KALAHEO — Koloa Rum Company reported 2017 annual revenues and profits well above those earned in 2016. The company will award all of its employees with $1,000 bonuses and 5 percent salary increases each.
The financial growth is attributed to Koloa Rum Company’s steady climb to becoming the largest Hawaii-based premium rum brand, as well as the recently enacted Craft Beverage Modernization and Tax Reform Act, which provides short-term reduction on alcohol federal excise tax for the first time since the Civil War.
“2017 was a remarkable year for Koloa Rum Company,” said Koloa Rum Company President and CEO Bob Gunter. “We are grateful that Congress recognized the burden that the FET placed on small distilleries like ours. The reduced FET and corporate income tax rates allowed us to reinvest savings back into our business and, most importantly, reward our hardworking team members.”
Koloa Rum Company’s financial success will also allow the company to increase its match to the employees’ 401k plan from 4 percent to 7 1/2 percent in 2018; add a new bottling line to increase its production capacity and operating efficiency; accelerate plans for a new distillery; and bolster its distribution, sales and marketing programs.
The company employs 31 individuals in Hawaii as well as one staff member in California and another in Florida.
Congress last year passed a tax bill that benefited the alcohol industry.
“Under a provision that originally slipped into the Senate version of the bill, beer, spirits and wine producers will get a two-year reduction in federal excise taxes worth $4.2 billion,” CNN Money reported. “Small brewers will see their tax rate cut in half, from $7 to $3.50 per barrel for the first 60,000 barrels. Tax rates for liquor plunge even more, from $13.50 to $2.70 per gallon for the first 100,000 gallons produced or imported.”
Koloa Rum, pointing out it is a privately held company, declined TGI requests for figures on 2017 and 2016 revenues and profits.
But nationally, statistics show people are drinking more.
In 2017, spirits companies — whiskeys, rums, vodkas and other spirits — sold 4 percent more liquor in the United States, hitting a record $26.2 billion, Reuters reported.
“The spirits sector had a banner year in 2017, driven by consumer confidence in the U.S. economy, product innovations that adult consumers want, and a fascination with premiumization across categories,” council president and CEO Kraig R. Naasz said in a statement. “The U.S. distilled spirits market is the second most valuable in the world, and we continue to promote consumer-friendly policies that expand responsible access to our products.”
According to the Distilled Spirits Council of the United States and reported by Forbes, vodka remained the largest category, representing a third of all volume, with sales rising 3 percent to $6.2 billion in 2017. Among other spirits, American whiskey was up 8.1 percent for 2017 (or $252 million to $3.4 billion), tequila was up 9.9 percent (or $246 million to $2.7 billion), cognac rose 13.8 percent (or $200 million to $1.6 billion), and Irish whiskey was up 12.8 percent (or $114.8 billion to $897 million).
Established in 2009, Koloa Rum Company produces artisanal, single-batch Hawaiian rum and ready-to-drink cocktails at its distillery in Kalaheo, and operates the island’s first and only distilled spirits Tasting Room and Company Store.
The company’s award-winning rums are distilled in a vintage copper-pot still and uses only the finest local ingredients, including Hawaiian cane sugar, pure mountain rainwater and aloha.
Koloa Rum Company’s portfolio includes its premium Kauai White, Gold, Dark, Spice, Coconut and Coffee rums.
It has been recognized as one of Hawaii’s fastest-growing companies.
“So we have broad appeal,” Gunter said. “The breadth of our portfolio gives us a much wider audience reach in terms of potential customers.”
In January, Koloa Rum released its first-ever Kauai Reserve Three-Year Aged Hawaiian Rum. Products are available for purchase online, at select retailers nationwide, as well as in Canada, France and Japan.
Gunter said the company began producing rum in September 2009, has enjoyed growth each year, including double digit increases in case sales and revenues.
Over the last three years, it has seen case sales increase 130 percent and consolidated revenues up 90 percent over that same time.
“That growth is maintaining a consistent curve upward,” he said Friday in a phone interview with TGI.
Despite being in what Gunter called a “hyper competitive industry” against bigger brands and bigger money, that growth is expected to continue.
“For us to experience this growth over a long period of time, that’s something we feel very positive about,” he said.
About 200 to 300 people visit the Koloa Rum store and tasting room daily. They experience the brand, firsthand, and they remember.
When they leave, Koloa Rum stays in contact, primarily via social media.
“We develop relationships with our customers,” Gunter said.
There are reasons for Koloa Rum’s success.
It produces a superior product, Gunter said, and provides what people are after: quality, authenticity and uniqueness.
“Consumers nowadays are much more discerning in terms of what they buy, what they consume,” he said. “They want to know how a product is made, where it’s made.”
Koloa Rum is made on a small island in the middle of the Pacific Ocean.
“We have a very compelling story to tell and we do tell it,” he said. “We do our best to align ourselves, leverage the fact that we are a Kauai product.”
“All of that together has helped us build the momentum and the foundation that we have now,” he said.
Gunter praised the team at Koloa Rum. They are not rock stars, movie stars or people with MBAs from Harvard.
“Most of us involved with this are from here,” he said. “We truly are a homegrown product. We’re working hard every day we continue to do the right thing, and to do those things over and over.”