Two familiar brands in the islands — Hawaiian Isles Water Co. and Hawaiian Isles Coffee Co. — have shut down under a pile of debt and in the wake of ongoing bankruptcy proceedings, according to the companies’ attorney.
Bankruptcy attorney Chuck Choi said Friday that the judge in the case involving Honolulu parent company HIE Holdings Inc. has appointed a trustee to oversee the Chapter 11 reorganization proceedings, and an auction is being planned for company equipment being stored in a Kapolei warehouse.
Hawaiian Isles Water, with its colorful label featuring a hula dancer, was one of Hawaii’s best-known bottled water companies, focusing on single-serving plastic bottles in various sizes that were found on store shelves throughout the state.
The company, founded in 1995, also distributed 5-gallon water bottles for home and office use. The operation shut down in late February.
Coffee products from Hawaiian Isles Coffee, until recently known as Hawaiian Isles Kona Coffee Co., also were sold in stores across the islands.
The company, incorporated in 1994, roasted and packaged whole bean and ground coffee brands at a leased warehouse on Mokumoa Street in Honolulu until the landlord evicted the operation in July and locked it out from the warehouse, according to court documents.
HIE Holdings provided support to the two operating companies, including sales, general and administrative, distribution and warehousing, and maintained two warehouse facilities in the Mapunapuna area.
HIE Holdings and the two operating companies had about 100 employees when the bankruptcy was filed in August, but now there are only about 50 employees, Choi said.
Officials with HIE Holdings could not be reached for comment, but bankruptcy documents point to a company dogged by liquidity problems.
According to a declaration by HIE Holdings President Michael H. Boulware, sales at both operating companies shrank during the COVID-19 pandemic largely due to lack of adequate working capital.
Sales at Hawaiian Isles Water plunged from $12.5 million in fiscal year 2020 to $7.25 million in fiscal year 2022, he said, while sales at Hawaiian Isles Coffee decreased during the same three-year period from $9.8 million to $7.3 million.
Diminishing sales made it difficult to pay the overhead on seven or eight commercial leases, including neighbor island warehouses, and the company struggled to meet payroll for employees located on all the major islands, Boulware said.
But HIE Holdings had other problems.
The state Department of Taxation in September 2020 sued Hawaiian Isles Water to collect container fees that were past due under the state’s recycling law.
In May of last year the Circuit Court granted a $2.1 million judgment in favor of the state, and the tax department served “garnishee summonses” on many of the company’s retail customers, which compounded the firm’s liquidity problems, according to Boulware.
In 2019 several Kona coffee farmers named Hawaiian Isles Coffee — then known as Hawaiian Isles Kona Coffee — and a dozen or so major national retailers in a class-action lawsuit claiming they were selling “Kona coffee” that contained little or no actual coffee grown in the Kona District of Hawaii island.
According to the suit, the company “deliberately misleads consumers into believing that Hawaiian Isles coffee products contain significant amounts of premium Kona coffee beans in order to justify the high price Hawaiian Isles charges for ordinary commodity coffee.”
“The deceptive marketing slogans, product names, and package designs are all intended to trade off the reputation and goodwill of the Kona name,” the suit said.
In a settlement reached last year the company agreed to pay the farmers $800,000, remove “Kona” from its company name and email its subscriber list to explain the difference between 100% Kona coffee and Kona coffee blends.
According to Boulware’s declaration, Hawaiian Isles Coffee was able to make only the first payment of $375,000 due under the settlement.
Meanwhile, landlords on two different islands went to court last year in a move to evict the company from property it was leasing, he said.
“It just goes to show you how difficult it is to do manufacturing in this state,” Choi said. “COVID didn’t help.”
Hawaiian Isles Water was carried by major retail and grocery chains in Hawaii and smaller stores as well. Sheryl Toda, Foodland spokesperson, said its stores stopped selling Hawaiian Isles Coffee before the pandemic due to “production issues.”
Packs of 1.5-liter bottles of Hawaiian Isles Water still might be on some store shelves, she said, adding that Foodland is selling out the rest of its product.
News Source: https://www.staradvertiser.com/2023/03/12/hawaii-news/debt-shuts-down-hawaiian-isles-water-coffee-companies/amp/