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Business News/ Mint-lounge / Features/  Gunter Faltin: Teatime stories

Gunter Faltin: Teatime stories

Up close with Gnter Faltin, the world's largest importer of the finest Darjeeling leaf tea

Günter Faltin (centre) at a tea garden in Darjeeling. Photo: Courtesy Projektwerkstatt GmbH/TeekampagnePremium
Günter Faltin (centre) at a tea garden in Darjeeling. Photo: Courtesy Projektwerkstatt GmbH/Teekampagne

Somewhere in the 1970s, Günter Faltin, an economics professor at Freie Universität (Free University) in Berlin, had an idea. He decided to turn entrepreneur, at a time when founding a start-up was not de rigueur. In fact, it was entirely unheard of, not to mention unlawful, for a tenured professor to do such a thing. It was a way for him to prove to his students that he wasn’t all talk, that he could put into practice the principles of entrepreneurship he taught in class.

He cast about for ideas but it would be a few years before he set up Teekampagne, the world’s largest single importer of high-quality Darjeeling leaf tea, a small and unorthodox company that cashed in on a big idea.

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The story of how it happened makes for an unexpectedly riveting tale that Prof. Faltin recounts over cups of the finest quality of Darjeeling second flush in his workspace—a pristine white apartment, bare except for some furniture made of vintage tea chests, in an elegant neighbourhood of Berlin. He refers to his workspace as an entrepreneurship lab that attracts talent from around the world whenever he is visiting. Prof. Faltin, 71, divides his time between Thailand, where he teaches at Chiang Mai University, and Germany.

The idea of Teekampagne, a mail-order tea business, brought together his long-held interest in Asian cultures with his training as an economist. “I was looking at all kinds of products from the developing world and my attention, more and more, came to tea. First of all, I have to say, I had no idea about it. I was not even a tea drinker. I was a coffee drinker and I am one still. As an economist, what I found astonishing was that you have a final product at the gate of the tea garden, and there’s nothing to do except package it. In coffee, it’s not like that: You have to roast it, grind it, vacuum-pack it. The question then was, why was tea 10 times more expensive in Germany than in India or other tea-producing countries? Sometimes, no knowledge is an advantage, you look at something and you think, strange, even crazy, this happens."

Posing as a merchant, he started investigating the tea business and learning the way it operated, working back from the teashop that traditionally sells a huge variety of teas up the long chain of middlemen: the retailer who buys his supplies from the wholesaler; the wholesaler who sources his stocks from the importer, who repackages it after procuring it from the exporter—who has lined up to buy tea in bulk directly from the tea garden or at a tea auction.

Prof. Faltin decided to save costs by overturning some of the conventions, by circumventing the middlemen and, instead of selling a huge variety, selling only the best variety of tea. As a wine drinker, he set about looking for the Château Lafite Rothschild of the tea world. He turned to the library for answers and found out about the one tea region in the world that is different from the others in altitude, steepness and intensity of sun rays—the combination that makes Darjeeling tea comparable to the finest wine.

A Darjeeling tea estate. Photo: Indranil Bhoumik/Mint
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A Darjeeling tea estate. Photo: Indranil Bhoumik/Mint

What if he sold this tea at one-third of the market price directly to customers? There was one more rule to break. He decided to sell the tea in 1kg economy-size packages, claiming that it would retain its aroma for up to three years (though that may be more true for the colder climates of Europe), further cutting costs. It caused a scandal. “Only a crazy German professor with no knowledge of practice and trade could come up with an idea like that," was the common refrain. “Nobody believed in it. My students didn’t believe in it, my colleagues didn’t believe in it. I was the only one who did. But I had nightmares at night," he says.

Tea exporters from India did not believe him either, and most ignored him or politely turned him down. Established tea traders in Germany derided him: “At this price, he could hardly be selling tea, let alone Darjeeling—he must be selling straw," they said.

The first consignment of 2 tonnes of tea, however, sold out in advance, through word of mouth. In an early instance of viral marketing, his students told their friends and friends told their families, and so on. Teekampagne, now a 31-year-old mail-order business, annually sells more than 400 tonnes of pure and organic Darjeeling tea—sourced largely from the Chamong Tea Estate, though a traceability programme allows each package to be tracked back to the garden it comes from—to a client base in Germany, Austria, Switzerland and France. Its annual turnover is €11 million (around Rs82 crore).

A few years ago, they even had an order from India. It surprised them, till the buyer explained that it was the only way to get the best quality Darjeeling, which is shipped out of the country.

Profits from Teekampagne are diverted to several foundations, of which Project SERVE (Save the Environment and Regenerate Vital Employment) is a reforestation project in Darjeeling implemented by WWF-India.

Prof. Faltin may have revolutionized the tea trade, but his intention was purely academic: to create a model of business. The “Faltin model of business", which fuses business entrepreneurship with social entrepreneurship, has been replicated around the world, for products like olive oil, washing powder, herbs, pepper and more. His book, Kopf Schlägt Kapital (Brains Versus Capital), is a best-seller that has been translated into English, and is a handbook for budding entrepreneurs. In Germany, which is notoriously conservative when it comes to business, Prof. Faltin is regarded as a cult figure for recognizing way back that entrepreneurship requires imagination, not capital.

He connects his eureka moment to his upbringing in postwar Germany. His parents had to restart their lives after World War II. Pocket money and toys were unknown to him. “We were happy children, we played a lot, but totally without money, and that was good economic education. We had to invent our toys, and that is something I bring with me from childhood. The best definition of entrepreneurship I believe in is to create something out of nothing, to take what is already there and combine it in a new way." Teekampagne was created out of nothing—he did not have knowledge of tea, knowledge of management or capital—but it worked.

Sunaina Kumar is a Delhi-based journalist and Medienbotschafter Fellow, 2016.

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Published: 06 Oct 2016, 02:06 PM IST
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