Exclusive Interview with Mr. Paul W. Case, Jr., Partner of Kolani Distillers LLC located in Paia, Hawaii

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Exclusive Interview with Mr. Paul W. Case, Jr., Partner of Kolani Distillers LLC located in Paia, Hawaii 

Q: What is your full name, title, company name and company location?

My full name is Paul W. Case, Jr.

Title: Partner

Company name: Kolani Distillers LL C.

Company location is: 320 Baldwin Avenue, Paia, Hawaii 96779

Q: What inspired you to build a rum distillery and why on the island of Maui?

In my pre-distillery days, I was a senior corporate executive in the cable television industry. The last company I worked for was acquired in 1991 and I got a nice “golden parachute” check. I decided I would work on my own ventures going forward. Since then, I built several companies but always wanted to do something with my son. Hawaii had been our family’s favorite place to vacation during my corporate career and…. I wanted to ultimately retire in Maui. Starting a family business with my son in Maui seemed to make a lot of sense. He and I started exploring various Hawaii based business opportunities including coffee, flowers, organic fruit crops, but in the process discovered that there were no distilleries in Hawaii.

Hawaii is one of the great sugar growing islands of the world so we decided on building a distillery and making rum our flagship product.

Q: Your brand name is Old Lahaina. Can you tell us why you chose this name?

We named our brand Old Lahaina because the entire history of rum in Hawaii started in Lahaina. The British introduced rum to Hawaii when they discovered these islands in the late 1780’s. Those British sailors brought their rum ashore. When the sailors, the rum, and friendly local native ladies all mixed together, a world famous party began. News of the Lahaina area revelry reached the ears of the Congregationalist Church ministers in New England. They quickly decided missionaries needed to be dispatched immediately to convert these partying locals to Christianity. The missionaries came in the 1830’s and decided that the first step in snuffing the party out was to get the rum out of Lahaina. A period of “rum wars” began. In addition to passing anti-rum laws, the missionaries even fired cannon on the rum laden ships in the harbor. Fortunately for us, they never could completely extinguish the party and as we say on Maui …….. it continues to this very day! Rum became a part of the Hawaiian culture with the great King Kamehameha ultimately owning his own distillery. Therefore, Lahaina is the birthplace of distilled spirits in Hawaii and our brand reflects rum’s early Hawaiian history.

Q: Where did you learn to ferment and distill to get your operation up and running? 

We started working on the distillery idea in the year 2000 – several years before craft distilleries got going. At that time, there were only 50 DSPs in the entire US. Distilling was a “lost art” in America. Few resources were around in the way of consultants … so we had to figure things out ourselves. It took us several years to get our distillery operational. We built the distillery ourselves. By that, I mean we largely turned all the bolts, did the electrical installation, and pipe wrenched steam fitting ourselves - with the help of a small group of locals. After construction, we began making a really mediocre rum product. Not satisfied, we didn’t sell our first bottle until 2009 when we became confident that the product was good enough to put on the shelves. My son came up with the original rum formulations and we have worked on making our products better and better each year. 

Q: I understand that your distillery made it onto the History Channel’s “Modern Marvels”, can you tell us a little more about this?

In 2005, Modern Marvels was doing a show called Sugar and they decided to base the show on Maui’s sugar industry. Maui is perennially rated “Best Island in World” by travel magazines so we get lots of crews doing food, beach, rain forest, ocean, wind surfing, and other documentaries coming here to film. Anyway, Modern Marvels was documenting the various Hawaiian businesses based on sugar and found out there was a distillery on island. They visited us to get some footage, liked our story, interviewed us, and featured Kolani on that episode. In short, we got lucky! 

Q: As all our readers know by now, producing rum on an island has a lot of challenges. What were some of the challenges you faced when you first opened up your distillery?

We were the first distillery in Hawaii so local fire, health, waste water, and even the liquor department had little idea how to deal with us. It took time to work through those issues. Other big problems included finding motivated and focused employees within an island culture that is by its very nature “laid back”. Transportation costs to islands are a huge expense. In our case, freight represents over 30% of our overall manufacturing and distribution costs to this day. The worst start-up problem was a self inflicted wound. I took a co-pack deal to produce another company’s product in our facility thinking that would give us a base level of production to cover our overhead as our brand got going. Those outside guys turned out be really bad news and nearly killed us. Great partners/investors are a blessing and bad partners are your worst nightmare. Lots of new distilleries are investor/partner financed. My advice - choose your business relationships (investors, distributors, and employees) very carefully … with the same care you’d pick a spouse. If not, you will soon understand it’s easier, less painful, and much less expensive to get a personal divorce than a business divorce.

Q: As the years have gone by what challenges are you currently facing and do you foresee ever overcoming them?

Right now, our focus is on volume growth, making our existing products better, improving our margins, and increasing our product line. Our family owns this business outright. We have no debt and no outside investors. We definitely like operating this way but that means we must fund all our brand development, promotional activities, and capital needs internally. Our costs are significantly higher than mainstream Caribbean rum producers but we also strongly believe that rum is the next “ultra premium” spirit category. In addition to making outstanding tropical cocktails, the truly great rums of the world are every bit as sophisticated and luxurious as the great scotches, cognacs, bourbons, and vodkas. That fact is just starting to be recognized. As ultra premium rums become popular, the Caribbean cost advantages become less pronounced vis-à-vis the rums of the 50 US mainland states. 

Volume growth via outside Hawaii geographic expansion would be a big and expensive move for us. Hawaiian rums have very small mainland market recognition at this point and we would have to fight our way on the mainland shelves. We continue to work on figuring what the next best moves are for us. Line extensions to other flavors, completely new spirit lines, better local brand promotion, and improved processing equipment might be better alternatives to broadening our geographic reach.

A really big issue for us is the fact that the last Hawaiian sugarcane plantation and sugar mill stopped commercial operations in December 2016.

Q: Can you share with us the state of the sugarcane industry in Hawai’i and what that means to your operation?

Hawaii was most famous for its legendary pineapple and sugar industries during the first part of the 20th century. In 1900, there were 130 sugar mills in operation in Hawaii. The sugar from here was world-class in quality. Over the years, third-world sugar production increased dramatically and is based on much cheaper labor. The local mills gradually consolidated to keep competitive but at the end of last year, the last mill in operation closed due to massive operating losses.

All our fermentable materials came from that mill so we now have find another local source. It’s interesting to note that many mainland distilleries were buying their rum’s granulated sugar base material from the mill right down the road where we got our “A” molasses. Today, some local distilleries are becoming sugar cane farm/distilleries.

We are working another model. In trying to figure out how to get local sugar and molasses again, we discovered that there are about 23 other non-distillery companies in Hawaii that base their products on local sugar too. They have the same problem we have. We are working together as a cooperative to get a farm and small mill operating again as soon as practicable. In the meantime, we stocked up on enough of the last plant’s molasses and sugar to get us by for the next couple of years.

Q: Can you tell us what rums you are producing?

We produce three Old Lahaina products – Silver, Gold and Dark. All of these products are made specifically for the rum based cocktail market here in Hawaii. By that, I mean we constructed these rums as “mixers”, not sipping rums. The vast majority of the rum consumption in Hawaii occurs in tropical cocktails served to our 6 million annual visitors. The Mai-Tai is the monster drink here. We specifically wanted to get that particular business for a number of strategic reasons. Our Silver is known for being a very light, low-ester rum that is very smooth. Our Dark is largely used as cocktail floating rum. Our Gold is featured in lots of drinks calling for a Gold rum base. People on vacation want to drink something local and unique to a destination. We cater to that market. Our label is very Hawaiian in nature so lots of people take our product home as a remembrance of their trip to Hawai’i. 

Q: Do you have plans to produce additional rums in the near future?

We have been barreling rum since 2006 and hope to get that ultra-premium aged rum mentioned above out in the not too distant future. We also are looking at tropical flavored rums to further extend the Old Lahaina line.

Q: Where are your rums currently available for purchase?

Our brand distribution is currently limited to Hawai’i only. We are a small batch, handmade “craft” product. Our view is that craft means locally made, high quality, and limited availability. We make every bottle by hand. People who visit Hawaii want something that is authentically Hawaiian. Part of our brand appeal to visitors is based on the fact that we are only available in this state. We believed from the start that we have to “own” the Hawaii market before considering further expansion. We are currently the largest selling local spirits brand in Hawai’i but we still have a lot of room to win more Hawai’i business. 

Q: Do you offer tours of your distillery, as well as tastings?

Currently, our distillery is located in the ruins of an 1875 vintage sugar mill on Maui. Our landlord considers our building and the surrounding area to be too dangerous to allow tours by the general public. By law, tastings have to be done within the confines of the distillery so we can’t do those either. That said, we do bring existing and potential customers into our distillery for private tours - should they want to come verify how we make the product. Unfortunately, public tours and tastings are not an option for us at this time.

Q: If people want to contact you, how may they reach you?

Please call me at the distillery:+1 808 579 8032 or email me at pcase@oldlahainarum.com! 

Q: Is there anything else you’d like to share with our readers?

I’ve been a long-time reader of “Got Rum?” and just recently attended your Rum University class in Louisville, Kentucky. We’ve been in the rum business for quite a while so I was a bit concerned exactly how much value I might benefit from taking the course. The class was 5-days long and the entire spectrum of the rum industry was covered – including areas I thought I fully understood.

I want to let your readers know that I got ideas, tips, and information worth to the full course value on each and every day of the class. I couldn’t believe how much I still have to learn. Anyway, I started implementing those ideas the day I got back! Thanks to everyone at “Got Rum?” and The Rum University for being a great resource to us in the global rum manufacturing and consuming markets!

Margaret: Again Paul, thank you so much for this inter view and I wish you, your son and your team much success.

Cheers!

Margaret Ayala, Publisher 

Nothing evokes rum and relaxation better than green and lush tropical destinations, and no place on earth embodies the concept of a tropical paradise better than Hawai’i. For rum enthusiasts, visiting Hawai’i and tasting rums produced locally is as close to nirvana as one can get in life. I am happy to know that Kolani Distillers is producing a fine line of Hawaiian rums for the world to enjoy.

Margaret Ayala, Publisher