A defining factor in the health of a family business is succession planning. How can the business endure and survive across generations? The story of YPO member and CEO of Delta Cafés, Rui Miguel Nabeiro, reinforces recent “survival statistics” that suggest that transgenerational entrepreneurship, in which one generation inspires the next generations to innovate, often in new ventures, is key to long-term success — particularly in times of crisis.
A Portuguese brand success story
Rui Nabeiro, a national icon and grandfather of Rui Miguel Naberio, founded Delta in 1968. Delta has since become market leader in Portugal’s coffee market, one of the country’s most recognized and admired companies. Headquartered in the small town of Campo Maior, in the Alentejo region of Portugal, the coffee roasting and coffee packaging company has witnessed global expansion. In the past 10 years, Delta grew from a small warehouse to a market leader in the Iberian Peninsula with a presence in approximately 40 countries around the world.
“Since I was born, I was surrounded by coffee, and have Campo Maior and coffee in my blood,” says Nabeiro. “My grandfather would regularly invite customers on weekends to visit the surroundings of the factory. So, I was exposed to this business from a young age and witnessed the importance of building a close connection with customers.”
In 2002, at age 22, as part of his onboarding to the business, his grandfather sent him to work in coffee trading and purchasing companies in Spain, Vietnam and Italy, to help him better understand the industry and the global supply chain process. “The transition to join the family business was never imposed; it came naturally. I was very interested in the industry and was keen to learn,” recalls Nabeiro.
Upon his return to Campo Maior in 2003, he launched several marketing projects, including developing the company’s website and digital strategy, before transitioning to a leadership sales role in Lisbon.
“When I found out there was an opening for a GM of sales position in Lisbon, I jumped at the opportunity. I felt it was important to not have the parachute of my father and grandfather by my side,” says Nabeiro. “I learned early on that when you are part of the family business, you have to work triple hard to prove yourself. So, I challenged myself to go after big customers. This helped gain the trust of the team.”
New entrepreneurial ventures
A few years later, at 27, in an effort to keep the brand relevant, Nabeiro began innovating and exploring new ventures.
“Anyone who has travelled to Portugal knows the prevalance of cafes and the coffee culture. But trends and coffee drinking habits were changing,” he says.
In 2007, he launched the Delta capsule, also known as pods system, under the Delta Q brand.
“Capsules was my first big solo project,” he explains. “Within three years, the Delta Q brand became the segment leader in Portugal by leveraging the strength of our distribution network and the Delta brand equity.”
Despite the risks and huge investment, Nabeiro decided that Delta Q should offer its own capsules based on a proprietary system and design a special machine that brews espresso.
“Today, capsules constitute a quarter of the business. This year, because of the pandemic, and more people staying at home, we have seen more growth,” he says. “If we did not have our own capsule system, we would have suffered more during the crisis. Now the segment is a building block holding up the company.”
Nabeiro adds that Delta Q has also driven the growth of the general capsule segment in Portugal. In a country where people traditionally enjoy their coffee in cafes and bars, home consumption has increased with capsule market penetration in households in Portugal reaching 80%.
Even though you have a family business, work as if you are a startup. ”
— Rui Miguel Nabeiro, CEO of Delta Cafés share
Global expansion ambitions
While developing Delta Q, Nabeiro began to lead the global expansion of the company, building on the initial presence in Angola where his entrepreneurial grandfather had established a factory. In the past seven years, the company has expanded to setting up Delta companies in Spain, France, Luxembourg, Switzerland, Brazil and China while exporting to other countries in the Americas.
“The capsule business led the internationalization effort because capsules are a differentiating product and easier to sell — a key driver of our geographic expansion and growth,” says Nabeiro.
He adds that while “made in Portugal” is an interesting and attractive proposition in places like Spain, there is still some work to be done to raise awareness and positive perception of coffee from Portugal — despite the country’s historical role in bringing coffee to Europe in the 18th century from Brazil.
“Coffee culture is ingrained in the everyday life and history of Portugal, but the flavor and quality of Portuguese coffee are just starting to become recognized globally. So, we see great potential in further geographic expansion.”
Advice for the new generation of family business leaders
As a third-generation family business CEO, Nabeiro offers advice to family business leaders seeking to follow the success of their entrepreneurial founders. From his experience, these practices have proven to help with business continuity, even during times of uncertainty in response to the COVID-19 pandemic.
- Even though you have a family business, work as if you are a startup. Recognize that creating a sustainable business is not easy. That the business was successful in the past does not guarantee success in the future.
- Keep innovating and be willing to take calculated risks. Initially, Delta Q, using available capsules, was not successful, and Nabeiro’s team had to change the strategy and create its own capsules and machines. In addition to the Delta Q capsule innovation, Delta Q Kids with chocolate and barley was launched, creating an exciting product line for a new segment of young hot chocolate drinkers. “A key role of a leader is to build an innovation culture, challenging the team, including those from the family, to create and follow ideas that have merit and to think differently.”
- Strengthen the company’s responsibility to community and environment. Some of Delta’s sustainability projects include development of a biodegradable, compostable and environmentally friendly capsule (eco capsule), which was launched this year. In another pioneering project, Delta is supporting up to 500 coffee producers in Azores, Portugal, over the next 15 years — an experiment to create Europe’s first coffee plantation. While many companies are recognizing their corporate responsibility toward the community and environment, Delta’s position as leaders of a family businesses makes it easier to take the long view.
- To create a climate of trust, you must balance business and family. The unity of family and the strong family values that this creates has been critical in Delta’s journey. “Early on, we created a system of governance and family protocols to guarantee there is a future,” explains Nabeiro. “The Delta brand is bigger than our family, so we have a system of governance with a family advisory, where everyone in the family can join, followed by shareholder and board governance layers.”
- Recognize that not everyone in the family has to have a management role. While Nabeiro’s father has been involved in the factory side, he chose a more active and visible role. At the third generation, only three family members are involved in the day-to-day operations. There should not be any obligation to join the business. If members of the family feel they can add value and are willing to work hard, they are welcome. “For my 13-year-old son, I always tell him to follow his own dreams,” Nabeiro says.
While Delta’s 4,000 employees and residents of Campo Maio — where the majority of people work for Delta live — take pride in their local brand reaching new heights, Nabeiro says there is no time for complacency. “The coffee culture is evolving, and new coffee businesses are emerging. We intend to continue to lead the wave with innovation and enthusiasm, following the same spirit of my grandfather and hopefully inspiring the next generation to do the same.”