Fruitful Business

Hawaii's two commercial wineries enjoy continued sales growth

September, 2002

The famed slopes of Haleakala, Mauna Loa and Kilauea have long established themselves as top tourist attractions. But these sites, home to the only two full-scale commercial vineyards in the state, yield much more than just panoramic views.

Although you won’t hear these craters mentioned in the same breath as some famed California valleys, Hawaii’s wineries continue to grow in popularity — and sales — among residents and visitors.

Maui’s Tedeschi Vineyards Ltd., located 2,000 feet above sea level on Haleakala, produces about 23,000 cases of wine each year. The family-run Volcano Vineyards LLC, nestled on 64 acres between Mauna Loa and Kilauea on the Big Island, annually produces about 6,000 cases.

Volcano Vineyards’ annual revenues hit $750,000 in 2001, General Manager Scott Bothof says. He and his father, Delwin, purchased the operation from Mauna Loa Grapes Inc. in 1999. “Since I’ve taken it over in March of 1999, we’ve been on a steady 20 percent revenue increase each year,” Bothof says. “This year will be the first profitable year for the company in a long while.”

Tedeschi Vineyards saw a 2 percent revenue increase in 2001 from the year prior, President Paula Hegele says. Even after weathering a drop in visitors to its Maui retail room after Sept. 11, revenues reached $2 million last year. That figure is projected at $2.6 million for 2002.

“When we talked to stores, they told us that even though visitor numbers went down, a lot of local residents were still buying our wines,” Hegele says. “So we have a local following, and we’re not as dependent as we thought we were on tourism.”

Hawaii’s wine production is just a drop in the bucket of the more than half-billion gallons produced yearly in the United States, according to the U.S. Treasury Department’s Alcohol, Tobacco and Firearms Division. But Tedeschi and Volcano wineries manage to make an impression with their own signature products.

Tedeschi uses about 10,000 gallons of pineapple concentrate from Maui Land & Pineapple Co. Inc. to create its top-selling products, including its most popular, Maui Splash.

Hegele also reports success with its newest (and highest priced) product, which debuted in late 2000: the Framboise de Maui Raspberry. As of this story’s writing, the winemaker had almost sold all of its first 1,000 bottles, which retail between $35 and $45.

“We know from the market that the raspberry wine is something we want to continue, but we’re never going to produce a great deal, because of the cost factor and limited fruit supply,” she says.

Unlike Volcano Winery, Tedeschi distributes its products to Mainland wholesalers in addition to Hawaii retailers. Tedeschi ships about 5,000 cases to the Mainland, mainly the West Coast, each year.

Guava Chablis remains the most popular choice among Volcano Winery patrons. The wine earned a bronze medal at the Atlanta 2001 International Wine Summit. Another Volcano specialty is its Macadamia Nut Honey wine, made with honey produced in the Big Island’s Captain Cook area.

The construction of a new building will accommodate an additional 10,000 gallons of vat space for Volcano Winery. That translates into a production increase of about 20,000 cases over the next two to three years, Bothof says.

Both winemakers partially attribute last year’s success to the passage of a state reciprocal shipping law, which took effect in July 2001. The law allows Hawaii wineries to sell their products directly to customers in more than a dozen states with similar laws. For Tedeschi, that simplifies the cumbersome — and costly — process of dealing with wholesalers and retailers.

The law enabled both companies to begin selling products on their Web sites. But the immediate benefit was a boost in local retail sales.

“That’s been huge for us,” Bothof says. “Mainland customers who visit our retail room can have wine shipped home, so they don’t have to carry it on the plane. They’ll buy three or four extra bottles, since they can ship home more than they could carry.”

Hegele anticipates the reciprocal bill will encourage visitors to become loyal customers, even upon returning to their Mainland homes.

“We’re optimistic that it will help us build a strong customer base,” Hegele says. “The value is there for those repeat customers, and visitors have developed an appreciation for local products.”

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