Trader Joe's is being sued over its peanut butter pretzels by California company Maxim Market, who claims to be the true creator of the snack.
Maxim Market stated it invented the peanut butter pretzel in the early 1980s and supplied it to Trade Joe's for over 25 years, according to Huffington Post. The company is claiming Trader Joe's cut Maxim out of the business when the store switched to ConAgra Foods in 2011.
Journalist Alfred Lee, who wrote about the lawsuit in the Los Angeles Business Journal, said Maxim is suing both companies. Lee discussed the issue with Morning Edition host David Greene, NPR reported.
"They're suing for alleged breach of contract and also alleging the existence of a peanut butter pretzel monopoly," Lee said. "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."
Maxim said it sold Trader Joe's $9 million worth of peanut butter pretzels every year, according to NPR. In return, Trader Joe's would sell the snacks at a gross markup of approximately 35 percent.
Lee said Maxim acted as the middleman between Trader Joe's and other small pretzel manufacturers and never actually owned its factories, Huffington Post reported. ConAgra bought up much of the peanut-butter pretzel manufacturers in the U.S., including Maxim's most recent supplier, National Pretzel. Trader Joe's is known for cutting out the middleman and partnering with the manufacturers of its own foods.
Maxim said it used ConAgra to manufacture the pretzels until Trader Joe's made a deal with ConAgra, cutting Maxim out, according to NPR.
"Maxim is saying that this deal prevents them from essentially doing business," Lee said.
Maxim's owner Terry Kroll spoke with the Las Angeles Business Journal about Maxim's ownership of the peanut butter pretzel, according to Huffington Post.
"We pioneered these items," Kroll said. "We took something from nothing and built it into their top-selling savory snack."
