Originally published September 28th, 2015
We spoke to Martin Elwert, co-founder of Coffee Circle, the social enterprise for good coffee with a good conscience. In the interview, he explains why the concept of fairtrade is outdated and tells us what to look out for when buying our own coffee. Plus he shares his insights on what “social” and “business” really mean to him and how to continue on even when the going gets tough.
What was your motivation for starting Coffee Circle? How did it all begin?
In 2009 I went to Ethiopia with my soon-to-be co-founder, Moritz. We helped to set up a school for orphaned girls. Back then, Ethiopia was among the five poorest countries in the world. I traveled a bit before, but I never saw poverty on such a scale and intensity before.
At that time, all of us three founders, Robert, Moritz and myself, were working as Management Consultants but were considering starting our own company.
The combination of those two things triggered the idea to set up something with Ethiopia. Being a bit naive maybe, we somehow thought: why don’t we combine a for-profit company with a strong empowerment component in Ethiopia. We were convinced, and still are, that entrepreneurship plays a crucial role in the sustainable economic development of developing countries.
We then figured out that there is great coffee in Ethiopia, great quality and a fairly stable international trade. We looked at the market in Germany and decided to go for it. We quit our jobs, moved to Berlin and started to develop the idea of Coffee Circle. We went online in December 2010.
What makes Coffee Circle coffee different from the other “fairtrade” brands that one might find on the supermarket shelves?
There are basically five differences between our coffee and fairtrade products;
- We invest triple the money in social projects in Ethiopia
- We attach our „donation“ of 1 Euro per kg to the quality of the coffee produced, not only to criteria fulfilled and certification processes passed and paid for. That is a significant difference in long-term motivation of the farmers, their independence and dignity.
- Our customers choose which project they want to support and we inform transparent about implementation and impact
- We measure our impact over several years
- We personally trade and also implement the projects; we develop personal relationships with our partners. Fairtrade is just a third party in the value chain. We do believe that the personal relationship to their customer motivates and empowers farmers and the communities.
When it comes to supermarket coffee in general, we also have much higher coffee quality and roast freshness than anything you find in the shelf.
On that note, what should people look out for or avoid when buying fairtrade coffee?
I would not look for certificates at all. Fairtrade is a good approach, but its old-fashioned the way it works in the coffee industry. Further, many supermarkets come up with their own certification and that is a joke anyway.
If you trade directly, you decide what price to pay to the farmers. You don’t need to pay a third party to put the certification on your package.
I would check how transparent and authentic the brands really are. I always check if the companies really know the origin of their coffees or if they hide behind wordings like „from East-African high-lands“. That can be for instance anything from Tanzania to Ethiopia.
Further, I always have to smile when I read „100% Arabica“ as sign of quality. There is so much shitty Arabica Coffee grown in the world that 100% Arabica is barely more than a marketing slogan. I think, that with some sensibility and research you easily find out who is telling the true story and who is just sending a marketing team to the origin to take some nice pictures (if at all).
Why did you choose to work specifically with Ethiopian farmers? What do your partnerships with local coffee farms look like?
We started working with Ethiopia because that is where we travelled and first discovered the coffee. But we’d love to expand into other countries of course. Currently we only work with smallholder cooperatives. Cooperatives are self-structured organizations with an elected leadership.
Every year we select certain cooperatives based on their coffee quality. If we don’t know them yet, we get in touch with them, visit them and start to evaluate if it makes sense to do a project with the community. With some cooperatives and farmers we already have long-lasting friendships.
How do you measure Coffee Circle’s ecological and social impact, both in Ethiopia and abroad?
We take all available data, for example from government or from NGOs working in the area to assess the need for impact. Further, we do personal interviews with different members of the local community, especially with women, children and key influencers like teachers or doctors.
After our involvement, we keep on measuring the effect, e.g. the reduction of certain health problems like diarrhea after a three-year water, sanitation and hygiene project. Or we look at the number of students graduating from the school we built and going for higher education.
All in all, measuring impact is important, but also very difficult, it takes a lot of resources, you have to stay pragmatic.
Every endeavor has its ups and downs, was there ever a low-point and if so, how did you overcome it?
We had many, but I think our mission has a great meaning for all of us, so we survived where other would have stopped. Last year we had to reduce our personnel by 50%, that was by far the most difficult time in the last 5 years.
What’s next for Coffee Circle?
We will setup our own roastery in the next months, and we are working hard on upgrading our systems and website. We also want to start sourcing from Colombia in the next 12-18 months, and at some point we might internationalize in Europe.
However, I have learnt that a two-year horizon is already quite far.
Do you have any advice for young entrepreneurs attempting to navigate the terrain of the social business sector?
First, there are various definitions what that sector exactly is; I wouldn’t bother about them, its not relevant. Being an entrepreneur includes a strong social component already; the rest depends strongly on your personal value system being expressed in the company values in the end.
Second, I would always start looking for an actual, real problem, a problem that really bothers me, one that really needs to be solved. Then I would try to figure out whether there is a way to solve it, or at least reduce the problem by also earning money with it – ideally a lot of money. If there is no potential for a strong financial upside, I wouldn’t touch it.
Third, a key learning for me was, that nobody supports you the way you need it just because you are „social“. That helps a bit in the beginning, its „nice“, but it is never the key factor for success. That’s actually one of the big misperceptions I’ve seen many times. The truth is, that if you don’t have a strong financial case, you won’t attract investors you need (you don’t need grants from foundations!), you can’t hire personnel you need, you can’t do marketing and compete with your „non-social“ competitors and so on. Fact is, building a social enterprise is, in many ways, more difficult than building a normal company. Therefore, you need more resources, and resources usually cost money. There is a great TED talk of Dan Palotta, which brings that to the point, it’s called „The way we think about charity is dead wrong”.
Therefore, I would personally always focus on the business part first, because without business, there is no sustainable social part. I’ve come to the conclusion, that it’s mainly the entrepreneur’s values that influence how “social” the company is in the end and whether it directly solves a social problem or not.
What makes you a changer?
We should rather talk about how the whole Coffee Circle team is a changer. I think we change many peoples’ “Coffee Life”, we truly improve the quality of life for a lot of coffee drinkers.
But to a much greater extent we also change the life of our partners in Ethiopia. We’ve equipped and built schools, secured electricity for a hospital covering more than 10.000 people and making a difference to the life of more than 38.000 farmers and their families. I think that makes us all changers.