Florian Hammerstein is managing director of the company Original Food, which markets climate-friendly products like wild coffee from Ethiopia. In an interview, he talks about sympathy buying and corporate responsibility.
Global Ideas: Your company was set up to market Ethiopian wild coffee. You are currently also rolling out projects to sell cocoa from Ecuador and tea from Nepal. What are you hoping to achieve?
Florian Hammerstein: We want to support small farm production in a way that simultaneously protects nature. The connection between forest conservation and forest use is always key. For example in Ecuador, older, high-quality cocoa plants are being pushed aside by large industrial plantations, which are much more profitable but don’t taste as good. The old varieties only grow in the forest, which they need for protection. Wild coffee is hard to harvest because it has to be hand-picked in the forest. And as the revenue is also smaller, it is only viable for farmers as long as we and the consumers of these products are willing to pay a high price for them.
What role does your marketing have on the interaction between forest conservation and forest use?
Marketing the fruits of the forest, which means fetching a high price for them, is convincing when it works. The key to successful forest conservation is sales. And for that we need a market. That, in turn, requires that we find consumers who want to know where their products come from, and are prepared to pay decent money for them. If we don’t sell the products, the whole idea of forest conservation fails, no matter how good the intention.
Does the forest conservation aspect imply particular challenges for a company?
As an entrepreneur and a shareholder, you have to be prepared to wait much longer for profits than with a normal investment. There is an old business-management saying that goes “purchase leads to profit”. In this case, however, we can invert it to “purchase leads to loss.” If I have to pay the producers a high price to keep them motivated to reach our mutual goal, it means I’m looking at a significant outlay, and that means it will take longer to turn a profit.
Why do you accept the wait?
I believe the company has responsibilities beyond those of price and quality. There is a moral aspect to purchasing, namely the conditions in which people in the producer countries live.
There are not many people who see forest conservation as their job. How did you manage to convince others about your business idea, and attract investors?
With a lot of patience and energy. A year and a half ago, one of our banks said: “We don’t want to support you anymore. We have talked about it among ourselves, we don’t understand your business concept.” It might be difficult to understand why we don’t want to achieve a maximum profit in minimum time, but if I want to include the producers, it takes time. I have to give them the opportunity to earn more money. If I hadn’t done that, it wouldn’t have been possible to stop the razing of forests so quickly.
Thus far, you sell in Germany and Switzerland – do you plan to expand?
Yes, that is the plan. Fundamentally climate-friendly products stand a good chance in all industrialized nations, because incomes are higher there and people can afford the luxury of not having to worry about how to get enough to eat. When we talk about people being in a position to consider whether or not the coffee they buy is organic or climate-friendly, we are talking about luxury. Only those who live in abundance can do that. Markets in Great Britain, the US and Sweden are strong and much more advanced than Germany, which is a developing country in this field. Here, there’s a small market for such products, and the big markets are for discounts and special offers.
What difficulties do you envisage in expanding into other countries?
In the past it was often difficult for us to estimate the production quantities. We need constant, reliable deliveries in order to meet a greater demand for new markets. At the moment we sell what we get. We just had a bad harvest which, for the first time, presented some delivery problems. But there is a natural cut-off point, because our coffee, tea and cocoa are not mass-produced. I estimate that we could reach five times our current quantities, but that would be all.
Can your concept for a climate-friendly product be an example for other foodstuffs?
Yes, for some, but not for all, because the idea is only convincing for high-quality products. Sympathy won’t sell products long-term; the marketplace is too cold for that. Unless we are able to offer consumers an additional advantage, such as a better tasting product, customers won’t keep buying it. Although it will certainly work for some projects, forest and climate protection make products more expensive, so the quality has to be good to ensure people keep paying high prices long-term. In short, our approach would not work for everyone else.