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Economic effects of blending Kona coffee analyzed

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By Andrew Hetzel

A new study commissioned by the Kona Coffee Farmers Association touts the benefits of legislating that all products sold with the label Kona Coffee within the State of Hawaii should consist of 100% coffee grown in Kona.

While I am in agreement with the concept of truth in labeling and believe that the origin and percentage of coffee blends should be identified on packaging, I disagree with the assessment that a 100%-only restriction would benefit the Kona coffee industry (but may be a windfall for other coffee growers in Hawaii outside of the Kona district).

My good friend and colleague Dr. Shawn Steiman makes a detailed technical analysis of the report on industry blog Roaste. I recommend that you read it at www.roaste.com/CoffeeBlogs/sha…

Additionally, I find the study makes two additional assumptions that are incorrect:

1) All Kona coffees are good and desirable. False. Unfortunately, 100% Kona Coffee does not necessarily equate to 100% ‘good’ coffee. Being the only licensed coffee Q grader in Hawaii and one who is presently engaged on a project funded by the USDA to grade coffees in the State, I find that the far majority of 100% Kona coffees I have sampled directly from farms or on retail stores shelves to be of marginally acceptable quality, and most a poor value for their high selling cost in comparison to other world origins.

A rare few are exceptional, but these coffees have largely pursued a strategy of developing and and marketing their own estate label brands instead of relying on the Kona appalachian moniker to justify their high cost to consumers.

In the commercial coffee trade outside of Hawaii, 100% Kona Coffee often occupies the same “exotic” designation as Jamaica Blue Mountain Coffee, Nepal Coffee and even Kopi Luwak, all high-priced novelties that has some measure of fame on the primary basis of marketing and inordinate cost rather than commercial viability.

This market position must change in order for the origin to survive and no amount of labeling will influence the purchase decisions of commercial traders or roasters — only taste will change the impression of professionals.

2) All Kona blends use 90% inferior commodity grade coffee to complete their products. False. Although I have not worked on behalf of any company to develop a Kona blend, I find it highly unlikely that commodity grade coffees from other origins are being used in typical Kona blend products sold within the State of Hawaii.

More likely, specialty grade coffees from Central or South America would be used for this purpose to create a mild and nondescript flavor, as taints and faults in commodity grades would be easily identifiable to even the most novice palate as undesirable.

There is no direct correlation between price and quality where coffees of differing origins are concerned, so any assumption that coffees being used for blending are inferior to domestic Hawaiian coffees on the basis of price is incorrect.

The study concludes: The blenders’ loss in the No Blending case would be offset by the benefit of improving consumers’ perception of the quality of “Kona Coffee” by avoiding attaching that appellation to a product whose taste is indistinguishable from commodity coffee.

Unfortunately, the greater problem is that most Kona coffees ARE indistinguishable from the coffees used for blending, thus creating a market opportunity for lower cost and subsequently better value blends that approximate the same result.

The only sustainable solution for Kona is to innovate, develop and improve the flavor profile of Kona coffee to match modern commercial and consumer taste preferences through research and then enact strict quality standards for harvesting, processing and eventually roasting.

We must make Kona coffee more desirable for use in modern methods of extraction, like espresso, and provide some objective assurance of quality and traceability for coffees produced to justify the high cost of operating in Hawaii. We must add value, not simply restrict use.

I urge the Hawaii Legislature to not restrict the free market from purchasing blended Kona coffee. In the absence of a blended sales outlet, the price of Kona coffee will collapse, as surplus supplies flood warehouses and Hawaii store shelves, thus creating further hardship for American farmers already hindered by the cost of doing business in the U.S.A. and unique costs of operating in Hawaii.

Furthermore, Hawaii does not exist in a vacuum and is not so distant from the U.S. Mainland or Japan as it may sometimes feel. As prices fall, Kona coffees will merely be sold off to other markets that do not operate under the enforceability of Hawaii’s State laws, further hindering small farmers who cannot reach store shelves on foreign shores.

Business as usual is not the answer, but neither are market restrictions. Make Kona coffee something identifiably unique and of great value, then consumers will no longer be satisfied by anything less than 100%.

Andrew Hetzel is a business advisor to multinational coffee retailers, roasters, institutional investors and industry trade organizations. He is founder of Cafemakers and a board member of World Barista Championship UK, Ltd a board member of World Barista Championship UK, Ltd. Find out more at www.coffeestrategies.com/

One Response to “Economic effects of blending Kona coffee analyzed”

  1. “I am in agreement with the concept of truth in labeling and believe that the origin and percentage of coffee blends should be identified on packaging,…”

    Andrew, I think that’s all what is needed!

    Please, no judgement on what a single estate in Kona produces (Me too had superb to just plain lousy Kona estate coffee). That happens in every region’s coffee estates, as you must know. Therefore enforced quality controls and education is essential for all Kona coffee farmers. Totally agree with you here too.

    The fundamental business model for any regional specialty agricultural product is based on SCARCITY. Yet the 10% Kona Blend biz model is based on GROWTH, as most corporations are. The processors theoretically could supply all the USA with 10% Kona Blends, but they don’t! Cherry prices are falling, no parchment is bought, their payments to the farmers are overdue, and by tomorrow many of them might be out of business. So they are indeed lousy marketers of their products, because the fame and reputation of Kona coffee as the worlds second great coffee they got was FREE! Kona’s name on coffee is an asset known the world over, and therefore faked the world over.
    Now if 10% Kona Blends could indeed convince the world to be a great coffee, I would rest my case.

    Don’t blame it only on this particular economy, because it’s a revolving story in Kona coffee land. Big farms and processors go bust when the economy goes sour, but small coffee farmers survive and rebuild the name. Just till the next ones come along and grab it again.

    And so the story goes.

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