Something Is Brewin

Kona coffee has a new mainland fulfillment center

June, 2003

While there was some “brew-haha” several months ago when Gov. Linda Lingle journeyed to Washington, D.C., and personally asked officials to serve Hawaii-grown coffee, one local coffee association quietly made inroads toward widespread Mainland distribution. In April, the Kona Pacific Farmers Cooperative (KPFC) began a partnership with a subsidiary of $130 billion global trader Mitsui & Co. Inc. The deal is for Mitsui subsidiary Intermodal Terminal Inc. to do fulfillment for KPFC, with an eye toward doing much more.

George Yamashita, who heads strategic business development for Intermodal Terminal Inc., says, “We do all the freight forwarding, supply chain management and order fulfillment for Mitsui and also for outside clients. We just started functioning [as KPFC’s] order fulfillment center here in Long Beach, Calif. We have a warehouse with square footage of about 1 million here and we have their products in our warehouse stored inventory.”

Yamashita says they want to assist KPFC with international and domestic trading and explore opportunities in marketing, promotion and financing. KPFC project manager Michael Nagasaki says KPFC finalized its marketing plan in 2002. It focuses on the message to “Buy America,” since Hawaii is the only place in the United States that grows coffee.

“Gov. Lingle helped us by actually giving it to the first lady and President Bush,” says Nagasaki. “We’re going to get to the White House. From the White House we get to the government agencies. From the government agencies we can basically get to the major restaurants. From the major restaurants we’ll get down to the consumers.”

The governor’s senior communications adviser Lenny Klompus, was with her in February when she presented Hawaii-grown coffee to first lady Laura Bush and to presidential adviser Karl Rove. The first lady told the governor that since the White House serves only domestic wines, it made sense to serve domestic coffee. “We are cautiously optimistic that this is going to happen,” says Klompus.

The bulk of the farms that grow coffee in Hawaii are in Kona. According to the Hawaii Agricultural Statistics Service, of the 710 farms in the state, 680 are on the Big Island and 30 are on Kauai, Maui and Honolulu. Of the 8.5 million pounds of Hawaii-grown coffee projected to be sold during the 2002-2003 season, the Big Island is expected to sell 3.4 million pounds, or 40 percent of the state’s coffee. While coffee production statewide is expected to be 6 percent over the last season’s harvest of 8 million pounds, the price paid to Hawaii farmers, $2.30 per pound, is down 6 percent.

Yamashita says that because there is a lot more demand than supply of Kona coffee at the moment, there is a lot of potential for growth. This pleases the former Hawaii resident. He says, “There are a lot of logistics and freight-forwarding companies that are here or based in Hawaii, but there are not a lot that have the background of a trading company with the scale of Mitsui, so in that sense I think it’s really beneficial for KPFC.”

Nagasaki says the United States buys an estimated 18 billion pounds of coffee a year. “You could double [what Hawaii produces] and still not sell enough coffee to the United States. It just hasn’t been marketed. With security and people being afraid of buying imported goods, I think it’s a good chance for the coffee industry to come back.”

The opportunities go beyond just the expansion of Hawaii’s coffee industry. At the time of this writing, Nagasaki was in talks to form a Honolulu-based marketing company to promote other Hawaii products through the Intermodal connection. On the Long Beach side, Yamashita says, “The potential to move cargo out from Hawaii and I guess overall business expansion for businesses in Hawaii is more cost effective by having an order-fulfillment center here.”

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Author:

Kelli Abe Trifonovitch