Kona Blends
16 February 2009
All coffee is greatly affected by growing conditions and the conditions in
Kona are perfect. The Kona coffee district is a tiny little region
on the Big Island of Hawaii with the exact micro climate and soil conditions
required for growing wonderful coffee. This makes Kona coffee one of
the rarest and best coffees in the world. Any time you have a high
quality product that is rare, you will have problems with adulteration and
fraud.
If you purchase Kona coffee from a store anywhere other than Kona, you are
very likely purchasing a Kona Blend. Here in Hawaii there is a state
law that requires a minimum of 10% Kona coffee and the percentage has to be
written on the label. On the mainland there is no such law so a "Kona
Blend" might be 0% Kona coffee. Even at 10%, that means a Kona blend
is 90% cheaper filler beans. If it's 90% something else then should
it be called Kona coffee?
Blending, whether it is with coffee, fruit juice, imitation crab, peanut butter
and chocolate, or any other product, is a natural part of food preparation.
Certainly the mere act of blending should not be outlawed. I do not have
a problem with Kona blends and I think they have an important place in any free
market. What I do have a problem with is dishonest marketing.
In 1996, a Kona coffee blender by the name of Michael Norton was
convicted and sentenced to 30 months in prison. He perpetrated what is
known as the Kona Kai scandal and it has had a serious effect on all
specialty coffees, especially Kona coffee. From 1993-1996, Michael
Norton imported 3.6 million pounds of inexpensive coffee from Central
America, mostly Panama and Costa Rica. He relabeled this less
expensive coffee as "Pure Kona Coffee" and sold it from his Berkeley,
California business as Kona Kai coffee.
Bacardi Blend
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$1000 Blend
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Kitty Blend
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Norton's coffee scam was never deemed illegal although he did eventually
pleaded guilty to one count of wire fraud and one count of tax evasion.
He made over $15 million dollars from this fraudulent scheme but paid
less than $1 million in restitution and delinquent taxes. As for the
other $14 million, I suspect that Michael Norton got out of prison long
ago and has managed to keep most of his considerable plunder. He has
always denied cheating his customers, claiming that they purchased
"Kona Style" coffee and that is what they received.
The Hawaii Department of Agriculture now has a trademark on the phrase "100%
Kona Coffee" and the Hawaii state law that requires a minimum of 10% is another
step towards honesty but the issue is still far from settled and there are
plenty of heated debates on both sides of the issue.
Some Kona coffee farmers feel that only 100% Kona coffee should be allowed and
everything else should be illegal. In my opinion, that is short sighted,
unrealistic and selfish. Some Kona Blends can actually be quite good and
all Kona Blends certainly help spread the Kona name. If it weren't for
Kona Blends, most consumers wouldn't even know about Kona coffee. The mere
act of calling it a "Kona" blend infers that Kona coffee is something special.
The large blenders often fight any legislation that restricts blending.
They have defended their right to sell whatever they want and call it whatever
they please. I have no problem with that as long as they clearly state what
it is that they are selling. Let the consumer decide whether or not to buy
it. As a consumer, I want the choice. I just don't like misleading
labels and I think that refusing to list a product's ingredients is dishonest.
Currently, Hawaii Coffee Company is the largest Kona coffee blender in the
state. Their coffee is sold under two brands: Royal Kona Coffee and
Lion Coffee. They clearly label their blends as 10% Kona Blend and they also
sell more 100% Kona than anybody else. Jim Wayman is the president. I've
met him a couple times but I don't think he remembers me. After all, he runs
a multi-million dollar company and I'm just a small time farmer that can't even
afford to replace his crappy tractor.
Jim Wayman, among others, opposed a recently introduced Hawaii legislative bill
(HB931)
that will raise the percentage of Kona blends from 10% Kona to a minimum
of 51% Kona. The primary argument against this bill is that it will raise
prices and therefore lower sales. I heard the words "crisis" and "ruin"
but I'm not sure I see the correlation.
Raising the minimum percentage will certainly decrease the profit margins on
blended coffee but I'm not convinced that it will have a negative impact on
sales of 100% Kona coffee. The blenders would certainly sell less coffee
and that would likely impact the price of coffee cherry (i.e. farmer income).
Exactly what effect it would have is debatable so let's do the math...
A pound of 10% blend currently costs the blenders about $3.70 (and sells for
$16) while a pound of 50% would cost about $6.50. Certainly that cost
increase would be reflected in the retail price which would likely decrease
sales of Kona blends. But, unless it decreases sales by more than 40%,
there would actually be a higher demand for Kona coffee which would raise the
price of cherry (i.e. farmer's would make more money). If that's the
case then I don't think "crisis" and "ruin" are the correct words to describe
the situation, at least not for Kona coffee farmers.
Such a drastic percentage increase could cause all sorts of unforseen changes,
good and bad. There's no telling what would really happen and nobody has
ever presented me with convincing evidence one way or the other. If we're
going to change the legislation, I think baby steps would be a much more prudent
approach.
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UPDATE: The proposed bill (HB931) never even made it to
committee. Indeed, it had so many drastic changes it's almost as if it
was designed to fail. I would like to see a higher minimum blend
percentage yet when it came to a vote, I opposed the bill. I felt that
the bill, as written, was simply too reckless. I would happily support
a more cautiously written bill, especially if it was backed up with a fair
and thorough market study.
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There is more at stake than just blend percentages. I was recently
telling a friend how McDonald's looked into selling Kona coffee because it is
the only specialty coffee Made in America. Even if the entire Kona crop
was sold as 10% blend, there's still not enough to supply McDonald's so they
dropped the idea. My friend said that McDonald's does sell Kona coffee
and even produced the cup she had purchased that morning as evidence.
What McDonald's is selling, right here in Kona (but not on the mainland), is
"Royal Kona" coffee. Royal Kona is a brand name. Nowhere on the
cup did it say it was Kona coffee. Is that deceptive marketing?
Should Royal Kona be allowed to use the name Royal Kona on non-Kona
coffee? What about the name Kona Earth? We only sell 100% Kona
coffee so should we be able to use the name Kona Earth or should the
government force me to change my company's name?
In addition to the increase from 10% to 51%, the new bill would also require
all coffees origins to be listed on the label and it would be illegal "to use
the name of a geographic origin on any coffee label as part of a brand name or
otherwise". If this bill was passed as is then after July 1, 2011 the name
Kona Earth would become illegal even though we only sell 100% Kona coffee.
Point of origin legislation isn't new. Sparkling wine can't be called
Champagne unless it is from the Champagne region of France. California
wine growers require 75% of their grapes to be from California. Jamaica
Blue Mountain coffee is very strictly controlled by the Jamaican government.
Point of origin legislation definitely has it's place but it can also get out
of control. I've spoken with some Jamaican coffee farmers and I
certainly don't want that kind of strict government control here in Kona.
If Michael Norton of the Kona Kai scandal hadn't done any wire fraud or tax
evasion, chances are he'd still be selling 0% Kona coffee to unsuspecting
consumers. He was stopped but unfortunately he's not the only dishonest
person doing business. I've seen packages of Kona Style coffee that
contain 0% Kona coffee. Anywhere other than here in Hawaii, that is
totally legal.
As much I would love to stop all the dishonest people, I don't want the
government telling me what to do. I seriously doubt the current
legislation will be passed and I'm fine with that because I'm afraid it
changes too much all at once. Maybe outlawing all Kona blends really
would ruin the demand for Kona coffee, or maybe the demand will go through
the roof, there's no way to know for sure. Either way, I'll continue
to sell only 100% Kona coffee and if I ever do sell
anything else, I will say exactly what it is.
10% Beauty Blend
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