Hawaii Food Manufacturers Association

Survey of Members

April, 2003

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HFMA Members Profile

Number of Manufacturer Members in April 2003	85
Number of Manufacturer Members responding to Survey	50

Revenue by Type
Wholesale	85.2%
Retail	14.8%	Includes results of members with own retail outlet, craft fair and trade show sales, and sales from own web site.

Primary Market Segment
Gourmet/Specialty	18	36%	Appeals to both local and export high end consumers. Includes such products as jellies, cookies, wines, teas.
Local Type Food	12	24%	Hawaiian and Asian style foods targeted to local market (may sell at mainland areas with Hawaii ex pats).
Tourist	12	24%	Primarily targeted to tourist market (locals may buy as gifts and special treats). May also be exported to other tourist destinations, or sold overseas as a Hawaii Specialty product to previous Hawaii visitors.
Commodity Type Food	5	10%	Produce, milk etc. Competes directly with imports and sold to local grocery stores, restaurants, hotels, military.
Natural Food Market	3	6%	May overlap somewhat with gourmet/specialty, but targeted primarily at natural food buyers.
	50	100%

Primary Marketing Methods
Direct Sales Calls to wholesalers, retailers, distributors, brokers	58%
Media (radio, TV, Newspaper)	18%	Includes local and/or tourist media
Trade Shows	8%
Word of Mouth	8%
In Store Ads	7%
Website	1%	Most respondents have a websites, but did not consider it one of their primary methods of marketing.
	100%
If respondents listed more than one method, their response was split, e.g. 50% direct, 50% media.

Immediate Customers
	Percentage	Number of members selling to these customers
Distributors	31%	22
Retail Stores	22%	19	Gift , specialty stores, other non-grocery
Grocery Stores	14%	17
Restaurants/Hotels	11%	12
End Consumers	9%	8
Wholesalers	8%	10
Club Stores	6%	3	May overlap with Grocery stores
	100%
Most sell to more than one of the above. Therefore responses were split, e.g. 50% restaurant, 50% grocery.

Sales by Region	Percent Revenue in Region	Number of members involved	Details
Local	81%	50	Of the respondents who did no exports, many sited that their product was unsuitable for export, e.g. perishable, or high weight and low value. Others are not yet ready to pursue.
Mainland	11%	31	Many respondents selling to the mainland sell in Las Vegas; through retailers catering to Hawaii ex pats e.g. Hilo Hatties, or use California Distributors.
Foreign	8%	19	See export profiles for more detail.
	100%

Members with Web Sites		%	On-line sales?
Have	39	78%	27
Do not have	11	22%
	50	100%

Financial Data

Other Financial Data
Average percentage of current production to plant capacity	72.2%
Current Break Even Percentage (Profit / Revenue)	0.3%

Financial Trends

Revenue Changes
Percent change from 2002	6.2%	Percent revenue growth for the first part of 2003 compared to 2002
Percent change from 2001-2002	0.4%	This low growth figure primarily represents the effect of the 9/11/01 terrorist attacks. Most members have stated that the very large drop in sales in early 2002 was offset by increases in the second half of 2002.
Percent Change in Coming Year	14.5%	Expected increase over the coming 12 months.

Foreign Exports

Foreign Destinations	Number of Members Involved
Japan	13
Pacific Islands / South Pacific	4	Mainly military establishments
Taiwan	3
Hong Kong	2
Switzerland	2
Finland	1
Germany	1
France	1
Canada	1

Considering Trying or Increasing Exports		Comments and Detail
Yes	23	Needs markets / help with marketing (7)
		Would like to, but not sure where to start, needs more help with basics (6)
		Comfortable with current progress and knowledge(6)
		Want to increase sales overseas, needs distribution channels (5)
No	21	Low cost commodity / generic type / perishable product with too much overseas competition (8)
		Products are designed for local market, would not appeal to overseas markets (2)
		Too new, not ready (2)
		Freight costs too high to be competitive (2)
		High weight, low cost product - would not be competitive (1)
		Tried and lost contracts after 9/11. Will concentrate on mainland development (1)
No response	6
	50

Biggest Business Problem (by revenue level)	Under $200K	$200K - $1mm	Over $1mm - $5 mm	Over $5 mm	TOTALS
Shipping Costs (1)	2	4	5	4	15
Qualified Labor willing to work (3)	2	3	1	2	8
Medical Insurance too high for small businesses (2)		2	3	2	7
Government imposed barriers to small businesses (2)		3	1	2	6
Can't find good distributors / sales representatives	3	1	1		5
Insurance Costs too high (2)				2	2
Tourist Oriented, so business subject to tourist level		1		1	2
Affordable capital to grow		1	1		2
Products are grown locally, but not available in needed processed form (4)		1			1
Family Business Succession Issues			1		1
(1) Includes the cost of shipping in raw materials and packaging/jars, shipping out finished goods causing them to be uncompetitive, plus the added problem of additional freight charges to neighbor islands for neighbor island members.
(2)Overlapping issues. Includes taxes, regulations (organic, processing, water, etc), insurance (health, workers comp)
(3) Labor turnover, don't show up after a few days, won't work very hard when on the job, also includes lack of qualified management, i.e. very few local managers have sufficient experience in efficient and sophisticated manufacturing practices.
(4) Examples: Ginger is grown locally, but has to be imported from Australia in powered form. Mango, papaya etc. grown locally, but have to be imported from Thailand in dried form. Hawaiian Salt is all from the mainland. Guava puree must be imported, not available here. Many people mentioned this, but under the category of "What locally grown products do you use?” not under this particular "What is your main problem?" category. So, this problem is more widespread than indicated above.

How can the HFMA do more to help your business? (by revenue level)	Under $200K	$200K - $1mm	Over $1mm - $5 mm	Over $5 mm	Totals
Organize marketing programs with local retailers. (1)	1	4	1	3	9
Sharing of business knowledge among peers / networking opportunities.	2	2	1	3	8
More cooperative efforts among members to lower costs (2)	2		2	1	5
Some kind of group fulfillment/warehousing center on the mainland.	3	1			4
Business Education - all areas (3)	1	1	2		4
Help in locating distributors (4)	2		1		3
Cooperative marketing on the mainland, e.g. "Aloha Day" on mainland as retail holiday.	1	1			2
State sponsored mainland & foreign promotion (too expensive otherwise)			2		2
Raise awareness of Hawaii products as worth the greater price		1			1
More grant moneys to support growth.		1			1
HFMA can do more to represent the industry to government.				1	1
Programs to reach more members and increase visibility/ less emphasis on trade shows.				1	1
Advertising in different publications - In Flight Magazines, to cruises, etc.		1			1
(1) Devise win win situations, where retailers don't take risks, but products are tested and hopefully picked up if successful. Do more in store Made in Hawaii product promotions in general.
(2)Members get together to cooperate on shipping to mainland, Europe, and other areas, and cooperate in ordering ingredients and supplies in bulk to ship in (to help lower shipping costs).
(3) Newer members want basic knowledge - legal, accounting, manufacturing techniques. More established companies would like information on advanced issues such as exporting. HFMA could help provide contacts and access to resources.
(4) Many members are having problems locating a distributor even though only 3 brought it up under the category of how HFMA can help. Some need them on the mainland, others in foreign countries.