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German Condom Maker Makes Big Gains

November 6, 2002

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COLOGNE, Germany (AP) _ Asking people about their use of condoms is Oliver Gothe’s business, and he’s turned it into a global success.

Condomi AG, the company he founded in 1988 with two college buddies, has grown from a one-store boutique into Europe’s biggest condom maker. Gothe says he did it by sticking with the marketing technique he first honed behind the counter as a college dropout: Listen to customers talk about what they want.

Only the scale is bigger these days. Condomi surveyed 15,000 Kenyans for a foreign-aid funded AIDS prevention program, and it’s paying British university students to report back on a semester’s condom use.

``The problem in the past was, large quantities of condoms were purchased, and the condoms would come in a container to the harbor of country X, Y, or Z,″ Gothe, Condomi’s marketing chief, said in an interview. ``And the problem was, how to distribute them and find acceptance from the consumer?″

Adjusting to customer tastes has helped the company grow rapidly, partly by winning crucial contracts from aid agencies trying to stop the spread of AIDS in developing countries.

Exactly what the 15,000 Kenyans told Gothe in the survey, done in conjunction with Germany’s KfW development agency, remains a trade secret. But he’s happy to talk about the result: a vanilla-scented, golden brown condom he says people in sub-Saharan Africa are more likely to use _ which is the whole point of the project.

``Sometimes it’s more intelligent to think about the social and cultural adaptation of the product _ for example, the color, the lubrication, the smell, the packaging,″ said the tousle-haired, jeans-clad 33-year-old.

Standard white latex just didn’t do much for his African testers, it turns out.

``Why is the condom gold? Because gold means something very valuable,″ he said. ``Why should a condom be white in this region?″

Gothe, along with friends Tristan Klandt and Peter Ruchatz, started Condomi with the equivalent of $7,500 borrowed from the local savings bank _ hopelessly undercapitalized, he says now, but at least they knew enough to register the brand name. Klandt is now on the board of directors; Ruchatz left in the early years.

First selling condoms made by others, they expanded through franchising and clever marketing, often substituting media attention for expensive advertising. Creativity also filled the gap, with stunts like stenciling the company’s name on the back of boxing champion Sven Ottke.

By 1997, Condomi was big enough to buy and modernize the Erfurt Gummiwerke rubber plant in former communist East Germany, adding a fully automated production line.

Condomi also has a subsidiary in Poland, and is building a plant in South Africa. The company went public in 1999; Gothe says he still owns about a quarter of the shares.

While profits are relatively modest _ not unusual in fast-growing companies _ sales rose 8 percent in the year ending June 30, to nearly $29 million, after soaring 124 percent and 95 percent the two previous years.

The company’s attention to consumer needs has helped it compete for roughly $100 million spent annually on condoms by aid agency and foundations trying to combat the spread of AIDS in Africa by persuading people to use condoms.

Thirty percent to 40 percent of the company’s business now comes from aid tenders, in which either a nonprofit organization or a country’s health ministry receives a grant and takes bids from condom producers.

In March, Condomi landed an order for 53 million condoms to be shipped to Nigeria under a contract funded by the British government. Another 177.5 million condoms will go to Kenya, Russian, Pakistan, Burkina Faso, Rwanda, Guinea and Namibia this year.

Gothe says helping combat the AIDS crisis in Africa there will be a key part of the company’s growth. He doesn’t apologize for a profit motive, but says the company and its employees get extra motivation from knowing they are fulfilling a humanitarian need.

``We are not a foundation,″ he said. ``We’re a stock-exchange listed company. But we think it’s a strategic position for us to be on this continent, because there is a strong need for us.″


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