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Is Trader Joe’s Crossing the Copycatting Line?
An investigation by food publication Taste found some foodie upstarts charging that Trader Joe’s has copied their recipes and package design innovations when developing its private label offerings and purposely cut them out of deals.
Citing conversations with five founders of small to midsize ethnic food brands, Taste detailed a practice whereby Trader Joe’s engages in conversations with an emerging brand under the guise of forming a private-label partnership, often asking for samples and exploring potential recipe adjustments. Conversations then go quiet, and Trader Joe’s winds up introducing a highly similar product on its own.
One founder who declined to be revealed believes Trader Joe’s proposes a “price point that they know you can’t meet” as an excuse to forego continued negotiations before developing a similar product on its own.
“It reminds me of the fast fashion model,” Jing Gao, who founded the Fly By Jing brand of Sichuan chili crisp, told Taste. “Trader Joe’s is like the food version of Zara or Shein. The way that these big houses keep up with so much innovation so quickly is by copying independent designers.”
Gao was reportedly approached by Trader Joe’s about replicating her recipes. However, she made it clear that she’d “only consider partnering with the company if it was also willing to carry her Fly By Jing brand in its stores. That turned out to be a dealbreaker, ending the conversation on the spot.”
The Taste article further said that given their experience working on similar collaborations with other retailers, including Costco, Target, and Whole Foods, the founders “described Trader Joe’s shadowy tactics as an outlier in the industry.”
Known for being tight-lipped when it comes to its private labeling process, Trader Joe’s told Taste in response to the alleged infractions, “We are proud of our long history of supporting vendors and their growth with us. For a range of reasons, we are unable to work with every company we contact and realize our decisions to not pursue certain products can be disappointing.”
In a response to Business Insider, a Trader Joe’s spokesperson said, “In our search for new products, we meet with many producers to determine who can best deliver on food safety, production capacity, quality, and price.”
Two other limited-assortment grocers, ALDI and Lidl, are also often known for developing private labels that are similar in taste and packaging to better-known products in the marketplace. A Daily Meal article notes that ALDI engages in “brand imitation” to legitimize such actions. The article states, “The key to this strategy is to have just enough difference in packaging, branding, and ingredients to avoid a lawsuit, which is called comparative advertising. So long as there’s no deliberate deception on the part of the imitator, it’s okay.”
A Reddit discussion thread exploring Taste’s article delivered mixed comments. Some agreed Trader Joe’s was taking advantage of smaller brands, but other commentators felt that other issues, including challenges meeting capacity requirements, likely led to the grocer not forming partnerships. One commentator said, “You need a massive infrastructure to get your products to their shelves.”
Discussion Questions
Are Trader Joe’s alleged tactics in engaging with smaller brands to explore private label development fairly common or an “outlier” approach for grocers?
Does such a practice seem ethical or unethical?
Poll
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Georganne Bender
Principal, KIZER & BENDER Speaking
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
It’s hard to say if Trader Joe’s practices are especially egregious relative to other industry players, but this sort of conflict between brands and retailers has existed for a long time. Even big brands that have some modicum of channel power can encounter these types of conflict. Ultimately, every brand needs to decide where they want to sell their products. Any retailer who continually poaches ideas from brands and them cuts them out is a bad partner and over time, brands will simply choose to not do business with them. But there’s a fine line between ‘being inspired’ vs. stealing an idea, and in all fairness to Trader Joe’s (and other retailers), some ideas aren’t nearly as unique as the brand may believe.
The issue extends beyond grocery products.
For new companies with limited resources, navigating the challenges of distribution is akin to running a gauntlet. While manufacturers of non-food or non-perishable items can opt for direct-to-consumer (DTC) channels to expand their brand and revenue while sidestepping this gauntlet, it’s a more daunting task for those producing perishable goods.
While one might argue that such practices are unethical or unfair, they, unfortunately, constitute a strategic decision that must be approached with an understanding of the potentially unfair process.
My initial thought – i.e. before I actually read the article – was that this belonged in the “food and whine” column: someone copies you ? tough…that’s the essence of competition. However, the claims in the story – that TJ is essentially using a subterfuge to gain (possibly) proprietary information – don’t get that free pass. Free and open competition is fine; espionage, if that in fact is what is going on, is not.
I have agree on a large amount on this- I have seen a lot of retailers copy them on items to compete with in their stores so that customer will not leave their stores, I just don’t think its as severe as espionage….
This isn’t a new issue in the industry: grocery retailers have long developed their own versions of products produced by big and small brands. However, the particular issue with Trader Joe’s is that most of its mix is private label, so it’s not like other brands even get a chance to compete on shelf alongside the own-brand alternative. If true, the practice isn’t very fair and it isn’t ethical; I would prefer to see Trader Joe’s partner with and invest in small brands to help them grow; but that likely does not fit with their business model. At the end of they day, if this doesn’t cross into the line of illegality there is very little that can be done.
I am so tired of this. And I am not chalking it up to the cost of competition because copycatting is rampant in retail.
Big box craft stores steal from independent designers, stores like Zara and Urban Outfitters steal from indie artists, musicians take riffs from lesser known musicians songs. Just stop. Stop taking advantage of smaller brands and do your own work.
This. Well said.
This issue is endemic in private-label merchandising. It’s one thing to buy samples of a product you want to knock off and do the work to create a version of it. It’s quite another, if the article is accurate, to feign interest in a product to get access to ideas and trade secrets and then bring your own version of product to market, knowing the inventor probably doesn’t have the resources to bring legal action. Sadly, this happens all the time and across many industries.
I’d worked with my sales team for months on getting our made-in-USA educational products into Michaels – many visits to their prototype store, days and days loading data and images into their system and creating 20-foot planograms. Would have been great – we’re a 50-year legacy brand trusted by 3 generations of teachers, they had the storefronts and the other crafty goods teachers use. About a dozen stores were eventually set up in various cities, with my sales rep jetting to review each one and providing feedback. Then radio silence from their side for several months. Yep, they rolled out knockoff products made overseas for super cheap prices and set them up fleetwide.
Designs so very close to ours and our competitors but not /exactly/ the same. Fewer pieces per pack, paper not as good, etc.
Thankfully teachers did not take to the product because the utility & quality wasn’t there and they had to clearance it all out just before the pandemic. We won’t ever deal with them directly again, not after that breach of trust and waste of our investment.
Like everyone else, Amazon…OH, NO! We aren’t talking about Amazon this time.
This is hardly espionage. This is how Trader Joe’s, Aldi, and Lidl do business, as do every other retailer that sells private labels, and they have been doing it for more than fifty years that I have been in the business. Business isn’t for sissies, and it never was.
If a company is afraid that a potential customer might copy its formula, recipe, style, or fashion, don’t present it to that potential customer.
With all due respect, just because you are larger than the company you steal from does not make it okay, nor should it be chalked up to the cost of doing business. I have seen too many small and indie brands hurt by this practice. Case in point: Tuesday Bassen’s fight against Zara. https://www.thecut.com/2016/07/tuesday-bassen-on-her-work-being-copied-by-zara.html
This is business. If you step into it, particularly if you are small, you should know how the game is played. Really, anything goes if it is legal.
What Zara did was not legal, especially in the Tuesday Bassen case. IP is copyrighted from the moment it is created. One doesn’t even have to file for it. Her case seems open and shut. When it is over, she will be compensated.
Well if this is true then it is egregious behavior by TJ’s. As long as it is alleged, and not proven, then we have this thing called innocent until proven guilty that acts as a protective shield for TJ’s.
Another side of this story is the old “where there is smoke there is fire” maxim, and invoking that gets you to a “guilty in the court of public opinion” “verdict.
If that is the case here, it seems to me that the most prudent path for potential vendors would be to avoid Trader Joe’s as a potential partner–go sell to Publix, or Kroger, or Whole Foods.
A private label initiative copying a brand…?!? I’m shocked! Every private label product that ever hit the shelves of a department store or grocery store copied some aspect of an existing brand. That’s not really the issue here. The issue is honesty and integrity. What’s in the public domain and what’s private and secret and proprietary? Maybe even by trademark or patent, or just plain old deep, dark secret. Copying something in the public domain is one thing, but even then there are rules. Engaging in some kind of subterfuge to gain access to secrets is despicable. Ideas and inspiration for new products are everywhere we look. But there’s a lot of hard work in getting from idea to product on the floor. Go ahead, build the better mousetrap. The market will reward you. But hopefully customers will not reward copycats and cheaters.
Does the end justify the means here? Trader Joe’s prides itself on offering unique items that most of its loyal shoppers assume are conceived and created by the retailer. This perception of originality plays a big role in Trader Joe’s overall brand premise. Engaging with brands under the guise of partnership, only to ghost and eventually copy those brands is indeed unethical (or dodgy, at the very least).
I walked into my first Aldi’s several years ago. I was greeted by stacked high boxes of private label Frosted Flakes. The boxes were almost identical to the brand.
I think Trader Joes is unique because so much of its stuff is private label (like its sister Aldi) and we don’t normally see that in grocery. Are they trampling on new/smaller suppliers? What is the difference between that and Forever 21, or Zara? Or even Gap’s knock offs at Target? Knock offs are knock offs.
Do I like it? I’d probably enjoy the shopping experience at Trader Joes with or without the private label (except for the parking lot).
They always talk about this on Shark Tank…”What’s to stop one of the larger players from copying and crushing you?” Without patents, nothing. This is one where I say the market has to decide if they want to buy the product or not.We can’t legislate against it.
The action to copy or closely imitate products is widespread in the retail industry, where many stores promote their private labels as comparable to, or even replacements for, established national brands. This strategy leverages the appeal of similar quality at lower prices, a practice generally accepted as part of competitive retailing.
Trader Joe’s is uniquely positioned regarding this issue due to its distinctive brand identity. Known for its ethical stance, consumer-friendly approach, competitive pricing, and unique product offerings, Trader Joe’s has cultivated a strong connection with its loyal customer base. This reputation for uniqueness and ethical business practices means that any actions perceived as common in the broader industry, such as product imitation, may be scrutinized more closely when it comes to Trader Joe’s. The heightened attention to Trader Joe’s practices likely stems from the contrast between its established brand image and the industry-standard practices of product imitation. I may be wrong. but it seems that Trader Joe’s is held to a higher standard. In the case of Trader Joe’s, its strong brand identity and the value of uniqueness and consumer trust could make typical industry practices, like product imitation, more noticeable and potentially more contentious among its consumer base.
Is it wrong? Yes! Will it stop? No.
First of all, there are no secrets. Gene Detroyer is right – like it or not this has been standard industry practice since Adam and Eve introduced the first private label apple and snake oil. I love Fly By Jing. In fact I like all chili crisp oils and use a variety every day. But … if I was a retailer and wanted an own label version I could simply order a jar on Amazon, take it to my local design to value shop, and – as fast as the lab could work – I would know exactly how to replicate the recipe and, in fact, improve it. This is exactly what Loblaw did with its President’s Choice line. Okay it isn’t all that simple, but it isn’t really much more complicated either. Small brands go to large retailers in order to scale and that makes them vulnerable in the same way that anyone partnering with Amazon enjoys a few great years and is then disintermediated. So, to answer the actual questions, yes it is a common practice and depending on whether you are the original brand or the private label versions it is either ethical or not. The truth is, like it or not, free markets are largely amoral. If people played fair the world of commerce would look much different. Not an endorsement. Just an observation.
This is a damaging allegation. I’m sure there are laws to cover this type of infringement. And we should also remember that a person or company is “innocent until proven guilty.”
This is a practice that is part of the competitive marketplace, and an integral component of our free market economy. All competitors are free to compete in a no-holds barred market, especially on product, price, promotion and place. Reverse engineering a product has been a component of American retailing and manufacturing since before we became the USA. House brands have always competed on a “look a like” basis, at a lower price, and often with a similar label. Successful brands in our retail market are always prepared for this, and know in advance that this position is coming as a part of their consumer success. From cars to potatoe chips, this is all around us, and as part of a free market economy, we vote with our dollars every time we buy something. Adapt, evolve or perish is the key component of consumer sentiment in America.