Latest news with #WonderstateCoffee
Forbes
14-07-2025
- Business
- Forbes
Roasting Responsibly: Inside Wonderstate's Model For Equitable Coffee
At the heart of Wonderstate Coffee's roastery is a vintage 1930's Probat roaster where they roast in ... More small batches, aiming for the perfect expression of the bean's natural characteristics. The specialty coffee industry has built its brand on the promise of sustainability and traceability—but a closer look at the numbers reveals how far it still has to go. Globally, an estimated 125 million people depend on coffee for their livelihoods, yet many smallholder farmers live below the poverty line, earning as little as $0.03 per cup sold in U.S. cafés (Fairtrade Foundation, 2023). Despite decades of ethical sourcing initiatives, most coffee prices remain tied to the global commodity market which has hovered around $1.35 per pound for much of the past 50 years, rarely covering the true costs of production. Meanwhile, climate change continues to threaten key coffee-producing regions, with up to 50% of current land suitable for Arabica projected to become unsuitable by 2050. In this context, Wonderstate Coffee—a roaster based in rural Wisconsin—is attempting to rewrite the rules of engagement. Founded in 2005 with a mission to source coffee more ethically and build lasting farmer relationships, Wonderstate has become one of the few U.S. companies to offer a published minimum price significantly above market rates: a $3.15 per pound floor, adjusted annually to reflect rising costs. Their supply chain is 98% Certified Organic, and their sourcing model prioritizes long-term contracts, pre-harvest financing, and hands-on collaboration with producers. But the company's commitment to equity doesn't stop at origin. In 2023, Wonderstate launched a profit-sharing initiative that distributes 10% of its annual profits to non-leadership employees—including baristas and production staff—based on hours worked. Last year, the program returned $41,520 to frontline staff, deliberately excluding executives to emphasize the collective nature of the company's success. I had a chance to talk to co-founders TJ Semanchin and Caleb Nicoles who both expressed they have long viewed coffee not just as a product, but as a platform for structural change. Drawing from their early experiences in sustainable development and fair trade, they have built a business model grounded in what they call 'Sourcing Coffee for the Collective Good.' This means investing not only in price premiums but also in logistical systems that preserve quality, even under volatile conditions. Their approach reflects a growing push within the industry to move beyond labels like 'Fair Trade' and toward deeper, more transparent partnerships. As coffee's future becomes more uncertain—economically, environmentally, and socially—Wonderstate's model offers an alternative path. It asks: What if businesses bore the true costs of sustainability, rather than offloading them onto producers and workers? In our conversation, Semanchin and Nicoles explore how a small company in Wisconsin is attempting to answer that question—one transparent, equitable transaction at a time. Christopher Marquis: You launched Wonderstate in a small Wisconsin town in 2005. What motivated you to take the leap, and how did your vision for ethical sourcing and sustainability shape the company from day one? TJ Semanchin, co-founder and president of Wonderstate Coffee TJ Semanchin: When we launched the company in 2005—then called Kickapoo Coffee—we were motivated by a shared belief that coffee could be a force for good. Caleb had just left a career in wine importing to be closer to family in Viroqua, and TJ and Denise had recently moved from Minneapolis, where TJ was working in fair trade coffee. We came from different paths, TJ's studies in sustainable development and Caleb's passion for quality & innovation, but shared a vision: to build a company rooted in quality, transparency, and relationships—with both farmers and our local community. Viroqua, in the heart of Wisconsin's Driftless region, was the perfect place to bring that vision to life. It's a place where organic farms, food co-ops, and small-scale craftsmanship thrive. That environment shaped our values from the start. We sourced coffee exclusively through direct relationships and fair trade cooperatives, and we paid some of the highest prices in the industry to ensure farmers could invest in their land and families. At the same time, we prioritized sustainability at home—installing a solar array, building out with locally made furniture, and adopting a four-day workweek to support quality of life for our team. Ethical sourcing and sustainability weren't marketing points for us—they were the foundation of our company from day #1. Marquis: You've developed one of the most sustainable coffee supply chains in the world—98% Certified Organic and built on direct, long-term farmer relationships. How did you establish those relationships? What does it take to maintain that level of commitment in a global supply chain? Caleb Nicoles, co-founder of Wonderstate Caleb Nicoles: We have always been curious about the product and have taken many opportunities to travel coffee regions to discover what is possible. These trips are an important opportunity to spend time with producers, review the prior year's crop, taste coffees as they are being harvested, and meet new partners that are aligned with our company's emphasis on organic production and benchmark quality. Over the years we have learned that coffee quality potential is based on the same three things that will determine the quality of a good bottle of wine: Micro-climate or terroir, the variety of the plants, and the way the coffee was grown and processed. Coffee is very different from the wine industry in that it is relatively easy to develop a relationship with a wine maker and find ways to import their product. In contrast, coffee is not a finished product—it has a quick shelf life, ideal processing techniques are not very well studied, even now, and there are infinitely more challenges for producers to process their coffees well, like weather and storage conditions. We had to create our own systems and benchmarks for quality processing, more stringent than the industry benchmarks and team up with coffee producers who had the desire and ability to execute these standards at a very high level. Each group we purchase from will have their own unique challenges every year that can impact their harvest. These complexities can be weather related, structural challenges within an organization, political or even geo-political dynamics can bring new, unforeseen challenges to our purchasing relationships. We maintain really good communication with our partners, especially during times of hardship and instability and invest heavily in travel and spending time at origin. This is not always possible as many of the places we purchase coffee from are not safe to visit every year. Earlier this year, we had planned to take a team of six staff members to one of our partners from Chiapas, Mexico but had to cancel the trip because the local Cartel had taken over their town. Also, coffee that sits at origin too long loses quality and takes on undesirable traits like woody, herbal and papery flavors. Because of this, specialty coffee is also a game of logistics, getting coffees out of country in a timely manner in order to preserve the delicate sweetness and complexity that producers had worked so hard to create. We plan our purchases 6-12 months in advance and communicate them clearly with our partners so that our producers can get necessary pre-harvest financing and develop detailed plans to support global logistics for timely shipments. It usually takes roughly 3 months to receive a coffee that we have purchased. There is nothing worse than receiving a once beautiful coffee at our roastery that tastes dull and flat because it got held up too long at origin. Imagine taking a bite out of the perfect apple…if you leave that apple on your counter for a month, the bright, piquant crispness is replaced by dull, flat and muddled flavors. This is an all too often occurrence in the coffee industry. Marquis: Wonderstate offers the highest published minimum price in the industry, far above Fair Trade. How do you determine fair pricing, and what does that financial transparency mean for the producers you work with? Nicoles: Our sourcing philosophy is guided by these nine principles which collectively we call Sourcing Coffee for the Collective Good. Our producer relationships are guided by a philosophy that first and foremost, has to be a viable product for coffee producers economically. Coffee farmers today on average, still make far less than they did before Specialty Coffee was born, 50-60 years ago. This is all because coffee prices for Specialty are set against what we call the C price, which is the Commodity price for coffee traded on the New York Stock exchange. For blender grade coffee, most coffee roasters and coffee importers will pay somewhere between the C price and +75 cents over the market price. This price is extremely volatile and has been sitting on average at $1.35 since the 1970's. When you adjust for inflation, coffee prices in the 1970's were two to three times higher than they are today. Back in 2017, we made this realization and established a floor price that protected farmers from market dips. We set this price at $2.75 as a minimum and vowed to increase it by .05 each year to keep pace with rising costs of production. Today, our minimum price is $3.15. Interestingly, we are in a moment where the C price is at historic highs, cresting over $4.00 in the last four months. So our minimum price is not relevant until the market goes back down to its historically low levels. Even still, our producers know that the market will dip again and having a floor price guarantees that they can produce coffee profitably when it does go back down. It is extremely difficult to determine a fair price for coffee as the economies and cost of production in each country is so diverse. Our approach to each country is unique and we do ask more of our producers because it takes extra effort to grow and produce the world's best coffee. Our baseline prices are typically set at $1.00 over the C price, that price is roughly $3.90 today, and go way above that to $6-$10 per pound for the more unique coffees that we purchase. We pay higher than that for some coffees and our hope is to keep finding ways to bring these exceptional, boutique and rare offerings to our customers. Marquis: Your profit-sharing model redistributes 10% of profits to frontline staff, excluding leadership. What was the thinking behind this decision, and how does it reinforce Wonderstate's broader philosophy of equity and shared success? Nicoles: We have always looked up to companies like Patagonia who took a long-range, human and environment centered approach to developing equity in our capitalist economy. The decision to pay our employees 10% of our profits was a fairly simple way to ladder the company's financial success back down to the employees who made it possible. At our core, we hope to create a workplace culture where staff can feel how their efforts and successes are connected to the overall health and well being of the company. Our profit-share model was an important way to build that culture. Everyone plays a vital roll at Wonderstate and we created a way to monetize that reality. Last year, we paid $41,520 back to staff, based on hours worked. Our hope is to pay significantly more to our staff in 2025.
Newsweek
30-04-2025
- Business
- Newsweek
Will Small Businesses Like Ours Survive a Trade War?
I'm living the American Dream, while it lasts. Twenty years ago in rural Wisconsin, we started Wonderstate Coffee with a commitment to making great coffee while supporting an environmentally sustainable and socially just network of coffee growers. Thanks to coffee fans in the Midwest and beyond, we have a successful and growing business with 85 employees, three cafe locations, and a local roasting and distribution operation. We were planning to invest in new packaging equipment to keep up with demand, but the recent tariff uncertainty has ground those plans to a halt. In addition to the financing costs, the chaos in the business environment prevents us from feeling confident in such investments. A Wonderstate Coffee worker operating a roaster. A Wonderstate Coffee worker operating a roaster. Photo Courtesy of Wonderstate Coffee The Trump administration's policies are no doubt causing anxiety for small businesses of all stripes, because we exist in a global economy. The business of coffee, which 70 percent of Americans drink every day, is a perfect example. Coffee beans can be grown only in a specific band of the globe and in specific climatic conditions. Beyond a small area in Hawaii and Puerto Rico, none of those places are in the United States. There's no way to bring coffee farming "back" to the U.S.; it was never here to begin with and never could be. A 10 percent tariff on coffee beans—and looming reciprocal tariffs—mean that even before we have to decide whether to pass the cost on to consumers, we need to find the money to bring our coffee into the country. Yes, small businesses are financing the tariffs. The price of coffee beans has already been rising due to crop losses from the extreme weather events of a changing climate, as well as geopolitical uncertainty. These factors put the squeeze on small businesses like mine as we compete with corporate giants. Now we're facing the worst crisis for our company since the height of the COVID-19 pandemic. Back then we did everything we could to keep our doors open to customers. Now we're scrambling to come up with the money to buy our inventory in the first place. Our commitments to paying farmers and our workers more than fairly, and to keeping prices affordable for customers remain as strong as ever; it's our motivation for doing this work. But I honestly don't know how small businesses will get through this if help doesn't come soon. Running a business like ours has never been easy. But in recent years, it's gotten much tougher. Corporate tax breaks have smoothed the path for big companies to continue investing in their growth, leveraging ever greater economies of scale to overwhelm smaller competitors. Meanwhile, health care and benefits costs keep skyrocketing, costs big companies can absorb but which can sink small businesses. At Wonderstate, we provide health coverage for our employees. How many more years of double-digit health care cost increases can we or other small businesses afford? Wonderstate Coffee's 100 percent solar-powered roasting facility in Viroqua, Wis. Wonderstate Coffee's 100 percent solar-powered roasting facility in Viroqua, Wis. Photo Courtesy of Wonderstate Coffee We're also committed to paying our farmers equitably for their work. In 2017, we announced the highest published minimum price guarantee to farmers, more than 80 percent above the Fair Trade conventional minimum price and over 50 percent higher than Fair Trade organic prices. This isn't charity; a healthy coffee economy increases the supply of beans, and ultimately keeps prices manageable for small businesses like ours and for customers who love and rely on their morning cup. This kind of long-term vision is undermined by drastic and unpredictable trade policies. Coffee is a global industry and the futures of farmers, employees, and consumers are extremely interconnected. A climate disaster in Colombia, or a civil crisis in the Democratic Republic of the Congo—both places where we buy beans from—can turn your $2 cup of coffee into a $4 one. The administration's tariffs will push prices even higher. Wonderstate Coffee's Jay Skrede loading green coffee into the roaster. Wonderstate Coffee's Jay Skrede loading green coffee into the roaster. Photo Courtesy of Wonderstate Coffee Small businesses need help now. Ending the tariff threat would be a good start, but the issues we face run deeper. American small businesses were hit hardest by the impacts of the COVID-19 pandemic and now face another crisis. Wonderstate and Main Street USA need an infusion of serious systemic support to keep paying our employees what they need, and offering benefits that keep us all healthy and safe. Targeted tax relief would allow small businesses to reinvest in our companies, allowing us to grow, offer our products to consumers at reasonable prices, and be the engine of a healthier U.S. economy. Making health care more affordable for small businesses, or at least extending the Affordable Care Act's tax credits, would help us continue to offer our employees the benefits they need and which every American deserves. Running Wonderstate has been my lifelong dream come true. I'm proud of what we've built over the last two decades, and grateful to all the people who've supported us along the way. But the headwinds we're now facing threaten all that we've worked for. TJ Semanchin is the owner of Wisconsin-based Wonderstate Coffee and a member of the Main Street Alliance. The views expressed in this article are the writer's own.
Yahoo
12-04-2025
- Business
- Yahoo
Coffee drinkers brace for record prices as tariffs hit
Americans must brace for record high coffee prices as Donald Trump's tariffs combine with soaring costs to punish consumers, analysts have warned. Retail coffee prices in the US are expected to surge by nearly a third this year to an all-time high as businesses scramble to adjust to higher import charges and record high commodity prices, according to Carlos Mera, head of agricultural commodities at Rabobank. Mr Mera said: 'I think for a large packet of coffee, we might see retail price rises of around 30pc in the 2025 calendar year.' TJ Semanchin, owner of Wonderstate Coffee, a wholesale roasters which also owns a series of coffee shops in Wisconsin, said: 'We are in uncharted territory as an industry. The tariffs could not be coming at a worse moment in terms of impact on our prices.' Mr Trump shocked coffee importers by imposing sweeping 'reciprocal' tariffs on America's trading partners on April 2, announcing massive charges on many key coffee exporters such as Vietnam, where he imposed a 46pc tariff. Although he scrapped these 'reciprocal' charges on Wednesday this week, most exporting nations are now subject to a 10pc blanket tariff, which will effectively add a 10th to the import price of coffee. This comes on top of an enormous surge in the commodity price of wholesale coffee beans. The price of Arabica beans, America's main coffee import, has soared to an unprecedented all-time record high of more than $4 (£3) per pound in February. It has since dropped to $3.56 but this is still up nearly 60pc year-on-year and is the highest price recorded for the beans at any point in history before 2025. This followed years of bad harvests in Brazil and Vietnam and major shipping disruptions due to Houthi rebel attacks on ships travelling through the Red Sea. Mr Semanchin said: 'Coffee has never been more expensive, ever. When you tack on a percentage tax on what is already a very high price, that's a multiplying effect. 'At $2 per pound, a 10pc tariff is 20 cents per pound. At a $4 market price, that tariff is now 40 cents.' Mr Semanchin already raised his prices by 15pc to 20pc in March to account for the higher commodity prices. Now, he thinks he will have to charge an extra $1 for every $15 bag of wholesale coffee that he sells. Mr Trump's about-turn on 'reciprocal' tariffs offers no relief for the US coffee sector, Mr Semanchin added. He said: 'Trump's announcement has almost no impact on the tariffs we were facing. The situation for importing for companies like ours remains dire.' Altogether, Mr Semanchin estimated tariffs will cost his business an additional $300,000 per year. America imports almost all of its coffee apart from around 1pc which is grown in Hawaii. This is because it does not have the appropriate climate to grow its own and means US coffee sellers have no option but to keep importing. Bjarne Schieldrop, chief commodities analyst at SEB bank, said: 'These tariffs really do drive up the prices of goods and coffee is going to be one of them.' Thijs Geijer, food and agriculture economist at ING bank, said US consumer coffee prices are already soaring at nearly three times the average rate of inflation. US consumer price index (CPI) data shows coffee retailer prices in March were up by 6.7pc year-on-year, far higher than the overall 2.4pc CPI rate. Mr Geijer said: 'Within the shopping basket of an average consumer, coffee and also chocolate are really the ones that stand out in terms of year on year price increases.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Sign in to access your portfolio
Telegraph
12-04-2025
- Business
- Telegraph
Coffee drinkers brace for record prices as tariffs hit
Americans must brace for record-high coffee prices as Donald Trump's tariffs combine with soaring costs to punish consumers, analysts have warned. Retail coffee prices in the US are expected to surge by nearly a third this year to an all-time high as businesses scramble to adjust to higher import charges and record high commodity prices, according to Carlos Mera, head of agricultural commodities at Rabobank. Mr Mera said: 'I think for a large packet of coffee, we might see retail price rises of around 30pc in the 2025 calendar year.' TJ Semanchin, owner of Wonderstate Coffee, a wholesale roasters which also owns a series of coffee shops in Wisconsin, said: 'We are in uncharted territory as an industry. The tariffs could not be coming at a worse moment in terms of impact on our prices.' Mr Trump shocked coffee importers by imposing sweeping 'reciprocal' tariffs on America's trading partners on April 2, announcing massive charges on many key coffee exporters such as Vietnam, where he imposed a 46pc tariff. Although he scrapped these 'reciprocal' charges on Wednesday this week, most exporting nations are now subject to a 10pc blanket tariff, which will effectively add a 10th to the import price of coffee. This comes on top of an enormous surge in the commodity price of wholesale coffee beans. The price of Arabica beans, America's main coffee import, has soared to an unprecedented all-time record high of more than $4 (£3) per pound in February. It has since dropped to $3.56 but this is still up nearly 60pc year-on-year and is the highest price recorded for the beans at any point in history before 2025. This followed years of bad harvests in Brazil and Vietnam and major shipping disruptions due to Houthi rebel attacks on ships travelling through the Red Sea. Mr Semanchin said: 'Coffee has never been more expensive, ever. When you tack on a percentage tax on what is already a very high price, that's a multiplying effect. 'At $2 per pound, a 10pc tariff is 20 cents per pound. At a $4 market price, that tariff is now 40 cents.' Mr Semanchin already raised his prices by 15pc to 20pc in March to account for the higher commodity prices. Now, he thinks he will have to charge an extra $1 for every $15 bag of wholesale coffee that he sells. Mr Trump's about-turn on 'reciprocal' tariffs offers no relief for the US coffee sector, Mr Semanchin added. He said: 'Trump's announcement has almost no impact on the tariffs we were facing. The situation for importing for companies like ours remains dire.' Altogether, Mr Semanchin estimated tariffs will cost his business an additional $300,000 per year. America imports almost all of its coffee apart from around 1pc which is grown in Hawaii. This is because it does not have the appropriate climate to grow its own and means US coffee sellers have no option but to keep importing. Bjarne Schieldrop, chief commodities analyst at SEB bank, said: 'These tariffs really do drive up the prices of goods and coffee is going to be one of them.' Thijs Geijer, food and agriculture economist at ING bank, said US consumer coffee prices are already soaring at nearly three times the average rate of inflation. US consumer price index (CPI) data shows coffee retailer prices in March were up by 6.7pc year-on-year, far higher than the overall 2.4pc CPI rate. Mr Geijer said: 'Within the shopping basket of an average consumer, coffee and also chocolate are really the ones that stand out in terms of year on year price increases.'
