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How About a Loan to Go With That Latte?

Coffee, diamonds, a new bra and now credit -- German consumers have a one-stop shop when it comes to every-day purchases. Tchibo is one of the leaders when it comes to product diversification.


So much more than just a coffee store.

They've sold Luciano Pavarotti tickets, diamonds favored by Heidi Klum, durable underwear and clothes irons.

Each week, Hamburg's Tchibo offers "a new world" for its customers, most of whom used to come to the company stores to buy coffee. But what began as a coffee distribution company has grown to a billion euro firm that sells everything from bras, to digital radios and vacations. Since the fall of this year, Tchibo has also begun offering credit-hungry German consumers credit at rates lower than most banks.

Through a joint venture with the Bank of Scotland, which is apparently eager to enter into the German market, the company is offering interest rates of about 8.8 percent on its credit line. In this period of dour economic news, the company is hoping to spark a little buying boom.

A spokeswoman told reporters that they will evaluate the test project at the end of the year.

"Should our expectations be fulfilled, we'll expand it nationally next year," the spokeswoman said.

Like many of its new ventures, Tchibo is offering credit on a pilot basis in one German state. The company did the same for vacation bookings in 1997 before making it a permanent part of their offer. The constant diversification has a long tradition at Tchibo.

Coffee, then Nivea and cigarettes

Rente von Tchibo

Tchibo's already been selling pension plans for the past two years.

After the company began as a coffee distribution service in the post-war years, the son of founder Max Herz began diversifying in the early 1970s. He bought up stakes in companies like Beiersdorf, which makes among other things, Nivea cream, and Hamburg cigarette manufacturer Reemstma.

Günter Herz eventually left the CEO position in 2001: He'd been tussling with his brothers and sisters over control of the company, which had a turnover of €3.1 billion ($3.7 billion) in 2002.

The company has kept on its diversifying track since then.

Under new CEO Dieter Ammer, Tchibo trumped Proctor & Gamble in buying out German insurer Allianz's stake in Beiersdorf. Leading a group of investors, Tchibo increased its former 30.4 percent stake in the cosmetics company to 49.9 percent in the beginning of October, making the coffee seller the largest Beiersdorf stakeholder.

Ammer said his company is prepared to "accompany" possible investments in North American and Asian firms in the coming years.

"We're not going to stay put," Ammer told German newsmagazine Der Spiegel in an interview.

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