Trader Joe’s Pretzel Tale of Antitrust & Breach of Contract

Posted on February 22, 2014 by

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ConAgra pretzel treats.

ConAgra pretzel treats. Photo by Courtesy Photo

The Trader Joe’s Peanut Butter Filled Pretzel weighs three grams, measures less than a cubic inch and consists, as its name suggests, of a thin pretzel shell stuffed with peanut butter. It was an unheard-of technological marvel when the Monrovia retailer started carrying them 26 years ago – “You haven’t lived until you’ve tried the two together,” famed food writer Ruth Reichl rhapsodized in an early review.

Millions of bags of the treat are now sold every year, stocking dispensing machines at tech startups and satiating late-night cravings of Hollywood celebs and strapped college students alike.

Today, the bite-size comfort snack is worth a lot of money – and at the center of a high-stakes struggle for control. The fallout includes accusations of a ruthless peanut butter pretzel monopoly, the breakup of a decades-long partnership and competing cross-country claims to the snack’s invention.

The trouble began in the fall, when Trader Joe’s allegedly switched suppliers of the product, cutting out Aliso Viejo’s Maxim Marketing in favor of ConAgra Foods Inc., one of the largest food packaging companies in North America. The jilted Maxim has not gone quietly, launching a legal fight alleging antitrust violations and breach of contract.

“We pioneered these items,” said Terry Kroll, Maxim’s owner and chief executive. “We took something from nothing and built it into their top-selling savory snack.”

The pretzel crack-up has also offered a rare public peek inside Trader Joe’s, a company that, for all its customer-friendly attitudes, maintains an obsessive secrecy about its products and is known for aggressive cost-cutting with vendors.

“It’s at odds with the image that the company has on the outside with customers, which is very folksy, friendly and casual,” said Mark Gardiner, a retail marketing consultant who has written a book about the company. “A lot of people would naturally assume that this kind of culture pervades the company, but it doesn’t.”

Trader Joe’s declined to comment.

ConAgra called the lawsuit without merit and declined to comment further.

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Posted in: Family safety