Founded in Pasadena in 1967, Trader Joe’s is one of LA’s most beloved grocery stores. It now has nearly 600 locations nationwide. The constantly evolving offerings include Asian simmer sauces, Mediterranean dips, playful snack items, and frozen meals from around the world. TJ’s works with global suppliers to make its eclectic products, but there are questions about the business practices behind the colorful Hawaiian shirts. Some small food producers say Trader Joe’s has ripped them off, according to Adam Reiner, founder of Restaurant Manifesto. He covered the issue in the online magazine TASTE.
For the last few decades, Trader Joe’s has operated through a system called private labeling. It finds manufacturers from around the world and creates products that are packaged with its own TJ’s branding. 85% of Trader Joe’s products are private labeled.
“Back in the day, people used to look at these generic brands as something that was inferior. But what Trader Joe's has been able to do is repackage these items in a sexy, fun way that makes them feel like they're different,” Reiner tells KCRW. “That especially has really appealed to younger clientele, millennials and Gen Z, who really respond to the idea that they're hacking the grocery aisle.”
In some cases, Trader Joe’s works with large companies like Pepsi and Wonderful that make products like Naked Juice and Wonderful Pistachios to create TJ knock-offs. However, the identities of the manufacturers are often hidden due to non-disclosure agreements, Reiner says.
While the large companies still make money on wholesale production, smaller producers have reported a very different experience working with Trader Joe’s. One of the small food entrepreneurs Reiner spoke with was Chitra Agrawal. The product innovation team at Trader Joe’s contacted her and showed interest in her product, so she shared samples and pricing information. They spoke privately for “several weeks, if not months.” Then, radio silence. But half a year later, Trader Joe’s released a version of her roasted garlic achaar (an Indian pickle), using the same ingredients and labeling. Her followers noticed and thought her original product was being stocked at TJ’s.
“There was a lot of confusion that was created at the time, and I don't think that she really wanted to make a big issue of it until she felt like it was necessary to clear up the confusion that she was not the person that was behind making that product,” Reiner explains.
Most of the vendors Reiner spoke with come from the ethnic food space, he explains, and feel like their recipes are not only culturally-specific but contain history: “They have a personal story, something that a company like Trader Joe's may not have the know-how to replicate.”
Many of the founders felt taken advantage of after working in good faith with Trader Joe’s to help design food products. Reiner says, “In some of the cases of the people that I spoke to, there was a back and forth with Trader Joe's where they were asking them to do things like take a little cilantro out of it. … After several months, they just disappear. The conversation ends, and then all of a sudden, a Trader Joe's version of something extremely similar ends up on the shelf.”
Small culinary entrepreneurs have little legal recourse. Trademark laws don’t protect recipes — just the packaging. One founder Reiner spoke to threatened legal action over nearly identical branding, which caused Trader Joe’s to slightly adjust their version. Other folks took to social media to express their frustrations. Agrawal publicly clarified online that the Trader Joe’s product wasn’t hers.
Reiner compares Trader Joe’s practice of copying small businesses and undercutting their products on price to what companies like Zara do in the fast fashion industry. In both cases he says, the low costs come at a price.
“What my story should bring into focus is that many times when prices are so cheap like this, there are people that are getting hurt in the background. And in the case of the founders that I spoke to, they’re working years creating these products, spending a lot of money to market and merchandise them — creating a lane in some cases for products that didn't exist before. And then Trader Joe's is just swooping in with their facsimile, copycat products and taking advantage of all that hard work. It's really hard not to feel sympathy for those small businesses.”