#010 - The Umbrella Structure. Our References of Governance Are in Tech and in European Wine and Cheese Co-ops.

Small is beautiful. The coffee industry should take European cheese and wine as an example. The opportunity is in adding value to a fragmented sector.

The evolution of agriculture was based on the American model of corporations. It emphasised scale and access to capital. It has its benefits. It was appealing for commodities, such as soy beans, cotton, corn, wheat, sugar or robusta. 

But it was not enough for specialty coffee.

The background…

For decades, cooperatives (co-ops) addressed the challenges of individual farming, such as market access and resource sharing. In markets like France, Italy, and the United States, cooperatives were the predominant organizational form, enabling collective bargaining and decision-making. 

Over time, globalization, regulatory changes, and economic pressures led to consolidation - lower number of co-ops, but larger scale. Americans prioritized volume and commodity-based production. Europeans prioritized quality and high value-added.

Co-ops have governance centered on member-elected boards for marketing and supply functions. That wasn't the most agile model. Co-ops have consolidated significantly as agriculture became more finance-driven. 

In the U.S., the number of co-ops fell from ~10,000 to ~2,000 between 1970’s and 2020’s, with an average of 70 mergers annually from 2007-2017. 

In France, the number of co-ops fell from ~4,000 to ~1,500 between 1990’s and 2024, involving 957 mergers between 2000-2010, 45% with investor-owned firms. 

In Italy, the number of wine-growing holdings dropped 42% from 2010 to 2020, while winemaking companies remained stable at around 30,000. 

The U.S. model illustrates governance oriented toward scale and lower value-added commodities. Production focuses on high-volume crops like corn (15.3 billion bushels in 2023) and soybeans (4.16 billion bushels), primarily for export and industrial uses. Farm consolidation has increased, with large operations accounting for 66.4% of market value in recent years, up from 38.3% in 1987. Co-ops such as Land O'Lakes have merged, favoring cost reduction over product differentiation.

In Europe, mergers of wine co-ops accelerated over the past decade to enhance marketing and technology access. French and Italian co-ops have struggled with fragmentation - average vineyard size is under 2 hectares. They adapted through umbrella organizations, maintaining democratic governance while addressing higher standards for traceability and environmental compliance.

French agriculture emphasizes quality through protected designations, with 257 PDO/PGI labels for agrifood and 438 for wine. Wine contributes 13.2% to agricultural value (€86.7 billion total in 2023). Dairy contributes 13.1%, supported by premium cheeses. Co-ops enforce strict quality controls, enabling premium pricing and supporting small family farms, aligning with EU sustainability requirements. 

Italian agriculture is more focused on high value-added wine. Co-ops produce more than 50% wines, emphasizing regional varieties and terroir. With revenues from large co-ops like Cantine Riunite & Civ (over €500 million annually) and Gruppo Caviro (€300 million+), the sector generates €13.4 billion overall. However, Italy is even more fragmented than France - 2.3 hectares average per vineyard versus France's 10.5. It has driven consolidation, enabling access to agronomists and export markets. 

It is arguable that wine co-ops outperformed investor-owned firms in efficiency, adapting governance to higher standards through collective investments in quality and sustainability. 

These divergent models highlight limitations of large corporations in high value-added agriculture. Corporations, driven by shareholder returns, often standardize production. In sectors like wine and cheese, success depends on traceability and community governance, where co-ops' democratic structures perform better than corporate hierarchies. Regulatory complexities for value-added products further disadvantage corporations, which contribute to farm displacement and reduced biodiversity.

What could be done…

Indeed, we are focused on coffee production in Brazil. And we firmly believe the European model should be followed.

On top of that, there are key points from the tech startup scene that could add huge value to the coffee supply chain. We will share our view on future articles. And we are already implementing it.

Brazil's coffee industry features 90 geographical indications and a co-op tradition, adopting strategies akin to French producers of wine, cheese, and niche fruits. High value-added family agriculture will enhance premiums and resilience over disruptions on commodity-driven prices, climate and the environment.

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Coffee Futures C Price in NY: -11.42% weekly, closin at 289.30 cents/lb. 

Coffee Price in Brazil's B3 in USD: -11.42% weekly, closing at 378.60 USD per 60kg bag. 

BRL/USD fx rate: +0.77% weekly 

Proxy of 20' container freight prices from Santos to Rotterdam: down ~7% weekly

Highlights:

• Starbucks reported its best quarterly results in two years, highlighting strategic menu innovations and operational efficiencies amid shifting consumer preferences for premium coffee experiences.

• De’Longhi achieved record 2025 results, driven by strong demand for home coffee machines, reflecting a consumer shift toward at-home brewing for consistency and convenience.

• Nestlé's new CEO revealed a personal habit of consuming 8 cups of coffee daily, underscoring executive-level endorsement of high coffee intake amid broader industry discussions on health and productivity.

• U.S. coffee consumption reached 66% daily among Americans in 2025, up 7% from 2020, but Starbucks' market share fell to 48% as consumers favored rivals like Dunkin' and drive-thru chains.

• Laird Superfood acquired Navitas for $39 million in December 2025, a strategic M&A move to expand in plant-based and health-focused coffee alternatives.

• Nueva Vizcaya, Philippines, allocated ₱5.7 million for coffee industry enhancements, a governmental initiative to boost local production through technology and climate resilience.

• Starbucks announced free coffee giveaways on February 9, 2026, as a strategic promotion to drive traffic and introduce new brews amid competitive pressures.

• India's 2026 Budget withdrew duty concessions on imported coffee machines, potentially increasing costs for machine-brewed coffee in cafes under new governmental fiscal rules.

• U.S. tariffs on coffee-producing countries were discussed, with exemptions confirmed, providing strategic relief to importers and stabilizing supply chains for 2026.

• Home coffee routines in 2026 emphasized speed and consistency, with consumers prioritizing durable, easy-to-use equipment amid hybrid work schedules.

• Brazil's first official survey (from Conab, released on  February 6, 2026) forecasts a record 66.2 million 60-kg bags (processed), up 17.1% from the 2025 cycle. If confirmed, it would exceed the prior record of 63.1 million bags in 2020; private estimates (e.g., Hedgepoint, Safras & Mercado, Itaú BBA, Sucden) range higher at 69-75 million bags for the 2026/27 cycle.