Make LemonAid

On a Friday night in a trendy bar in Hamburg's famous Sankt Pauli district, the weekend is just kicking off.

Although most of the punters drink beer, many of those who prefer soft drinks sip on organic lemonade or tea served in little green or red bottles.

LemonAid and ChariTea, as the products are cleverly called, are relatively new to the market. They're made by LemonAid Beverages, a company that has based its business model on social and environmental sustainability and adheres to fair trade business principles.

Start-up with a social mission

The Hamburg-based company buys only ingredients that are organically grown and fairly traded. It invests a percentage of its profits in social projects in developing countries where its suppliers are located.

LemonAid Beverages is the brainchild of former development worker Paul Bethke and Jakob Berndt, who was previously a strategic planner at a large Hamburg advertising agency that worked for clients such as BMW and Mercedes.

The two 30-year-olds sought a change in their lives and decided to launch a soft drink start-up with a social mission.

"LemonAid is a beverage company, basically, but it's based on a very different idea," Bethke told Deutsche Welle.

The soft-drink producer, he says, supports farmers in third-world countries by buying their produce - such as juice, sugar and tea – for use in its lemonade and tea beverages, and investing a percentage of its sales in local community projects.

LemonAid is one of the first soft-drink companies in Germany to apply the fair trade principle. And just two years after entering the highly competitive German beverage market, it's already profitable.

One reason for its success, the company believes, is that its drinks are made only from fresh and natural ingredients, and based on recipes that Bethke devised together with his co-founder Berndt:

"We didn't have any experience in producing drinks, but we thought we'd like our drinks to be very simple - like homemade," Berndt told Deutsche Welle.

Swedish design

The two entrepreneurs launched in a kitchen, squeezing out limes, brewing lots of tea, testing different kinds of juices and eventually mixing it all together using a simple technique, according to Berndt. "Then we invited friends to a party. They tried the drinks and told us 'put a little bit more sugar in there' or 'a little less juice' or whatever," he said. "At the end of the day, we found a recipe, which we all thought was great and then we started filling bottles."

Currently, LemonAid makes its lemonade and tea beverages in five different flavors. They come in sleek bottles designed by the Swedish agency BVD, whose clients include the home furnishing giant Ikea and fashion retailer H&M.

The modern packaging, together with the marketing focus on sustainability and fair trade, has helped LemonAid achieve its relatively quick success, Berndt believes.

"We thought that design is a very important factor in our mission because everything in the fair trade market so far does look really old school and doesn't appeal very attractive to younger target groups," he said. "And we thought we'd like to convince especially younger people to consume more sustainably."

Berndt and Bethke have launched a charitable organization into which LemonAid channels a fixed percentage of its profits. That money, which amounted to 40,000 euros in 2010, funds educational and medical projects in its suppliers' communities.

Efficiency goal

Bethke, who worked briefly as a development worker in Sri Lanka for an organization funded by the German government, said he was disappointed with the way aid money was being spent there.

"I realized that (such aid money) doesn't work because it doesn't have an efficiency goal - it doesn't have a business model at the basis. It's just a clan of people who hang around and spend other people's money and don't have any relation to it," Bethke said.

"I want to know what happened to the 40,000 euros we spent last year on social projects. I'm going to go to these countries and see what happened. I want to see effects."

The success of LemonAid so far suggests Berndt and Bethke have found a business model that not only makes money for its co-founders but also puts money back into poor communities.

The business partners expect to double the annual number of bottle sales to 1.5 million this year. At the moment, their drinks are available almost exclusively in restaurants and bars like those scattered throughout Sankt Pauli.

While large supermarket chains have shown interest, Berndt and Bethke aim to move slowly on the expansion front. The young entrepreneurs aren't interested, they say, in flogging their product aggressively just to make a quick buck.

Authors: Julian Bohne, John Blau
Editor: Sam Edmonds