” he says.

Sanford worked in the family business alongside siblings and cousins during nights and summers, while attending Iolani, and continued to work summers while earning a business degree from the Unviersity of Southern California. Tom, a McKinley High School graduate with no postgraduate education, kept the business humming and was the president and general manager by the time Sanford officially joined Malolo in 1977.

Tom says, “I was approached to sell [several times], but I held back, because I wanted to keep it for him to see what he can do.”

The Convenience Society

Sanford officially entered the family business at a time when canned drinks were rapidly gaining in popularity. He became the president more than a decade ago, about the same time that syrup sales started to decline.

“Syrups are not in great demand today because of all the ready-to-drink items. … Economically, our product is still one of the best buys,” Sanford says. “But today’s society demands convenience, so whenever you have a party it’s easier to buy the canned ready-to-drink items rather than taking a punchbowl and mixing ours.”

At the same time, more local companies began dabbling in disposable-goods distribution. In the 1990s, big-box retailers entered the scene. In addition, Malolo’s regular customers, the mom-and-pop food-service operators who needed their disposable goods were facing their own challenges.

Sanford says that anyone opening a restaurant these days seems to have some sort of national affiliation. “Very few family businesses are being started in our industry. You’ll have some, but to sustain it is a challenge. The food industry is a tough, tough industry. I think a lot of people who have been very successful, their kids probably said, ‘Well I don’t know if I want to get up at 4 o’clock in the morning and start making the beef stew and plate lunches and stay until 7 at night and start this process all over again seven days a week.’”

The softening market for disposable food service goods sent Sanford in a new direction a couple of years ago. “Janitorial was something that we felt would be helpful to expanding our business base, not too far away from our core business. We still stay with our core business, disposable food service, but I think you have to add things that sort of grow and we’re always looking for new opportunities,” he says.

Malolo also manages to remain competitive through a focus on customer service. Sales representatives see clients on a weekly basis. Malolo delivers the following business day. Its drivers will also unload most of the merchandise and put it away in a customer’s storeroom.

Sometimes, these deliveries are made by over-qualified drivers. Recently, an old customer, Yami Yogurt, called to say the Ala Moana shop was running low on lids. Sanford says, “So [Tom] and I made a delivery at lunch hour — threw a couple of cases in the back of the truck, drove down there and dropped it off. That’s how we do business here.”

The Last Guy in Line

Outstanding customer service may not be enough to sustain Malolo in the long run. Annual sales over the past five years have been pretty steady, in the neighborhood of $10 million to $11 million, and Sanford says Malolo has managed about a 6 percent increase each year. Sanford says, “You always try to look for growth. The thing is competition gets keener and keener. There are more people dabbling in and cutting in on businesses in everything.”

He hopes the janitorial side of the business will help boost their profit margin and he’s still on the lookout for other lines of products to add that make sense to their food-industry customers. He’s learned that perseverance pays off in Hawaii. “Keep going back. You never know what changes people’s minds. Never say never,” says Sanford. “Here in Hawaii, don’t burn your bridges because this community is so close, you never know who knows who. You never know you’re related, at times.”

FAMILY BUSINESS: Sanford Young confers in his Sand Island office with his father, Tom, and his cousin, You Mun Chang.

Malolo’s banker, First Hawaiian Bank vice president Wayne Suehiro, says Malolo is a lot more successful than the average family business in Hawaii. “I think people could learn a lot from the character of the business,” says Suehiro. “This is still Hawaii. It’s a small community and a small marketplace and your reputation will precede you in most situations. They have a tremendous reputation and I think that’s something that a lot of businesses could learn from.”

There’s still that ubiquitous succession problem facing family businesses across the state. Sanford’s two adult children are not interested in working for the family business. “The line of succession? We don’t have one,” he says. “I’m the last guy in line right now.”

However, he figures if he lives as long as Tom (who still puts in six hours a day as “head go-fer”), he has a good 30 years to give to the job. “Long term, who knows?” asks Sanford. “If someone comes tomorrow and knocks on my door and says this is how much you can get for this business, who knows what might happen?”

What about the syrups that made Malolo a household name in Hawaii in the first place and are already distributed as far away as Las Vegas and Southern California? “It’s more of a sentimental legacy type of thing for them,” says their banker, Suehiro. “They’ll never not sell it because that was the genesis of the whole business for them.”

Adds Sanford: “I think we’re happy with our niche here.”

Family Business Resource: The UH Family Business Center is Back In July, University of Hawaii management professor John Butler took the reigns of the Family Business Center, which had been dormant for months. Hawaii Business caught up with the new director as he was starting to formulate the center’s program. Why family businesses are important: Butler: If we lose them in a small state like this, what happens is the corporate headquarters leaves and support for community activities leaves. Why Hawaii firms can use service to compete: Butler: I think a lot of people don’t understand that it isn’t like going from Washington to Oregon. It’s a little bit different here and I think being local could have some real advantages. John Butler can be reached at 956-8582 or jebutler@hawaii.edu.

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