"Hot as Hell" - excerpts from an article in the magazine Der Spiegel

The article "Hot as Hell," a compilation of fragments from a piece in Der Spiegel No. 42 of October 1962, is devoted to the structure and internal conflicts of the West German coffee market at the turn of the 1950s–1960s, as well as to the figure of Max Herz, the Hamburg entrepreneur who founded the Tchibo retail chain.

Introduction and context
The starting point of the publication is the image of the coffee magnate's new marble villa in Hamburg, which became a symbol of the industry's commercial success. From this everyday detail the author moves to an analysis of the economic mechanisms that ensured the phenomenal growth in coffee consumption in the FRG: from 1.05 kg per capita in 1952 to 3.72 kg in 1961, despite the high excise tax and prices that were three times higher than pre-war levels.

The industry's split: two competing camps
The article's central focus is the description of the coffee business's division into two blocs:
• entrepreneurs running branded stores and mail-order trade (Tchibo, Eduscho, and others), selling coffee directly to the consumer;
• "packers" — large roasting firms (Jacobs, Onko, Idee-Kaffee), supplying products through the retail network and forced to factor the retailers' margin (20–25%) into their prices.

It is shown that with equal market shares, the packers find themselves at a disadvantage due to a longer distribution chain, which makes their products a fifth more expensive than the branded-chain products.

Pricing policy and profit structure
The author examines in detail the cost calculation for a pound of coffee — from the purchase price of raw material and the tax burden to the final retail price — demonstrating that vertically integrated companies such as Tchibo achieve substantially higher net profits, comparable to the turnover of large industrial enterprises.

Import liberalization and Max Herz's biography
A separate section is devoted to the history of the abolition of the protectionist "Union of Coffee Trading Firms" by Economics Minister Erhard, which opened direct access to raw material imports for large retail chains and instant coffee manufacturers. Against this backdrop, the article traces Max Herz's entrepreneurial path — from an importer's apprentice, through his family's bankruptcy and a lottery business during the period of currency restrictions, to the creation of postwar Germany's largest chain of branded coffee stores.

The article's key conclusion is that the explosive growth of the German coffee market in the 1950s–1960s was driven not so much by falling raw material prices on the world market as by a structural restructuring of distribution channels — a shift from the guild-like protectionism of importers to direct trade between producers and consumers — which allowed certain entrepreneurs, including Max Herz, to accumulate superprofits comparable to those of major industry.