Increasing In-Country Consumption with Vera Espíndola Rafael
Only 10% of the value of coffee stays within coffee-producing countries—Vera is hoping to change that.
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You’ve probably picked up a bag of coffee or a bar of chocolate and observed some sort of certification on the label. Maybe that certification promised that the product was made in a sustainable way, or that the workers were paid more than they had been previously. But beyond the quick snippets, there is more to how these products are made than meets the eye.
My guest today is Vera Espíndola Rafael, a development economist working within coffee-producing countries. Recently, she wrote a paper called, “A Business Case to Increase Specialty Coffee Consumption in Producing Countries.” Coffee is a good that’s grown in one country, and then is traditionally—thanks to centuries of colonialism—exported somewhere else. Globally, coffee is a $200 billion industry. Vera was struck when she found out that only 10% of that value actually goes into the economies of the countries that grew the coffee, while 90% of that $200 billion stays in consuming countries.
You can hold that bag of certified coffee, or read a story about a roaster that promises to pay more for its beans, but Vera says that the solution to low coffee wages cannot depend solely on exporting a valuable product to traditional consuming countries. Instead, she argues that people should work to grow the value of coffee within their own countries. Not only will more of the value stay within producing countries, but more of that value will also go directly to the producers themselves.
Vera is based in Mexico City, and she got her start in coffee by working for Guatemala’s national coffee organization, Anacafé (Asociación Nacionel del Café). Later, she moved to UTZ, a label program that certifies products grown through sustainable agriculture—you’ve probably seen an UTZ label on something you’ve consumed. Now, Vera is working to find ways to increase consumption within coffee-producing countries, with the goal of raising farmers’ wages and giving them more agency in the global coffee supply stream. Here’s Vera:
Ashley: Can you tell me about some of your first memories of coffee?
Vera: Yeah, I think coffee for me is linked to Guatemala. It's there where I got acquainted with coffee. I started to work at Anacafé (the country’s national coffee association). For me, the memory is twofold. It's walking into the building and always smelling coffee. It's also specific visits I made to farmers in several regions during my time there.
The sense of smelling that coffee, smelling the aroma, and then knowing that I was coming back from several visits to farms and entering the building again—it always reminded me of how amazing [it is] to see how this product just goes from one hand to another.
But then ultimately the hand that I see farmers [have in growing coffee] is basically in very poor conditions. How is it possible that something that I'm drinking on a daily basis is causing—or at least it's not helping farmers get out of those vicious poverty cycles? That’s one of those things I’ll always be reminded of.
Ashley: That perspective probably informs a lot of the work that you do in coffee currently. I was wondering if you could tell people a little bit about your background working in nonprofits and how you applied that to your current work in coffee now.
Vera: The reason I started to work at Anacafé was that I was part of a research group. We were trying to understand better what was the percentage of the consumer price for several types of crops. This would be vegetables—and this would also be coffee.
In coffee at the time, and this was 2005, we calculated that around 6–8% of the consumer price went to the farmer. That for me was also a motivating piece because it allowed me to start thinking about other commodities. I was very interested also in cocoa and in tea. When I saw a job opening at UTZ for a cocoa position, they said, “Great, but we don't see you as a cocoa person. We see you as a coffee person.”
So they invited me to join the coffee team. At that time we were a very small organization—12, 13 people in Amsterdam, and the same number of people in other countries [UTZ was in]. It was great because it allowed me to have a better understanding [of coffee] not only from a research perspective but to see, OK, how can we can actually influence the consumer angle to say if you have a certified product, you will probably pay more—and that added value will actually reach the producer?
And over the span of, I would say of eight years, I got to understand better the realities of coffee producers in Asia, Africa, and Latin America. I also got to understand what the roles are of an NGO as well as other producer organizations and other entities within the sector, right? That really was a great opportunity to live through that.
Ashley: It's funny that your position at UTZ could have been different. Your whole pathway could have been different, if they had said, “Yes, you could be part of the cocoa team.” It's funny how those little decisions change the trajectory of our lives because here you are now as, I would say, one of the leading thinkers in the coffee industry and a lot of … I'm always tickled by those little moments where you're like, “Oh wow. My whole life could have been different if a decision might have gone another way.”
I was wondering, can you tell me a little bit about your time at UTZ? If you could explain what that is first and foremost, and how that informed the way that you started approaching agriculture and the problems that you were seeing at farms that you mentioned before—being able to drink a beautiful cup of coffee, but knowing that the people who were producing this coffee were living in poverty or were in pretty dire straits.
Vera: UTZ is a nonprofit organization. We started with setting up a norm, or what we called at that time a code of conduct, where you mentioned good agriculture practices, and these practices had to be fulfilled by producers or producer organizations. Different at that time was that we focused very much on those agriculture practices. And of course, we had social and environmental [practices].
I think in the timeframe of three years, a lot of these social and environmental practices slowly coincided with these pillars that all of the standards at the time were putting in their codes. In the beginning, I think there was much more of a difference [between certification organizations]. You’d see Fair Trade was much more social, and Rainforest Alliance was much more environmental. We were the ones that had focused more on the agriculture and economic piece. And that was very helpful.
It was helpful, but at the same time, you could also sense that there needs to be in some way more working together between organizations, especially these ones, in order not to overlap so much. I think that's why it's very good that Rainforest Alliance and UTZ [merged], because at one point there was a lot of overlap, and there is also a lot of overlap when it comes to implementation sites.
You need to be very smart on that, because the last thing you want to do is to burden a producer. And I still think that a lot of the things that we did in some ways are a burden to the producer. I really was also of a mindset that in order to actually have more practices that we believe are sustainable, we need to definitely have more of a bigger voice of people within the countries themselves.
This is still a criticism that I have. A lot of these [certification] organizations are not based in producing countries. At the end of the day, you do miss out on evolution and developments in a country, be it from a political point of view, or be it from a social point of view [because the organization is not based there].
You really need to factor in that these are not only labels for consumers in consuming countries—these are labels that producers need to understand what it means for them. What I'm sometimes sad to see is that we do not value the labels that much anymore. I think Fair Trade is the one that gives the biggest premium to producers, but the other standards—it’s very small, the value that implementing these practices [gives to farmers] in terms of price. It’s very small.
That is definitely sad to see—that we were not able, or the organizations are still not able, to share that added value sufficiently, and to share the fact that we need to pay more for these products to consumers.
Ashley: I liked that you mentioned value because I think that that's going to be a theme that's going to come up over and over in this episode: What does value mean? Where does value come from and who takes value?
We'll define that in a minute, but another thing that you discussed that I also want to highlight is that we define a lot of problems in global systems—that's essentially what nonprofit work is. Then we have these organizations that come up with solutions. People are well-intentioned with these solutions, but like you said, a lot of times these solutions don't involve the people that are actually affected.
What I loved about this paper that you wrote—so Vera wrote a paper. It's called, “A Business Case to Increase Specialty Coffee Consumption in Producing Countries.” What I think is really unique about the article that you wrote, as opposed to so much of the discourse in the coffee community right now, is that it really focuses on people within producing countries. The solutions come from them because the problems affect them. So I was wondering if you could talk a little bit about what prompted you to write this paper?
Vera: So after UTZ, I got this great opportunity to work for the Secretary of Agriculture in Mexico—a lot of people I remember were saying to me, “What are you going to do at the federal government level in Mexico?”
And for me, it coincided with that belief that if I really want to—I was living in Costa Rica for the last few years before I left UTZ, and then I had a year in Amsterdam, which gave me that reflection of, “If I really want to be part of the solution, I really want to be in one of these countries that I very much appreciate.”
And since my family lives in Mexico I was clinging to the fact that I would say, “That's the culture I most understand.” So that's where I want to head towards, to run back to—back to Mexico, and go back to an understanding of, “Okay, so what does it mean to live here actually now in the city, and what is happening in the coffee sector and in the coffee scene?”
I went back in early 2016, and although I've always visited Mexico and my family, it's never the same when you actually live in a city—it's never the same when you actually are immersed on a day-to-day basis. The struggles, the political tendencies, the cultural aspects. With that said, I was also working on coffee solutions for Mexico and not just for a region—just for the country itself.
A piece of this was linked also with me being part of the board of the Specialty Coffee Association [SCA] for the first time. For me, it was an unbelievable position to be in. One of the things I mentioned to Ric (Rhinehart, former head of the SCA) and to Kim (Elena Ionescu, chief sustainability and knowledge development officer at the SCA) at the time, I was saying, “Sometimes I cannot believe that I'm going through this path of going back to Mexico, feeling so happy to be back here, and then also working more in coffee and specifically also in specialty coffee.”
And one of the things I said is, “What I'm seeing in Mexico City is so many beautiful coffee shops, people so passionate about coffee, and also talking very much about the producers. [People are sharing] exactly which region a coffee is from, and talking about producers that we both know, so we know which region [the coffees are from]. We know how far it is. We know most likely what cultures they fall into, and also from an economic point of view.”
So it was very nice to know that the conversation doesn't stop at “Oh, it's from Oaxaca.” No, we can talk more because we know more, because we are citizens of this country. I know what's around it. So the conversation becomes completely different.
I was mentioning this to Ric and he was intrigued, Kim was intrigued, and at one point I said to Ric, “Well, there will be an event in Mexico City. You need to come over.”
So he came, and this was the International Coffee Organization’s meeting that we organized in Mexico City in 2018, and he came over and I, of course, took him to a cafe, which was open until 9 p.m. And he had this beautiful espresso from Michoacán. We started to talk more about that. I mentioned to him what I was seeing and what I was hearing. And one of the things that I was hearing was that producers [in Mexico] were receiving a good price—a really good price [for their coffees when consumed in Mexico]. So we started talking more.
Then during the event—Let’s Talk Coffee hosted by Sustainable Harvest—I got engaged in a conversation with IDB, the International Development Bank. They were very interested in the topic because they said, “One of the things that we're looking for is this circular economy aspect that we believe needs to happen in producing countries.”
I mentioned the topic of coffee, and then also Safe Platform was interested. I managed to get funds and they said to basically start the study, start doing this. And of course, this was not only from Mexico. I wanted to also understand better if this was also the case for Colombia, for Brazil, and ultimately Ric said, “Well, let's study an East African country.” This case, it became Rwanda—let’s do a case study to understand if this is more widespread than we think. Of course, these are just a handful of countries. I do believe that other countries are heading in a similar direction. It's great to see that that topic has evolved over the last two years in a very short timeframe. I'm very happy to see that.
Ashley: Yeah, I think you're right. I think in the last couple of years, this topic has come up more and more. And even on the last episode of Boss Barista that I just aired—these might not be sequential, maybe they will be, who knows—but I talked to a woman named Ana Sofía Narvaez, and she talked to a coffee producer in Nicaragua and they were talking about increasing in-country consumption there. So it's something that's on the mind of a lot of different people.
I was wondering if you could really plainly state the thesis of your piece and what you were hoping to explore, because you identify a pretty major problem when it comes to how coffee is valued and how that value is distributed.
Vera: I think one of the best studies—I would say definitely the one that gave me more to think about—has been The Coffee Barometer. I was floored by one of the key points that they were stating: Basically, 10% of the value of coffee is for green-coffee-producing countries. And then seeing that's just $20 billion of $200 billion just floored me.
So here we are producing these great coffees in all these countries. And then the only reward, so to say, is 10% of this $200 billion value. So apparently 90% of the value is being produced in consuming countries. So here I am, and I am thinking, “How do we ever change that?” Because that's just this big question.
I'm in a city here drinking my coffee, and we understand the value of our coffee, and other people here sitting with me in the cafe are also equally enjoying, as I am, this coffee. So I wanted to really understand: How can we, as a strategy for promoting coffee consumption in our countries, how does that strategy translate into more value for a producer? That's what I wanted to understand in this study.
Ashley: Why was that the thesis or the hypothesis that you came up with? Did that come from the fact that so much of the value that's created in consuming countries—that 90% value that we're talking about—almost primarily has to come from roasting and cafes?
Vera: Yeah, because I think at the end of the day, I'm attending these events and I'm listening about consuming trends in the U.S., other countries. This is a common topic at a lot of these events—to share what the coffee culture is in other countries. So in the U.S., and I call them traditional consumer countries. And I'm sitting there, and I'm like, “Well, fantastic that this is happening. But if the value keeps being 10%, what is it for us? So what does it mean for us as producing countries? Why are we not able to change this narrative?”
I was also trying to understand the export markets of several countries in Central America—I can’t remember what I was doing with that, maybe nothing to do with this? But I was understanding from the numbers that certain countries solely depend on the U.S., let's say, and 90% of their coffees go to that market.
And then the rest is distributed to other European countries, or Asia—it goes all the way from 70-90%. So you're completely dependent on these countries to buy your product, and just from a business point of view, that's not really smart. I was thinking, “We do not do enough to understand our own coffee cultures.” Here's me trying to understand how many cafes are in Mexico City, what are we doing in this sector, share an interest to see what is happening in my country, but there are no big studies about that.
So what we need to change is to say, “Well, this is a market that we need to understand and where we need to invest in. But before that happens, we need to also make the case for this.” And that’s part of the pieces that I tackled within this research.
Ashley: I think one of the most—I wouldn’t say damning, but I want to say damn because it's not a bad word, but just a shocking word—but I think one of the very first lines that you write in this piece that I had to stop and reread again was, “Considering these trade patterns of volatility and recent low coffee prices with no immediate long-term improvement on the horizon, producing countries must actively respond to mitigate the impact of their populations.”
So basically you're saying here that the solution to low coffee prices has to come from producing countries, because no one's fucking changing their behaviors, essentially. Which I thought was really poignant, because I think we go to so many of these coffee conferences in traditional consuming countries like in Western Europe and the United States, and we're talking constantly about the price crisis, and yet we have not fixed it, and it is a problem that we have created.
I think it's really interesting that you’re like, “Well, then let's scrap that way of approaching it,” and not excuse us any way—we in consuming countries obviously need to consider how we approach coffee buying and start to correct our own behaviors. But basically, your paper is almost saying, “We can't wait for that.”
Vera: Yeah, definitely. We cannot wait for that. It's so frustrating to see that we are dependent. You don't want to be in that position when you're traveling, just, what? Two hours from here [Mexico City] and you see sheer poverty? Come on. I'm definitely one of the people that’s like, “Okay, so where can I have influence on this? And is that even with a cup of coffee?” And the answer is yes. So let's try to understand that better.
I think that that applies to many of these countries. I just saw some quotes from the podcast [episode you mentioned] that is out there right now from Nicaragua. It's completely true. We are not only coffee professionals, we are also consumers. And that is very strong here.
We are, at the end, able to influence what we consume right now. Even if that, for me, is just three cups a day, for me, it’s a start—but it needs to be understood also in your own country. You need to understand how we consume, and you need to understand where we consume. And I do think that's still a lot of work in progress.
For me, that was the important piece of it—I think that we still underestimate the value of the work that's being done [in producing countries]. And I see a lot of value created at the end, and I think it's great for you guys. I want to focus on creating value at this end for the producer, and capture that for them.
Ashley: I like the way that you phrased that because I think there's something about the idea of value where we think it's a finite amount. We have this one coffee bean, and it will be worth this amount and that's fixed. So it's a distribution problem. How do we distribute more value on one end of the spectrum versus the other?
But I think what you're saying is that value is not fixed. If we can create value on both ends, that's good. That's what we're trying to do. And that's why that idea of dependency, of creating value in a totally, completely different way, by focusing on in-country consumption, is really interesting.
I don't necessarily care too much about consuming countries [in this conversation], because we have a ton of other problems that we need to address here. Lots of other things there, but I want to focus on specifically what you wrote. So let's talk a little bit about how you approached solving this problem. What did this research process look like for you, and what were some of your findings that you were surprised by or intrigued by?
Vera: The most fantastic thing about doing this study is basically to hear the stories behind all these coffee shops. So I had the opportunity to do several interviews in Brazil and Colombia, and a bunch here in Mexico. [I went to] Rwanda, that was thanks to Sustainable Harvest. I was able to go there and present part of this study already, and also had the opportunity to talk to several people in Rwanda, in Kigali. And a lot of the stories are similar. A lot of these stories are about people wanting to influence their immediate community by offering the best coffee of their country—and not wanting to wait for something.
If you [have to] go over to the U.S. or Europe to try that fantastic coffee—no, [people want to have] the tools here to serve that best coffee, and then make sure that that value also goes back to the producer. It's a very short supply chain, and it's also in terms of scale, it's small. So it's a small percentage of our total markets, but it's a valuable one.
That value, the understanding as consumers of what it means to drink fantastic coffee here, is slowly getting understood by more people. That passion and that eagerness to do, I saw in all of these countries. For me, that was very motivating to talk about.
Aside from the interviews, I also had several visits with producers where I interviewed them based on, “How do you see the national markets? What is your take on this?” That for me was also very insightful, because that means that we have enough room to grow and room to improve as a sector here. And those issues are not the ones that are being discussed.
For example, at an international event, at a very global event, these are issues very much from here [and nothing is done with that]. I think that is something that we definitely need to do something more with, because at the moment, we leave it just in a paper or undiscussed, and we will not be able to grow and understand better [the farmer’s] point of view when it comes to selling their coffee on the national markets.
The most important thing that I was surprised by was definitely the results I processed when it comes to price. Those were the ones that very much surprised me, because I did think that there was very similar or competing prices going on between the national sector and the export opportunities for producers. I did not think that, in some cases, [the national sector] would be equal or more.
I say that with a smile because it's great to see that, because that means that there is an additional strategy for some of the producers. I say some because this is something that we need to work on more, and understand.
Ashley: That's interesting. So there's a lot to unpack there. I think there are two things I want to identify.
So first off, the value of in-country consumption seems—there's a lot of reasons, but it seems twofold, two big ones. Number one, you shorten the supply chain. So instead of paying an exporter this or that, this person to get coffee from one country to another, you cut that supply chain. There are fewer people to pay, so more of the value naturally will go to the farmer. So that's more of a distribution issue. If we cut out some of the actors, some of that money goes somewhere else.
But then there's also the idea—and you mentioned this in the paper—of being able to interact with somebody face to face, being able to interact with somebody of your culture, being able to speak the same language, having the same cultural norms and understandings so that when you do negotiate, you're like, “I understand this person. I know what their needs are. They're better able to communicate their needs to me. So we're able to agree to something on terms that we both understand.”
Those two things kind of work in tandem and that's where that idea of value creation happens, as opposed to distribution. But it seems like those two big things are the reason that in-country consumption can improve the lives of farmers.
Vera: Definitely, definitely. And I think when you touched upon the shortening of the supply chain, many people think, “Oh yeah, that's a given. So what else?” I think the most important thing, and it goes in hand with the second point you mentioned, is the fact that when you have a person that talks the same language, the same slang, says the same type of words we use, which you will not find at a Spanish school in Antigua, that's the pieces where you start building that relationship purely because you're from the same group of people.
Then, when you're able to also share some insights about what you know—so there are, for example, certain people that are roasters that are also cuppers and then go to producers, and they have a better insight into the science of coffee and what happens when you ferment coffee for so many hours, and if you do it in certain bags … and when they start transferring this knowledge, and when there is an interaction between them and the producer says, “Yeah, I did that, and I saw this and then I saw that,” and there is that back-and-forth in your own language, and you don't need to shy away because this white person came to your house and you do not know him and you do not understand him.
That's great to see, that producers are having access to more knowledge and understanding of what they're doing, but also feeding back what they're seeing and hearing what the potential could be, and seeing also a bag of coffee with the name of their farm and seeing that in their own language—that is very valuable.
I think the combination of those two things are of value. I will definitely hear from producers that say, “It's fantastic. I go up to a certain town and there I see my coffee and I see my name.” It's something that’s very close by, and that helps constantly in the relationship between these two parties.
Ashley: Early in the conversation, you mentioned the idea of a circular economy. I had not heard this term actually until very recently. I've been writing a lot about sustainability for some of the clients that I work for. But when I read about this and when you mentioned it, it totally clicked.
So the idea of the circular economy is that instead of a good or a service being handed down linearly with very little interaction between the actors, that everything is almost reused, everything comes back full circle. People experience or interact with products and ideas over and over and over, as opposed to creating waste. That's kind of the framework from a sustainability perspective, but from a producing perspective, when you're thinking about coffee consumption inside of a country, I think the idea of the circular economy is really a powerful metaphor as well.
I imagine that reinforces quality or that reinforces what the potential of specialty is, because when we alienate people from specialty, if we say, “Hey, specialty coffee only happens in traditional consuming countries. Let's export all this coffee over there,” there is no reinforcement of what specialty coffee is, right? A farmer doesn't ever get to taste it. They don't ever get to experience the fruit of their labor—which is kind of a cheesy metaphor, the fruit of their labor.
But when things are happening within your own country—when you can drive to a coffee shop that's maybe a couple of hours away and see your coffee and see people that you identify with and interact with—that builds that idea of what the potential of specialty coffee can be, because you're able to experience your product and take that knowledge and say, “Oh, I tasted this and this espresso, I did this to the coffee this year. What if I do this to this coffee next year?" And I can get that experience again and see what happens.”
I wonder if that's something that you've been thinking about too—what is the potential for the future of specialty coffee as in-country consumption increases?
Vera: It was definitely one of the questions that was asked to me multiple times, because they say, “Well, you're talking about specialty coffee.” And at the end of the day, when we look at the pyramid of consumption, I would say the top of the pyramid is the specialty coffee consumption. Then the other big group of [coffees], let's say clean coffee, that's not related to any particular origin reference. Then you have at the bottom, the ultimate bottom of coffees, a lot of the time that happens in our countries because I think when we are in specialty coffee, we sometimes hope that everybody starts drinking specialty coffee. I think it's okay that not everybody does because not every bean of coffee is specialty coffee quality.
That's okay. It doesn't mean that that producer who produces coffee not for the specialty market and barely makes it, it doesn't mean that he deserves a not sustainable, not prosperous life. That's not what I'm saying. We need to get [to the point] that everyone who produces has a prosperous life.
What I'm trying to say is that we need to understand in our own countries how we can influence and how can we share information and knowledge, so that consumers can say in our countries, “Oh, I actually want that. I don't want this. I want that.” And are able to understand what the difference is.
I do think that sometimes we're very far away because we have been … I would not say miscommunicating, but over-communicating a lot of things at the same time. That has costs for a lot of consumers, to not understand even what a [certification] label is, or what's the intent, what does it mean and what part of the price does the [premium] cover, and what does it not?
We almost think that everything is okay. I understand that as well. I, as a consumer, sometimes just want to know, “Can I drink or eat this? Yes or no.” And then you've seen so many labels like that and you’re like, “Yeah, let me forget it. I will not buy anything off it.” So there's a lot of things that we can improve in terms of communication.
But the thing is, my communication and my country are not the same as yours, you know? I think that we sometimes think that we can just copy/paste. We need to learn how to communicate in our own language, in our own words, and learn also from other examples that have existed for years in other countries.
I would say that the potential for specialty coffee definitely is going to grow more in our countries. I would like to think that the efforts that people are making—I'm not referring to to national strategies, there are several already in place and several being executed—but that people are doing this in their own community, that is having a great outreach and impact.
Even if that's small, I think combined, that's becoming bigger, and it’s great to see how much that is. I think here in Mexico, we can go up to 10% [of coffee grown in the country being consumed in-country]. I think we're now at around 5%. I do think that we can go to 10% and then—and I’m referring to specialty coffee in its pure sense. I'm saying [coffees that score] over 85, specific quality parameters.
We do need to think more and talk more about the sustainability of the full supply chain. I'm also referring to the living income for baristas in our own countries. That's what I'm also aspiring for. But yeah, I think that there is sufficient space to grow.
Ashley: I was going to ask you for any final thoughts, but I feel like you really captured a lot of big themes in that last answer. So I guess to kind of close things out, I was wondering, is there anything—reading your paper, what would you want somebody to take away from it? What would you want somebody reading it to feel empowered to do or think critically about after reading this piece?
Vera: I remembered it also, Brian [Gaffney] also asked me a similar question. What I would like this paper to achieve is that there are more conversations about consumption in our countries. But not only about the consumption itself—what is needed is to have producers have more tools to decide on where they want to sell their coffee.
I would like to see us start thinking about and start acknowledging the needs of our professionals and our supply chains here. So that means the barista who is making a minimum wage and wants to be a professional. Currently, the tools out there and materials out there are not always focused on them or focused on a different group of people. And sometimes not even in Spanish.
So I think there's a lot to uncover there. If you really want to have more consumption in these countries, we do not need to think only about consumption strategies and how to reach the consumer. We need to think about our sector. We need to think about our professionals that need to have more materials, more information, more knowledge made available to them. And we need to be smart about it. Not everything needs to be about business—I refer to the business making a lot of money out of these materials.
Ashley: Vera, thank you so much for taking time to chat with me. I really appreciate it.
Vera: Thank you, Ashley. I appreciate it.
This interview has been lightly edited for clarity.
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