Today’s Solutions: September 26, 2023

Urtekram, the Danish pioneer in organic food and natural-care products, has nothing to hide. The company considers it the most normal thing in the world to do good things in the world.

Marco Visscher | March 2006 issue

Intet andet reads the label of Urtekram products—“nothing else.” For all of you who want to know what you’re putting in your mouths or on your skin, Urtekram’s list of ingredients is nothing short of wonderful. No synthetic additives. No words containing an illogically large number of consonants which can only be understood if you have a degree in chemistry.

In the words of Lars Børresen, Urtekram’s CEO, “Consumers have the right to know what they’re buying. So we don’t want to use too many ingredients—and certainly none that are unnecessary. If it’s such a big deal to make something like soap, I’d say there’s something wrong.”

Hence, intet andet.

With those two words, the Danish food and cosmetics company offers a clear alternative in light of consumers’ growing awareness of the damaging effects of toxins found in everything from shampoo to snack foods, from soap to salt. Many personal-care products owe their fresh scents to potentially carcinogenic synthetic-musk compounds. Phtalates, which can damage our liver and kidneys, are often added to cleaning products as solvents. Vegetables and fruit contain traces of pesticides. Nearly all meat and fish contain chemicals that build up in our bodies.

Urtekram won’t be affected if, down the road, consumers slap the food and cosmetics industry with expensive lawsuits for damage to their health. Such toxins are never used in Urtekram’s factory. Intet andet, remember?

There may be nothing else to say about the ingredients. And yet this is not where the story ends. Urtekram—a known brand in Scandinavia for organic food, and in the rest of Europe for natural-care products—is a model company where concern for people and the environment is so embedded in management policy that it seems the most normal thing in the world. Urtekram shows what corporate social responsibility is all about—not just the P.R. gesture of sending a few hand-me-down copiers to Africa, but a very ordinary part of the daily routine. Urtekram shows the world an important message (which, with characteristic Scandinavian modesty, they do not shout out loud): Yes, we’ve proven it’s possible for a company with small volumes and turnover figures to conduct business with a mission while turning a profit.

The affable pioneers of Urtekram—which started out as a vegan eatery run by students in Copenhagen—are based in a small city in Jutland on the European mainland that mostly looks back in time. The houses in Mariager are carefully maintained in historical styles. In the summer, masses of tourists come to visit the local fjord which, according to many, is among Denmark’s most beautiful natural wonders.

Urtekram is located in a small industrial park in an energy-efficient building, made from environmentally friendly materials and powered by a windmill and a biofuel plant where local farmers’ hay is incinerated for energy. Desk lamps are nearly superfluous inside Urtekram headquarters thanks to the natural lighting that comes in through the rows of immense windows, which offer the added benefit of a view of goats grazing in grassy meadows.

Urtekram is more sophisticated than it first appears. The company combines organic production with the principles of fair trade. This means that farmers in countries like Turkey, Sri Lanka and Uganda are guaranteed a fair price for the organic products they supply—from dried apricots to raisins to nuts to herbs.

“Urtekram is fast,” explains Judith Kyst, head of marketing at the Danish division of the fair-trade organization Max Havelaar. “As soon as new products with our trademark become available, they’re the first to use them. They also keep a close eye on developments in our sector. They research trends in the United States carefully and try to discover what’s relevant to them so they’re always a step ahead.”

Kyst has nothing but admiration for the company. “Remember that at Urtekram, fair trade isn’t simply a marketing ploy, as it is at some others. At Urtekram the involvement of farmers, what they’re paid and their working conditions are embedded in the philosophy and strategy.”

That business philosophy is not expressly focused on maximizing profits. With gross sales of around 25 million euros ($30 million U.S.), Urtekram’s profit is modest—600,000 euros ($720,000 U.S.) in 2004, up from 134,000 euros ($160,000 U.S.) in 2003—all of which is completely reinvested in the company.

In presenting figures and analysis on the company’s finances, export manager Steen Resen seems eager to apologize. “In our sector, I’ve never seen anyone get rich. You survive, that’s all.”

He hesitates, and then he says: “We could make more money if we wanted to, but we wouldn’t be able to work with the women’s cooperative in Swaziland, for instance, that produces jam for us and invests the profits in local schools. We make a loss on that jam, just as we lose money on the high costs of fair-trade certification for the ingredients in our care products. But we want to keep doing that, even if it isn’t the most optimal business move. Why? Because no one else is doing it. Because it’s human… Because it’s a good thing to do.”

It can’t be a coincidence that urtekram is a word from the ancient Danish that means “good things.”

That fundamental decision to do the right thing has pushed the company into financial distress on a number of occasions. When Urtekram continued to lose money under the leadership of founder Lisbeth Damsgaard, its lenders lost confidence in 1995. A cash injection was needed, and fast. The hunt for investors led to the Gaia Trust, a group of companies owned by Ross Jackson, a Canadian investor who made a fortune in international financial markets and, starting in the 1980s, decided to use his knowledge and capital to help create a sustainable world. Jackson invested his money in environmentally friendly companies, primarily in Denmark where he had settled in the 1960s with his Danish wife. Urtekram became one of his investment projects.

And clearly a special one. Of the many Danish companies Jackson has backed, Urtekram is the only one in which he has personally invested his own money as well as the Gaia Trust’s. If he hadn’t, Urtekram would have gone bankrupt. “Even back then, Urtekram was a known brand name in the food sector with a good reputation,” Jackson says in retrospect. “I simply considered it important that this type of company continue to exist as an organic food wholesaler. That was enough reason for me to invest.”

But even with Jackson’s money the problems weren’t over. The organization didn’t make adjustments for the growth it experienced after starting to supply Coop, Denmark’s largest supermarket chain, in 1993. This prompted a steady rise in the number of employees, but Urtekram’s management style—rooted in the company’s origins as a vegan eatery—appeared incapable of providing the stability needed to allow it to adapt to the changes.

Jackson went in search of someone who could take charge of Urtekram and found Lars Børresen. Børresen had been working for the chewing-gum maker Stimorol for 20 years, where his duties included a deputy management position in Moscow charged with chewing-gum sales in Eastern Europe. “You can say a lot about chewing gum, but it will not save the world,” Børresen used to tell his friends and relatives if they asked about his switch to the organic sector.

Lars Børresen is indeed a man of few words. The 2004 annual report shows a picture of him accepting an “Organic Gold Medal” for Urtekram’s spelt flakes—the tastiest of all the organic varieties, according to the jury of the Økologisk Landsforening (Danish National Organic Association). The jury report underlined that the good taste of this breakfast cereal made from the ancient spelt grain wasn’t the only reason for their decision; it was also the “breadth and the quality” required to “penetrate to a wide audience.” In the photograph, Børresen himself looks as surprised as anyone that so many profound things can be said about breakfast cereals. You get the distinct impression that he’s not so sure how he should pose after receiving such a medal.

Børresen had started to move away from the chewing-gum world before taking the position at Urtekram. He and his family had decided to go organic some years before and he considered it a challenge to deploy his management skills in this growing sector of the food business. He didn’t find the same level of enthusiasm among all the 65 employees at Urtekram. He was bothered to discover that few of the workers took advantage of the employee discount on Urtekram products. Børresen saw it as a sign that staff involvement was low. So he initiated a free lunch for everyone. It’s not vegetarian (after all, there are only a handful of non-meat eaters to be found in a village like Mariager), but it is 100-percent organic. For many employees, it was their first introduction to the products they work with every day. The result: They began buying Urtekram products and, even better, they made suggestions for improvements and new products.

Staff involvement was further stimulated when Børresen decided to break with the hierarchical management style of his predecessor, who insisted on making all the decisions. Børresen refuses to take credit for that move. “Delegating is something every modern company does; it’s not innovative,” he says. “People who experience problems in their daily work also often have the best insight into solutions. Then it’s only a matter of having the confidence to hand over the reins.”

A key strategy for surviving as a small player in a market with killer competition is emphasizing the development of new products. Now that bigger companies are entering the market for organic and socially responsible products, innovation becomes essential as a means of standing out from the competition. A four-person product-development working group was formed and each year more than 100 new products are conceived, produced and marketed. Feasibility studies and consumer tests aren’t part of Urtekram’s style or budget. Instead, Børresen opts for intuition, sound judgement and trust.

In the highly competitive market for small, responsible cosmetic brands, it is also important for companies to distinguish themselves through details. Urtekram’s packaging materials, for example, are made from recycled paper, which is a little more environmentally friendly than other natural-care product makers. The company can also boast about its energy-efficient production process, which further separates it from its peers. And Urtekram is probably the only firm in the field that compensates its employees for commuting to work on bike.

I say my good-byes to Urtekram staff in Mariager and I ask Lars Børresen if he has anything more to say. He stares off into the distance, lets the question sink in, sighs, shrugs his shoulders as he seems to consider what more you can say about a transparent company that sells organic food and natural-care products based on the principles of fair trade, whose factory is energy-efficient and where employees are trusted to make their own decisions…
Then he says: “No, nothing else.”

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