Ankerkraut – navigating the pandemic with courage

Ankerkraut – navigating the pandemic with courage and confidence

For the herb and spice artisans of taste at Ankerkraut 2020 has been a turbulent year. On top of Covid, a new investor has come on board, new stores have opened and demand has soared. Founders Anne and Stefan Lemcke have had to be flexible.

What does it take to start a successful business? Anne and Stefan Lemcke both agree that it takes courage and optimism; and you have to believe in your dreams and trust your gut instinct. Anne and Stefan founded Ankerkraut seven years ago, so they know what they’re talking about. In 2020 they have racked up sales of herbs, spices and teas running into the double-digit millions of euros. Things started very small, though. Stefan used to run an online shop for herbs and spices out of a garage.

Growing up as the son of development aid staff in Tanzania he learned about the diversity and local quality of herbs and spices at an early age. He and his wife Anne expanded the family firm and they currently employ over 120 people. The herbs and spices are blended by hand in-house and are sold on the company’s online shop, its own brand stores as well as in premium supermarkets and fine food stores.

Ankerkraut produces and markets herbs, spices and seasonings. Its product range also includes teas, barbecue sauces, barbecuing accessories and cookery books.
The products can now be found in over 6,000 retail outlets and in the company’s own brand stores.
Raw materials are shipped from all over the world. Some contracts are agreed locally, for example for a pepper plant in Sri Lanka. This is where Ankerkraut sources the raw material for its “fermented pepper”. Many of the spice mixtures have creative names like “Magic Dust” or “Crunchy Kong.”
Ankerkraut’s administrative staff have periodically worked from home during 2020. All key processes were digitalized when the company was founded.
All work processes were adapted to comply with infection prevention regulations. There are clear rules stating which employees may work in the office and when.
The herbs and spices are blended and packed by hand in Sinstorf, near Hamburg. Ankerkraut does not use additives and prioritises operating in a socially responsible manner, also in relations with its suppliers.
Employees responsible for shipping, manufacturing and warehousing have been allocated to split teams and now work in shifts that allow employees to keep a safe distance.
Masks and disinfectant products are standard issue items in any food processing facility. The founders have taken supplementary hygiene measures and incorporated more time for disinfection into its procedures.
Those doing shift work have been allowed to work shorter hours – for the same pay. All employees received a bonus for this demanding year as it was important to Anne and Stefan to demonstrate their appreciation in this way.
Looking back on this year, the Ankerkraut owners are grateful for what they have and the good overall conditions in Germany. They also realise that anyone can achieve more than they thought they were capable of.

To begin with, Anne and Stefan put all their eggs in one basket. Gradually, though, their need for security increased, so they decided to sell a stake in their firm to an investor. They still own a majority stake in Ankerkraut, however, and continue to put their heart and soul into running their company – just as energetically as they did on day one.

As the spectre of a coronavirus pandemic loomed in March 2020, the founders and their two company co-heads took quick decisive action and devised a comprehensive plan for every area of the business.

A great deal of dedication was invested in adapting all work processes to comply with infection prevention regulations. Predictive inventory logistics have enabled the firm to keep no less than 400 different products in stock without any supply bottlenecks. The entire administrative side of the business was conducted by staff working from home during the shutdown which was a completely new situation. “Before the coronavirus pandemic, working from home was not really an option for us. We thought it would impair cooperation between our employees and that our company’s performance would suffer”, Anne admits.

They changed their minds very quickly. And the challenges emerged over time, “in the past, many employees have expressed the wish to be able to work from home occasionally, but it’s totally different when you’re doing it for weeks on end. Some felt lonely, many had children at home, or a partner who had lost their job. That’s a completely new type of stress”, says Stefan.

Changing plans is part of running a business

Anne and Stefan had ambitious plans for the business year 2020 – they wanted to open several stores in Germany and expand into Europe and the US. They had even been granted government funding to do so. In the Spring, Anne and Stefan were still planning to move to Silicon Valley in California with their children for three months, so that they could drive the expansion there. Covid-19 put a stop to that – “evidently it wasn't the right time for us or our company”, Anne concludes, albeit without regret.

Other plans also had to be shelved, like the Ankerkraut display stands at events and Christmas markets. There was no time to get bored, though – with their products and sustainable values Anne and Stefan are in step with the zeitgeist. There’s a real boom in the number of people who are spending more time at home, swapping a holiday for time in their garden, barbecuing and trying out new recipes in the kitchen.

Anne explains another reason for the sharp rise in demand – “a new generation has discovered online shopping – like my parents for example. They noticed that it works just fine and it’s not even necessary to go shopping every day”.

Entrepreneurial courage and looking to the future

Ankerkraut decided to buck the trend on investing. While other firms froze their budgets, they invested in marketing just as the costs for online advertising had fallen due to the decline in demand. Also, prior to the crisis the founders had already started opening stores in Cologne, Berlin and Frankfurt to enable customers to experience their brand.

Shopping arcades were virtually deserted during the shutdown and the planned opening in the centre of Hamburg had to be postponed until spring. However, the decline in demand did also give rise to more favourable tenancy terms for shop premises which meant that Anne and Stefan proved their entrepreneurial courage in this respect as well. They opened their stores in Hamburg and Bochum, even though it was foreseeable that sales would not meet expectations this year.

Multi-channel strategy has proved its merits during the crisis

Ankerkraut’s strategy of operating several distribution channels, that is to say online shops, food retailers and their own stores is something that Deutsche Bank also values, as Anne and Stefan know from their regular meetings with their relationship managers.

There will be a time after Covid – what we’re seeing now will not be the new normal.

After all, the multi-channel approach offers precisely the flexibility and thus the certainty that is required in a crisis. “There will be a time after Covid – what we’re seeing now will not be the new normal. Bustling city centres will make a comeback”, Stefan Lemcke is sure of that. “And then we’ll be on the ground with our products.” Until then, the online shop will generate the necessary revenues.

Incidentally, Deutsche Bank has been the bank at Ankerkraut’s side ever since it shipped its first spice mixture as a young start-up. The bank has been providing support ever since, especially in the form of working capital, which has helped keep the firm solvent and able to pay for enough raw materials and supplies. This was crucial when the demand for their herbs and spices skyrocketed.

And when the new investor came in, it was logical for Deutsche Bank to offer them a loan. After all, the founders had dependably proven that their start-up could hit its targets.

About Ankerkraut

2013: Stefan Lemcke begins grinding spices in a garage in Hamburg. He sells his spice mixes via his own online shop. Demand rises rapidly, so he and his wife decide to go all in, giving up their jobs and investing all their energy and savings in their new firm: Ankerkraut.

2016: Ankerkraut has twelve employees. In the German version of the TV show “Dragons Den” Anne and Stefan convince investor Frank Thelen to come on board.

2020: Ankerkraut seasonings are stocked by almost all major food retailers, the company has four facilities where more than 120 employees take care of production, shipping and logistics. The company also operates five stores of its own in Germany and an online shop.

August 2020: Anne and Stefan sell a portion of their holding, but still retain a majority stake in the company.

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