Surviving reunification was a piece of cake for Kathi | Business| Economy and finance news from a German perspective | DW | 01.10.2010
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Surviving reunification was a piece of cake for Kathi

When the two Germanys offically became one back in 1990, numerous East German businesses got lost in the mix. One that managed to survive is Kathi.

Old picture of factory

Kathi cakes are as popular as ever

Kathi was to East Germans what Dr. Oetker was to West Germans: a way for cake lovers with little time or skill to bake from scratch. And unlike so many other products that once lined the shelves of the German Democratic Republic (GDR) but have since disappeared without a trace, Kathi cake mixes now proudly fill store shelves next to those of rival Dr. Oetker.

It all began back in 1949 in the then East German city of Halle, when food shortages called for inventive solutions. Working to that recipe, Kaethe Thiele came up with an idea to mix liver sausage with various spicy ingredients to use as a savoury spreading paste. From there she developed soups, sauces and her instant cake mix, and by 1951 a new company had been born.

Kaethe and Kurt Thiele

Kaethe and Kurt Thiele got the ball rolling

Kaethe, who lent her name to the family business, ran it with her husband Kurt, and it was initally a huge success. But under socialism, where personal initiative was shunned and there was no concept of competition, there was only so far the company could go.

A critical decision

These days Kaethi and Kurt's son, Rainer, are in charge of the company with its 90 employees. Rainer Thiele told Deutsche Welle how the socialist period influenced Kathi to become the business it is today.

"Our expansion was too big to sit well with the socialist image,” he said. “And because of that, my parents had to withdraw from three main groups of products and limit themselves to just one.”

A woman holds out two cake mix boxes

The cake mix product range has grown over the years

They decided to stick with cake mix, which Thiele believes was the right choice. And the sales figures back that up. Having survived reunification, Kathi is currently the market leader in eastern Germany, and according to Rainer Thiele's son and junior manager, Marco Thiele, the company is also gaining ground in the western half of the country.

“You can't sell everything in the east just because it's an eastern German product,” Marco Thiele told Deutsche Welle. “It has to be good quality.”

The personal touch

He says the company never took part in the campaign to encourage consumers to buy goods from the former East Germany but, instead, has always allowed the quality of its products to speak for themselves. And because Kathi doesn't have the financial means to buy television advertising time or run large-scale print campaigns, it attracts the attention of shoppers in a more direct way.

“We go into supermarkets and let people taste our products there,” Marco Thiele said. “We don't just set up a stand and cut up a bit of cake to let people taste; we bake right there, so that the aroma fills the air and attracts people to the stand.”

He says that while such marketing strategies may involve more effort and take longer, they can be just as effective, as Kathi's ongoing success proves.

Reporter: Monika Lohmueller (tkw)
Editor: John Blau

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