Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Salas Family Built a Coffee Empire in Costa Rica
Transcript
- Lucas: So you know how we've talked about families that built empires on sugar or tires or candy. Today I want to bring you one that's built something on a crop most of us consume every single day without thinking about where it comes from. Luna: I'm guessing coffee? Because that's the only crop I can think of that's this universally loved and this opaque in its supply chain. Lucas: Exactly. And not just any coffee family. The Salas family of Costa Rica. They've been growing coffee in the Tarrazú region since the 1890s, and they're now in their fourth generation. But what makes them interesting isn't just the history. It's the decision they made about fifteen years ago to stop selling green beans to commodity buyers and start building their own brand. Luna: That's a big leap. Most small farmers don't have the capital or the nerve to do that. What changed? Lucas: Well, it was partly necessity. In 2013, coffee rust hit their region hard. That's a fungus that can wipe out a whole harvest. The Salas family lost about thirty percent of their crop that year. And like a lot of farmers, they realized they were completely exposed to a commodity price that was barely covering their costs. Luna: So they decided to do something about it. But vertical integration in coffee is expensive. You need a mill, you need a roaster, you need export licenses. How did they pull that off? Lucas: They started small. They built their first micro-mill in 2014 with help from a cooperative of about forty other local growers. That let them process their own beans instead of selling cherries to a central mill that mixed everyone's harvest together. Once they controlled the processing, they could start marketing their beans as single-origin, micro-lot coffee. Luna: And that's where the price jump comes in. I've read that direct trade coffee can fetch double or even triple the commodity price. Is that what happened for them? Lucas: It took a few years, but yes. By 2018, they were selling about sixty percent of their output through direct trade relationships with roasters in Europe and North America. They were getting a premium of roughly forty percent over the commodity price. And they used that extra margin to buy more land and invest in better processing equipment. Luna: That's a solid turnaround. But I imagine it wasn't just a financial decision. There's the family legacy angle too. Lucas: Absolutely. The current matriarch, María Salas, who's in her late seventies now, she was the one who pushed for the shift. She'd seen three generations struggle with the volatility of commodity markets. She told her children and grandchildren, if we keep doing what we've always done, we'll be gone in a generation. That's a powerful motivator. Luna: And did the younger generation buy in? Or was there friction? Lucas: There was definitely friction. Her son, Carlos, who's now fifty-five, was skeptical at first. He thought it was too risky to take on debt for a mill when the commodity price was finally starting to recover. But María convinced him by pointing out that the mill would give them control, and control meant stability. Carlos eventually came around and now he runs the commercial side. Luna: It's interesting that you mention control. That's a theme we see in so many family businesses. They want control, not just for profit, but to keep the family's identity alive. Is that what's driving the Salas family now? Lucas: Partly. But there's also a pragmatic side. By keeping ownership within the family, they avoid the pressure from outside investors to scale up quickly and dilute the brand. They've turned down offers from bigger coffee companies more than once. That's a source of pride for them. Luna: Speaking of scaling, they've also diversified into other crops, right? I remember reading something about plantains and citrus. Lucas: Right. After the rust crisis, they planted plantain and citrus on the lower parts of their land where coffee wasn't growing well. That not only gave them another revenue stream, but it also helped with soil health and pest control. It's a classic agroforestry move. Luna: So they're not just coffee farmers anymore. They're a diversified agricultural business. That must change the succession calculus. Lucas: It does. The family now has four branches, and each branch has a different role. One handles the coffee, another the plantains, another the citrus, and the fourth is exploring specialty drying methods. They've set up a family council that meets quarterly to coordinate and make sure everyone's aligned. It's not always smooth, but they've managed to avoid the kind of splits we've seen in other families. Luna: That's impressive. I've covered families where a single bad season or a disagreement over strategy led to a complete break. What's kept the Salas family together? Lucas: A big part is their commitment to the land. They all live on or near the family farm. That physical proximity creates a shared identity. Also, they have a written family constitution that outlines how decisions are made, how profits are shared, and what happens if someone wants to leave. That's been crucial for avoiding conflict. Luna: A family constitution is something we've seen in other episodes. It seems like the ones that work are the ones that are consulted and updated, not just written and filed away. Lucas: Exactly. The Salas family revises theirs every five years. The last revision was in 2024, and they added a clause about sustainability certifications after some of the younger members pushed for it. They're now in the process of getting Rainforest Alliance certification for all their farms. Luna: That's forward-thinking. But I'm curious about the market side. Specialty coffee is getting more competitive. How are they differentiating themselves beyond just the story? Lucas: They're investing in experimental processing. For example, they're doing honey-processed and natural-processed lots that fetch even higher prices in niche auctions. In 2025, one of their micro-lots sold for over one hundred dollars a pound at a specialty auction. That's a far cry from the one to two dollars they were getting for commodity beans a decade ago. Luna: That's a real number. It must feel like a different world now. But what about the next generation? Are they as committed as their grandparents? Lucas: That's the big question. The fifth generation is coming of age now. Some of them are studying agronomy and coffee science. Others are more interested in tech and marketing. There's a tension between those who see coffee as a tradition to preserve and those who see it as a business to grow. That's not unique to them, but it's especially sharp when you're in a single-crop region. Luna: I guess that's the eternal challenge for any family business with a long history. You want to honor the past, but you can't let it hold you back. Lucas: Right. And it's interesting because they're also facing external pressures. Climate change is already affecting coffee growing in Costa Rica. The temperatures are rising, and the rain patterns are shifting. The Salas family has had to move some of their coffee plants to higher elevations. That's not something they could have anticipated a generation ago. Luna: So they're adapting. But how are they balancing that with the need to make a profit? I mean, relocating coffee plants is expensive. Lucas: They're using the profits from their direct trade sales to fund those adaptations. They've also invested in shade-grown coffee, which is more resilient to heat. And they're working with agricultural researchers to develop more drought-resistant varieties. It's a long-term investment in their own survival. Luna: That's the kind of thinking that makes me optimistic about family business. They're not just looking at the next quarter. They're looking at the next generation. Lucas: And that's exactly why we tell these stories. It's not just about money. It's about legacy and stewardship. Speaking of which, I want to mention something that's been on my mind. This podcast is ad-free, and that's a luxury. We're able to do these deep dives because a small number of listeners chip in every month through buy me a coffee dot com slash fexingo. Luna: Yeah, and it's genuinely those contributions that keep this going. We don't have a corporate sponsor, so it's just us and the listeners who find value in these conversations. Lucas: If you've gotten something from these stories, that's the way to make sure they continue. No pressure, just that. Back to the Salas family. So they're at a crossroads. The fifth generation is coming up, and they have to decide whether to continue the slow, deliberate expansion that has worked so well, or to pursue more aggressive growth. Luna: What do the older members think? Are they pushing one way or the other? Lucas: María, the matriarch, is famously cautious. She's quoted as saying, we didn't get here by rushing. But Carlos, who's been running things for a decade, he sees opportunities in the growing Asian market. There's a real debate about whether to open a roasting facility in Singapore or to stay purely as a grower and exporter. Luna: That's a classic dilemma. Expand the value chain or double down on what you know. Lucas: And it's not just a strategic question. It's also a question of identity. If they become a roaster and a retailer, they're no longer just a farm family. They become a consumer brand. That's a shift not everyone is comfortable with. Luna: Do you think they'll do it? Lucas: I honestly don't know. But I think the fact that they're even having the conversation is a sign of health. They're not paralyzed by nostalgia. They're actively debating their future, which is more than many family businesses can say. Luna: It's a good reminder that a family business is never just about the business. It's about the family. And the Salas family seems to understand that. Lucas: Yeah. And if they can navigate this next transition with the same thoughtfulness they've shown so far, they'll be a model for other family farms around the world.