The Real Reason Kroger Was In A Major Lawsuit Over Kona Coffee

Kona coffee is a precious commodity. It comes only from the North and South Kona districts on the big island of Hawaii, an area that measures a mere 20 miles long and 2 miles wide, according to the Kona Coffee Farmers Association. The lush climate produces world-class coffee that is hand-harvested because of the area's steep hills. Coffee grown outside the small Kona district legally can't be labeled Kona, and that's why a group of Kona coffee farmers filed suit against Kroger and the Hawaiian Isles Kona Coffee Company (HIKC), alleging that the companies were selling coffee labeled as Kona, when the beans had been sourced elsewhere.

According to Top Class Actions, Kroger and HIKC recently settled the lawsuit for a combined $14.3 million. Though neither company admitted wrongdoing in the settlement, Kroger is on the hook for $13.5 million, while HIKC owes $800,000. In addition to the financial payment, the companies agreed that they will change their labeling to accurately reflect the origin of the coffees they offer for sale.

Kona coffee farmers claim to have sustained damages because of Kroger and HIKC's falsely labeling non-Kona coffee as the real deal, according to Top Class Actions. Kona farmers say that selling "ordinary commodity coffee" beans as Kona damages the strength of their brand, as consumers may receive an inferior product that reflects poorly on Kona quality.

Kona farmers also claim they were forced to sell their prized beans at a lower price, as there was a glut of counterfeit beans driving prices down. Farmers who were part of the lawsuit are eligible, under the settlement terms, for a cash payout, the amount of which will be determined based on the quantity of authentic Kona beans a farmer sold. The $14.3 million payout to farmers, along with the labeling changes, is intended to remedy the harm done to Kona farmers and protect the reputation of Hawaiian coffee in general and Kona coffee in particular.