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Peanut Butter Pretzels at the Heart of Trader Joe’s Lawsuit

Snack foods are big business in America. Just ask Trader Joe’s, a grocery store chain with a reputation for offering difficult-to-find foods. Among their most innovative and desirable products is the peanut butter pretzel, a salty-and-sweet confection involving a pretzel shell filled with peanut butter. It’s a delectable snack, and it can mean big money for whomever supplies Trader Joe’s with the product.

snacks%2053061838-001.jpgSince the early 1980s, Trader Joe’s supplier has been Maxim Marketing. This southern California business essentially acted as a middleman between the factories that were making peanut butter pretzels and the retailer. It was a lucrative setup, with Maxim selling approximately nine million dollars worth of pretzels to Trader Joe’s on an annual basis.

It seemed to be a win-win situation until food giant ConAgra starting buying up the factories that produce peanut butter pretzels. Suddenly, Trader Joe’s began to see the value in contracting with ConAgra directly for its salty sweet fix.

That left Maxim Marketing out in the cold. With Trader Joe’s bypassing them to go directly to the source – something they have a reputation for doing in numerous situations as a cost saving strategy – Maxim’s bottom line was suffering. Things became dire for the marketing firm, and they filed a lawsuit against Trader Joe’s and ConAgra.

The complaint alleges that Trader Joe’s committed a breach of contract with their supplier, Maxim. Moreover, Maxim says that ConAgra has a monopoly on the peanut butter pretzel market because they own so many of the factories that make the snack. Maxim’s arguments amount to saying that the monopoly makes it impossible for them to conduct business.

Trader Joe’s has yet to comment publicly on the lawsuit, and has not yet filed an answer. A ConAgra spokesman calls the claims “baseless and built on false accusations.” While this may seem like a lot of unnecessary brouhaha over an inconsequential snack food, the reality is that a great deal of money is at stake. While the defendants have not officially responded to the litigation, it seems clear that the case will be aggressively defended before a decision is reached.

Sylvester, Oppenheim & Linde represents businesses and their owners in most types of litigation. If your business has a legal problem, contact Richard Oppenheim directly for a prompt, no charge initial consultation. You may use the contact form in the left column or call 818-461-8500.