Crowning Achievements

Spearheading the innovation of the bread category with their unique King’s Hawaiian breads are, from left, Curtis, Taira, vice president; Tomika Hill, CFO; Dean Sheardown, operations manager; Shelby Weeda, president; Mark Taira, CEO, and Herb Beckius, plant engineer.
by Dan Malovany

When it comes to enjoying a taste of paradise, King’s Hawaiian likes to share a slice of The Aloha Spirit with consumers. Yes, aloha! For Hawaiians, the greeting means both “hello” and “good-bye.” It also means “love,” which is something many consumers feel about King’s Hawaiian’s breads and rolls.
For Mark Taira, chief executive officer of the Torrance, Calif.-based company, The Aloha Spirit was imbued into the bakery by his father, Robert, who founded King’s Hawaiian 54 years ago in Hawaii and headed the company until he passed away last year.
“My father always had the philosophy that the products we make must be of the highest-quality ingredients and made the best possible that you can for your customers,” Taira explains. “With our employees, we try to instill in them that pride and to show that integrity in what they are making. It is very important that they have that pride.”
For King’s Hawaiian, aloha in 2004 represents hello to a number of crowning achievements. Specifically, for the first time in more than 20 years, the company has a new, state-of-the-art production facility that’s providing the much-need capacity to penetrate new markets, seize new business opportunities and enter new channels of distribution.
The 151,000-sq.-ft. plant immediately doubles and will eventually triple or even quadruple the amount of its signature sweet Hawaiian breads and rolls that it had produced in two, smaller, aging facilities in Southern California. Aloha also means good-bye to three years of pent-up demand for its products and the inability to bring a taste of paradise to new consumers, despite that its aging bakeries were operating 24 hours a day, seven days a week. Simply put, the company was starved for additional production.
Currently, King’s Hawaiian serves about 72% of the nation. This spring, it began rolling out its products throughout New England. Next year, the company will enter the New York market. By the end of 2005, King’s Hawaiian products will be available nationwide, and it hopes to eventually springboard into Canadian markets not long after that.
“Since 2000, when we started to think about the project, we knew we had to expand our operations because of the lack of capacity with our current facilities,” Taira explains. “We needed the extra capacity to expand our distribution in the Northeast and into other areas where we currently are not in.”
Just as importantly, the new plant, which opened this spring with the start up of the roll line, allows King’s Hawaiian to bring out a number of new product concepts to diversify its portfolio. That’s something that the intermediate wholesale baker has been biting at the bit to do for some time in order to stimulate greater consumer excitement and bring new consumers into the Hawaiian bread and roll segment.
“It has been almost impossible for us to bake anything new,” Taira says. “This new facility gives us the ability to make as much of our current products as we need for the market, and we’ll also have the ability to introduce new products.”
This summer, for example, look for King’s Hawaiian to introduce sliced Hawaiian breads, says Shelby Weeda, president of King’s Hawaiian. Certainly, it’s a natural line extension, and some may argue a no-brainer, but because its old facilities didn’t have slicers, the company could only produce its signature round Hawaiian breads that are baked in pie pans. The highly-automated bread line will produce not only its signature round loaves, but also the new16-oz. sliced breads that will be shaped in a conventional loaf shape and come in both its traditional sweet Hawaiian and honey wheat varieties.
“When we come out with sliced bread, it will be the greatest thing since sliced bread,” Weeda says. “We expect to have the sliced bread available in June with a soft sell-in and then hitting it big for the back-to-school period. Basically, the way our products proof up, a 16-oz. loaf is a pretty good-sized loaf of bread. We could go to a heavier dough, but even now, it’s going to be one of the largest-looking loaves on the shelf.”
Other new products may include breakfast breads, pastries and a variety of multigrain, seeded breads and rolls, Weeda says. Advanced mixing technology in the new plant will allow King’s Hawaiian to incorporate a variety of fruits and nuts into its traditional doughs. New seeders will add an array of toppings to differentiate, reposition or add value to its line. How about a macadamia coconut loaf? That sounds quite Hawaiian. Or what about a flaxseed, hazelnut, multigrain bread or even a Hawaiian bread pudding? King’s Hawaiian already produces those products and dozens more at its two restaurants/bakeries, which it also operates in Torrance, Calif.
“We’re testing a lot of new products in our restaurants. That’s one of the beauties of having retail outlets because we have a captive audience,” Weeda explains. “We feel that we are a big brand, and there are items that we can develop under our halo-like breakfast breads and hazelnut breads. Certainly, we could develop single-serve and grab-and-go items in the sweet goods category, which we are looking into as well.”
King’s Hawaiian also plans to establish an entire new brand where it can develop additional baked goods that may not fit under the umbrella of its flagship brand.
“We’ve identified the brand. We’ve trademarked it. We are actually moving forward and starting to do research on this brand,” Weeda says. “It’s going to allow us to develop a new line of heavy grain products and take us into the health food sections of the stores. It’s going to take us into the Wild Oats and the Whole Foods type of businesses — channels that we haven’t been yet because of the products that we make.”
There’s certainly no shortage of innovative concepts. In fact, Taira says, the new facility is simply allowing King’s Hawaiian to more fully tap into its potential. As it ramps up business with new products and greater market penetration, he adds, it will be only a matter of time before it becomes a $100 million company.
“We’ve been waiting for years to introduce new products and expand our distribution,” he says. “As far as the growth for the company, it’s only a matter of how fast we push it.”
The Royal Touch
Since Robert Taira opened his small bakery in Hilo, Hawaii, the family-owned company has steadily seen the popularity of its signature round bread expand, first across Hawaii and eventually spread throughout the mainland United States. In fact, Weeda notes, King’s Hawaiian has experienced 21 consecutive years of growth. The wholesale baker is not only the creator of the Hawaiian bread category, which is comparable in size to rye bread or sourdough, but it’s also the category king with an estimated $60 million in annual sales.
Despite its production restrictions, the company experienced 11% growth in 2002 and around 8% in 2003, which Weeda describes as “impressive” because it’s done so with only a limited line of premium-priced, specialty-baked goods. In addition to its signature 16-oz. round Hawaiian loaves, the company produces 12-pack dinner rolls, 4-pack dinner rolls and a 6 pack of 4.5-oz. sandwich rolls that will soon come in a larger 8-pack size at its current price level.
“Recently, the growth has come with little or no new products,” Weeda says. “It’s been the same formulation and the same four SKUs that we had over the last three years.”
In fact, King’s Hawaiian bakery products are ranked 23rd of all branded bread and rolls registered nationwide with Chicago-based Information Resources, Inc. According to IRI data supplied by Weeda, the company’s original bread is ranked 25th out of 8,405 bread items for the 52-week period ending January 25, 2004. Among 3,735 roll items, King’s Hawaiian 12-count dinner rolls are ranked No. 1, while its 4-pack dinner rolls are fourth and its honey wheat dinner rolls are 19th in ranking.
Additionally, its sandwich rolls rank 12th of 1,636 items, IRI notes, even though they are only available in just over a third of U.S. markets. Weeda notes that King’s Hawaiian recently tweaked the formula of its sandwich rolls to strengthen the base of the premium product so that it can hold together longer, especially when they’re used with such high-moisture products as juicy burgers or grilled teriyaki.
Over the years, King’s Hawaiian’s roll business, especially sales of its dinner rolls, has grown faster than its bread sales. In fact, rolls currently account for about 65% of the company’s revenue.
“It’s just an easier way of using our product. It’s planned usage,” Weeda says. “People buy them for the holidays, for dinner or to snack on. They’re easier to eat than our round breads, but that will change as we roll out the sliced breads. It’s all about convenience.”
To broaden its line and position the company for its new plant expansion, King’s Hawaiian made several small but important changes last year. First, it introduced honey wheat versions of its round bread and dinner rolls. Weeda has high hopes for a sliced version of the honey wheat bread, which has a soft texture and a sweet flavor that appeals to kids who normally don’t like the taste and texture of traditional wheat bread.
New packaging also hit the shelves last year. For the first time in years, the company updated its graphics to feature a warmer design by replacing the black type with its signature orange logo and gold lettering against a light tan. The orange logo and packaging is designed to heighten the brand’s identity while the gold and beige bring more warmth and richness to the package.
At a Glance
Company: King’s Hawaiian Bakery West, Inc.
New Location: 19161 Harborgateway, Torrance, Calif. 90501
Founded: In 1950 by Robert Taira Est.
Annual Sales: Around $60 million
Products: Sweet Hawaiian bread, dinner rolls, sandwich rolls. Honey wheat bread and rolls.
Distribution: 72% of U.S. nationally. Recently expanded into New England markets.
New Plant Size: 151,000 sq. ft.
No. of lines: Two. One roll line and one bread lline. Room to add one more production line.
No. of Employees: 130
Key Personnel CEO: Mark Taira
President: Shelby Weeda
CFO: Tomiko Hill
Operations Mgr.: Dino
Moreover, it rolled out tamper-evident packaging.
“Consumers not only want a consistent, high-quality loaf of bread, but they also want to make sure that the product is safe,” Weeda says. “We wanted to be out there, ahead of the pack, on this issue.”
Courting New Consumers
King’s Hawaiian’s premium positioning and high-quality image was confirmed last year by the American Tasting Institute, which gave its bread the Gold Taste award for being the “best of the best” among all nationally distributed Hawaiian sweet breads.
While quality is king, the company has also succeeded because it has taken a non-conventional approach to marketing and promoting its brand. It’s stayed away from the bread aisle and found a home in the deli, near the in-store bakery or in other special displays throughout the supermarket stores it serves.
“We’re not a product that competes in the bread aisle. All of our business outside of our local California distribution area is in the deli department,” Weeda explains. “When we go into New England or New York, our goal is to be in the deli. We’ve seen a lot of people coming into that section over the past several years, but we were one of the first in that section over two decades ago.”
In addition to geographic expansion, King’s Hawaiian continues to diversify its distribution into alternate channels. While supermarkets remain its core competency, the company is looking to place its products wherever consumers shop, including mass merchandisers, warehouse clubs, convenience stores, dollar stores, drug stores and foodservice chains. As consumer shopping patterns change, so must King’s Hawaiian adjust, Weeda says.
In some venues, the new plant will certainly help. King’s Hawaiian now has the capabilities to produce signature items for foodservice chains, and develop grab-and-go products for C-stores or custom-design meal bundling solutions for multiple channels.
“Several years ago, we wanted to become more involved with solutions,” Weeda says. “This year, we want to be able to bring something new to the deli and give customers a reason to stock our product and merchandise it in front of the glass or use it as a part of the meal behind the glass. In order to be successful, we have to bring something new and unique to the retailer.”
For instance, King’s Hawaiian offers menu suggestions for delis. For its consumers, who average between the ages of 35 and 54 with an annual income exceeding $45,000, its Web site is loaded with innovative ways to create the taste of Hawaii at home using the company’s products. Once a premium-priced specialty bread selling for upwards of $3 a loaf, King’s Hawaiian is now attractively affordable when compared with the burgeoning number of super-premium baked goods being introduced to the market.
“Without a price increase, we have continued to grow, and a lot of our success can be attributed to our ability to develop new, unique programs for our consumers,” Weeda notes. “We’re very flexible in developing custom programs for our customers.”
Moreover, the company uses radio advertising to support its products, especially in new markets. In addition to sampling programs in New England, for example, it’s running commercials during the afternoon drive-time periods to encourage consumers to pick up its rolls for dinner or make its bread into French toast for breakfast. When it comes to marketing, King’s Hawaiian tries to use every tool available.
For instance, last year the company ran television commercials for the first time ever. Overall, the tagline or theme of its advertising programs is “Taste Paradise.” Its commercials suggest using King’s Hawaiian breads in multiple-usage occasions throughout the day.
Additionally, in support of its position in the deli, the company dropped more than 200 million freestanding insert (FSI) impressions last year, and it plans to be front-of-mind with consumers throughout this year as well.
“That’s a lot for a company our size,” Weeda says. “There’s no one today who is supporting their product in the deli department as much as we do. We have a whole list of programs, including cardboard displays, wire racks, custom-designed racks, custom signage, and we co-brand with our customers. We offer customer contests, on-pack programs and bounce back cross couponing.
“If a customer has a spinach dip, and they want us to partner up, we’re right there,” he adds. “We offer them a ’buy a package of King’s Hawaiian bread and save 50 cents on a carton of eggs’ and tie into a French toast promotion. We’ll put the coupon on the eggs or on our bags. Or with the deli, we’ll have a promotion where you buy a package of King’s Hawaiian bread and save a dollar off your purchase of sliced luncheon meats and cheese in the deli.”
For King’s Hawaiian, Weeda says, getting consumers to taste a slice of paradise is its strongest selling point.
“It’s a fun product. People who eat our product aren’t mad. They enjoy it with a smile,” he says. “When you eat a slice of King’s Hawaiian, you are transformed to Hawaii. We are from Hawaii so we have a license, in effect, to call it Hawaiian bread. We have the license to talk about King’s Hawaiian bread from Hawaii. No one can say they’re from Hawaii. No one can. We started there. We have Hawaiian people who own the company.”
And don’t forget about The Aloha Spirit as well.
Firing Up a Hot Summer Promotion
With the start of the grilling season, King’s Hawaiian is launching its largest consumer program with $500,000 in consumer support and prizes, including a grand prize of a Vermont Island Outdoor Grill, valued at $10,000. The program, which also includes Berghoff grilling tools and customized BBQ grills, encourages consumers to “Grill Hawaiian Style.” It starts on Memorial Day and runs through Labor Day. The program is supported with on-pack coupons, bellybands, and Web promotion and point-of-sale materials that include umbrellas and other eye-catching special displays.
“Why barbecue? We’ve been tying into the holidays for some time. Years ago, we just ran promotions for Christmas and Thanksgiving, but then we started doing Super Bowl, which is a national holiday now, and the results were tremendous,” says Shelby Weeda, president of King’s Hawaiian Bakery West, Inc.
“Then we started running Labor Day and Fourth of July programs because our product is great for grilling,” he adds. “Every year, it’s gotten more and more popular. We get cards and letters from people saying, ’I tried your bread on a grilled chicken sandwich, and it was phenomenal.’ It’s all about trying to get consumers to try our product for the first time. A lot of people sell sandwich rolls and hamburger buns, and they are just platforms to hold meats. When you use our rolls, it makes any meal more delightful. There’s no question about it.”
Birth of the King
With $382 that he borrowed from a friend, 26-year-old Robert Taira began baking Hawaiian sweet bread in a small storefront bakery in Hilo more than a half century ago. He had developed the soft, light texture with a long shelf-life after noticing that a Portuguese sweet bread had become hard and crusty in the warm tropical climate after just one day.
Five years later, Taira moved his business to Oahu, where he opened a bakery and coffee shop on King Street on Honolulu. That’s where the name King’s Hawaiian sweet bread was born.
After he discovered that many of friends and relatives were sending the signature bread as gifts to their acquaintances on the mainland, Taira recognized a business opportunity and opened up a 30,000-sq.-ft. plant in Torrance, Calif., to serve what he hoped was an untapped market for his unique breads. Over the years, King’s Hawaiian has spread in popularity across the nation.
In 1992, he closed the Hawaii business to enable his wife, five children and several grandchildren to spend more time together. Taira worked at King’s Hawaiian until he passed away last year.
Today, his son Mark is opening up a brand new 151,000-sq.-ft. plant and taking the brand nationally, just as the next generation of family members are becoming more active in the business.