#012 - The Opportunity of Impact Investing in the Coffee Supply Chain

First you identify a big pain and put your energy into solving it.

Then you identify bottlenecks, which could make the whole chain more fluid.

There is a known history about a wealthy family trying to do good: someone simply entered into a hospital, identified first a line, then a rotten equipment and then a rotten process. That created the opportunity to make a huge impact.

The coffee supply chain is broad and presents many of these impact investment opportunities.  

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We have argued that the coffee industry could adopt best practices of impact investing from developed countries… creating positive impact alongside attractive financial returns.

Impact investing has gradually shifted from a niche among old-money families to a broader investment philosophy.

There are several parallels between Europe and the US among wealthy families such as the Rockefellers, the Pritzkers, the Fords, the Agnellis, the Grosvenors, and other wealthy families. Specifically in Sweden, the Wallenberg family is known for owning core companies in telecommunications, power grids, and industrial sectors. They have been associated with brands such as Ericsson, Electrolux, Atlas Copco, Saab AB, and more. They all became benchmarks due to their focus in sectors that benefit society and their emphasis on climate change.

But what is the playbook?

The sophisticated version of impact investing isn't just writing a check to a charity. It involves recognizing that a hospital may be failing due to equipment that breaks recurrently or a governance structure requiring three signatures just to buy a box of syringes.

For example, both the Pritzker Family Foundation and the Rockefeller Brothers Fund have shifted toward "impact" not by accepting 2% returns, but by identifying systemic frictions—bottlenecks—and deploying "catalytic capital" to resolve them.

The process typically includes a diagnosis, a governance fix, and often a machine. By establishing proper governance and addressing the physical bottleneck (e.g., purchasing equipment or improving management), they create a "flywheel effect." The hospital (or environmental project) becomes self-sustaining. Capital is preserved because the "investment" is often structured as a low-interest loan or recoverable grant, and impact is measurable (e.g., lives saved per dollar).

These projects usually follow a framework:

• Theory of change first—not vaguely "we invest in health tech," but specifically "this telemedicine platform in rural India reduces maternal mortality by 25% by connecting midwives to specialists in real time." Every deal starts with that clear map.

• Standardized, outcome-focused metrics: clinics built, lives saved per dollar, health workers trained and retained, patients reached, etc.

• Patient capital: 7-12 year horizons, not the usual 3-5.

• Local execution: Money stays in-country, talent is local, solutions fit the market.

• Blended structures: First-loss tranches from foundations cover downside; commercial investors capture upside. This has unlocked billions that pure grants or pure equity never could.

We believe the same logic could be applied to agricultural bottlenecks.

Coffee culture in developing markets and healthcare share much in common: the same geographies (Africa, Latin America, Southeast Asia); the same problems (smallholders lacking capital, poor infrastructure, climate volatility).

In coffee, key bottlenecks include warehouses, mills, irrigation, drying technology, and soil regeneration. Smallholders face high capital costs and time constraints: they pay 18-30% on loans (vs. 4-6% in Europe), long-term financing for wet mills is almost nonexistent, post-harvest losses reach 20-30% due to inadequate storage (e.g., plastic sheets in the rain), and yields stagnate at 600-800 kg/ha. Climate change only accelerates these issues.

Why direct resources to origin countries?

This isn't about "more aid." It's about redirecting part of the coffee retail market's capital. A significant portion currently flows to consultants, certifiers (SGS, Bureau Veritas, etc., with 80,000+ employees in rich countries), and marketing budgets in consuming nations. Impact investing done right reverses this flow, improving coffee quality, the environment, and the lives of many families—while offering attractive returns to patient capital.

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Weekly Highlights:

• Coffee Futures C Price in NY: -5% weekly, at $ 285.70 cents/lb following broader -18% monthly decline.

• Coffee Price in Brazil's B3 in USD: -5% weekly

• BRL/USD fx rate: Up ~0.8% weekly

• Proxy of 20' container freight prices from Santos to Rotterdam: -9% weekly .

• Starbucks reported strong traffic growth for the first time in two years, with global transactions up 3% and same-store sales rising, driven by menu innovations and operational efficiencies amid shifting preferences for premium experiences.

• De’Longhi achieved record results in recent periods, fueled by demand for home coffee machines and a consumer shift toward at-home brewing for consistency and convenience.

• Nestlé's leadership emphasized coffee as a growth pillar, with plans for premium single-serve, RTD formats, and sustainability investments in 2026.

• U.S. coffee consumption remains high (around 66% daily), but Starbucks' market share has declined to ~48% as consumers turn to rivals like Dunkin' and drive-thru chains.

• Laird Superfood's acquisition of Navitas (late 2025) expands into plant-based, health-focused coffee alternatives.

• Nueva Vizcaya, Philippines, allocated ₱5.7 million for coffee industry enhancements, focusing on technology and climate resilience.

• Starbucks announced promotional giveaways (e.g., early February events) to drive traffic and introduce new brews amid competition.

• India's 2026 Budget withdrew duty concessions on imported coffee machines, potentially raising costs for cafe-brewed coffee.

• U.S. tariff discussions on coffee-producing countries included confirmed exemptions, stabilizing supply chains.

• Home coffee routines in 2026 prioritize speed, consistency, and durable equipment amid hybrid work.

• Brazil's Conab first official survey (released early February 2026) forecasts a record 66.2 million 60-kg bags for 2026 (processed), up 17.1-17.2% from the prior cycle—exceeding the 2020 record of 63.1 million bags if confirmed; private estimates range 69-75 million bags for 2026/27.