02/21/2014 03:44 pm ET Updated Feb 21, 2014

Trader Joe's Sued For Alleged 'Peanut Butter Pretzel Monopoly'

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The famous Trader Joe's peanut-butter pretzel may be salty and sweet, but one California company is quite bitter about the snack's dominance.

Maxim Marketing claims to have invented the treat in the early 1980's and to have supplied it to Trader Joe's for more than 25 years. Now the company is suing Trader Joe's, claiming the grocer switched suppliers to industrial food giant ConAgra Foods in 2011, effectively cutting Maxim out of the business it pioneered.

"They're suing for alleged breach of contract and also alleging the existence of a peanut-butter pretzel monopoly," business journalist Alfred Lee told NPR. "I realize that sounds kind of funny, but this isn't some bite-sized niche, if you will. It's a market worth tens of millions of dollars."

According to Lee, ConAgra has bought up almost all the peanut-butter pretzel manufacturing capability in the country. Maxim never actually owned its factories, but rather it acted as a middleman between Trader Joe's and various small pretzel manufacturers. After ConAgra bought National Pretzel, Maxim's most recent supplier, it worked out a deal with Trader Joe's to cut Maxim out as a distributor.

“We pioneered these items,” Terry Kroll, Maxim’s owner told the Los Angeles Business Journal. “We took something from nothing and built it into their top-selling savory snack.”

Trader Joe's did not respond to the Huffington Post's request for comment.

Trader Joe's, once dubbed "the most secretive retailer in America" by Fortune, has a reputation for cutting out middlemen when creating its private-label foods. The court in the Maxim lawsuit must determine whether a contract was actually breached and whether the Trader Joe's-ConAgra deal impedes competition in the peanut-butter pretzel market, according to NPR.


Trader Joe's Taste Test, Round 2
Trader Joe's Taste Test, Round 2