Berlin start-up banks on personalizing fair trade | Globalization | DW | 05.03.2012
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Globalization

Berlin start-up banks on personalizing fair trade

Coffee Circle's concept almost sounds like a caricature of Berlin's tech arena: a start-up that uses social media to sell fair trade coffee. But the three ex-consultants behind the site may just be on to something.

It is a familiar scene in Berlin: a handful of young people clustered in a makeshift office, hoping to see their start-up take off. At Coffee Circle's headquarters, nestled next to three other start-ups in the bustling Kreuzberg district, the fair trade coffee vendors have a chance at turning profits within a year.

A person could be excused for thinking: another fair trade coffee joint? That was Robert Rudnick's reaction when presented with the concept for the business he now helps run.

"Guys, are you serious? Fair trade coffee has already been done," he remarked two years ago in response to a couple of friends who proposed importing coffee from Ethiopia and giving the proceeds directly to the farmers.

"Doing something new in the area of fair trade coffee is very difficult, so right at the start I said we might want to sleep on the idea for three weeks," Rudnick added.

Room to innovate

The coffee circle team trying out coffees

Before buying beans, Coffee Circle's founders try up to 90 varieties of the drink

But once the former management consultant considered the idea more carefully, Rudnick decided it had potential.

"The coffee market is so big and established that you can do a lot by using the possibilities of selling online and the transparency the Internet offers," the entrepreneur told DW.

Coffee Circle aims to use video and social media tools to bring coffee consumers and producers closer together than ever before. By way of the online shop, customers can choose between three coffees grown organically in Ethiopian farms as well as which development project they would like to help finance with their purchase.

Of the 24 euros ($32) that a kilogram of coffee costs, one euro goes back to the producers. "The customer will see that we don't just buy in the best coffees from each harvest but that we also implement health and education initiatives in the farmers' areas," Rudnick said.

The website features numerous pictures, videos and documents intended to offer customers better insight into the lives of those producing the coffee.

More than a cup of joe

Robert Rudnick at his desk

Robert Rudnick took a hefty cut in salary to work on the start-up

The camera is also present when Rudnick's business partners Martin Elwert and Moritz Waldstein-Wartenberg fly to Ethiopia twice each year for three weeks. They buy raw coffee for 11 euros per kilogram, which is around three times the world market price.

While there, they also advise the farmers and their families on how their villages might be improved. Five projects costing between 800 and 1,500 euros have already been implemented, including building a water supply well, outfitting a small health station and providing furniture for a school.

In November 2011, Coffee Circle got a major contract capable of financing a project all on its own. The sport and lifestyle brand Puma agreed to purchase up to 1.5 tons of coffee per year for guests and employees at its headquarter in Herzogenaurach in southern Germany.

"That's a case where we can all profit - we as a company, because we're selling more coffee, and Puma, because it can do something for its image by proving that it makes corporate social responsibility and sustainability part of its value system and business model," Rudnick said.

Breaking even by 2013?

Ethiopian children hold books and stand next to Coffee Circle workers

One of the site's projects aimed to bring books to local school kids

If Coffee Circle continues to develop like it did in its first year of business, then the startup could be making profits by 2013. Currently, the business gets its financial support from a loan by the government-owned KfW Bank. The Tengelmann Group also has a 29 percent share in Coffee Circle by way of the major holding company's e-commerce branch.

Pursuing unlimited growth isn't the 12-member company's goal, Rudnick stressed.

"When I look at my colleagues and how we relate to each other, we can't have another 20, 30 or 40 people sitting here, because the team dynamic would go away," he said.

Burned out on consulting

Inside the offices of Coffee Circle

The Berlin start-up is wary of growing too much and losing its tight-knit culture

Before starting Coffee Circle, the site's founders were much more used to closed doors, stiff management hierarchies and big staffs. All three worked as management consultants with the firm Roland Berger.

"We all decided consciously against pursuing careers in consulting and in big business because we learned that money is far from everything in life," Rudnick said, adding that he prefers focusing on the enjoyment he can derive from work.

"As consultants, we saw among clients and among our own colleagues that of those who had been on the job for five, six, seven years, very few were happy," he continued.

Though he now earns about a third of what he did as a consultant, he seems very satisfied - even then his money was all gone by the end of the month, he says, but for different things than now.

Author: Sabine Kinkartz / gsw
Editor: Andrea Rönsberg

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