Trader Joe’s Has Transparency Issues

Discussion
Jul 27, 2010
Tom Ryan

By Tom Ryan

Writing for The Faster Times, the online investigative website,
Amy Westervelt said private label food items have a “transparency” problem
because consumers aren’t told what firm is actually manufacturing the items.
As part of an ongoing “Generic Foods Investigation,” she has launched
a probe to find out who produces many of Trader Joe’s popular items.

For instance,
she has so far found, partly through reader’s responses, that Trader Joe’s
Green Goddess Dressing is made by Annie’s; Trader
Joe’s
organic yogurt by Straus Creamery; and Trader Joe’s Spinach and Cheese
Frozen Pizza by Amy’s Kitchen. (Trader Joe’s didn’t confirm the findings.)
She also identified the cost-savings for consumers for a Trader Joe’s item
versus each manufacturer’s comparable item. For instance, Trader Joe’s
organic yogurt is 80 cents cheaper than Straus Organic Yogurt.

The problem,
according to Ms. Westervelt, is that private label food products at food
retailers are tough to track.

“If you discovered, for example, that there was a meat by-product in
the food, your only recourse really would be to take it up with Trader Joe’s
– -the manufacturer remains obscured,” wrote Ms. Westervelt.

Ms. Westervelt
also said  consumers should be aware of Trader Joe’s connection
to German supermarket giant Aldi. The chain is owned by a family trust set
up by Theo Albrecht, one of the two brothers behind Aldi.

“What doesn’t sit quite right is the lack of transparency —
the fact that it’s next to impossible for consumers to figure out where
their food is coming from,” wrote Ms. Westervelt.

She promised information
on Wal-Mart’s and Costco’s private label
lines in future installments.

Many online responses to the series praised the
reporter’s efforts at revealing Trader Joe’s manufacturing sources. But a few
were sympathetic to the retailer.

One respondent, Jeanne,
who worked in an industry related to private label products, remarked that
she didn’t think it was fair to compare a manufacturer’s
flagship product to their private label efforts. Recipes/formulas are changed
to “personalize” the final private label offering for each chain.

Another
responder, Daniel B., who said he worked in advertising for many years, said
that while the investigation was said to be about supply chain transparency,
the biggest benefit is “giving the consumers the heads up about which
brands can be purchased for less at Trader Joe’s.”

Still, he believes retailers
who put their name on private label items they didn’t produce “need to
be more vigilant” than if they were just
stocking shelves with national brands.

“By putting their own name on a package, if something goes wrong, it is
the retailer whose reputation is tarnished. And I do believe that is a strong
incentive for keeping things on the up and up,” he wrote.

Discussion Question: Should retailers provide the names of manufacturers
that produce their private label products?

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22 Comments on "Trader Joe’s Has Transparency Issues"


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Susan Rider
Guest
Susan Rider
10 years 9 months ago

Often retailers go to well-known manufacturers to produce their private label brand. Therefore, the mayo you buy that is private label may be exactly the same as the name brand, it just costs less, which is good for the consumer! This is the case across the board in many instances.

Requiring the retailer to disclose their manufacturer reduces their competitive edge and will snowball into companies developing subsidiaries, etc, to hide the data. What difference does it make? As long as the retailer puts the information about the product required and possibly country of origin. Companies stand behind their private labels. Much ado about nothing!

David Biernbaum
Guest
10 years 9 months ago

Private label has never had much transparency at the retail store level for consumers. However in most instances, the actual manufacturers take most of the legal and ethical responsibility and carry most of the liability for products sold to the consumer. I do believe that for certain foods and drugs that there needs to be a user friendly way for consumers and public officials to immediately identify the actual manufacturer of the product.

Anne Howe
Guest
10 years 9 months ago

Retailers have had big CPG manufacturers producing private label or private branded products for years. I believe the retailer should require any manufacturer to provide country of origin information on the products, but not necessarily the name of the manufacturer. It is the retailer’s responsibility to stand behind its brand quality and image in the marketplace. Frankly, I am not sure shoppers are seeking the level of transparency on which manufacturer is actually producing the product. They care more about taste and the relative value that adds up to a lot of savings on the shopping receipt.

Max Goldberg
Guest
10 years 9 months ago

Retailers should not have to provide the names of manufacturers that produce private label products. What difference does it make if we know who produces ice cream for Trader Joe’s? Consumers shop TJ’s because they believe that TJ’s will sell quality merchandise at a reasonable price in an entertaining retail environment. TJ’s stands behind every product they sell no matter which company manufactured it. This is must ado about nothing.

Bill Emerson
Guest
Bill Emerson
10 years 9 months ago

I’m having a hard time figuring out the utility of all this “transparency.” Did the blogger think that the retailers were building farming and manufacturing facilities to produce private label cans of peas or spinach dip? Upon finding out that this was not the case, how did this turn into something that needs to be “investigated” at Walmart? Hey, why stop at the manufacturing segment? How about transportation? Maybe the trucks that delivered the goods were, gasp, using diesel from BP.

Private label is a strategy that works for retailers and manufacturers in providing alternatives to the consumer, typically at a lower price. What insidious plot are we uncovering here?

Dr. Stephen Needel
Guest
10 years 9 months ago

Have to agree with Anne and Max – who really cares?

And for those who point out that major manufacturers often make PL products – keep in mind that it is often a PL version, not the same branded product (often with cheaper ingredients).

Anne Bieler
Guest
Anne Bieler
10 years 9 months ago
Private Label means that the retailer has assumed the Brand responsibility for the product. By doing so, Trader Joe’s can offer items at lower prices, by eliminating the trade fees, promotions and coupons, media advertising, customer service functions, etc. that a national marketer might offer. Well-known food manufacturers sometimes make Private Brand products, but usually on a contract basis, and the item may or not be the same as the national brand. Sometimes a different or unique formula is developed by a retailer, who then has it manufactured in an inspected, licensed facility. There are also companies who are contract manufacturers – and provide both private label and national brand products. For special runs, packaging, regional distribution, etc, national brands may use contract packers rather than their own plants. Also, specialty and canned items are often imported from outside the US – so it’s important to read the label. At the end of the day, the food product responsibility lies with the brand owner, whether retailer or national brand – who are required to have… Read more »
Paula Rosenblum
Guest
10 years 9 months ago

I wish Trader Joe’s would bring its non-transparent private label product stores to South Florida!

One thing the Pet Food melamine disaster brought to the forefront is that even national brands don’t necessarily make their own food. “Premium” brand IAMS had the same problem, and was made in the same factory as Publix store brand (among others). So where do we stop and where do we start?

I’m frankly happy to find out the country of origin for all food products I eat (and their components). Beyond that…not so much.

And seriously, Trader Joe’s, South Florida awaits you.

Cathy Hotka
Guest
10 years 9 months ago

This is not a problem.

Consumers want quality products that taste good. Those avid consumers of TJ’s Goddess dressing couldn’t care less which manufacturer makes it. And knowing that it’s from Annie’s still doesn’t provide actionable information. What is it we need to know, beyond the ingredients listing?

David Livingston
Guest
10 years 9 months ago
I don’t think it’s important. Sometimes it’s easy to tell when the product is in the exact same package, box, or jar as the name brand. There are times I’d like to know. I was at the Mariano’s grand opening in Arlington Heights, Illinois. One thing Mariano’s was doing was a taste test between name brands and the Roundy’s private label. I thought this was good PR. I asked the demonstrators who manufactured the private label. Some knew, some didn’t. One thing I don’t like in a supermarket is when they have two private labels. One is equal to the name brand and one is dollar store quality. I don’t think a reputable supermarket should carry lower quality private label products. I know they do it to compete with Aldi, but since Aldi’s PL quality is equal to name brand, customers will be disappointed when they open the cans. Not a good idea to sell a customer a poor quality product, regardless of the price.
Ed Rosenbaum
Guest
10 years 9 months ago

Oh no! Trader Joe, say it isn’t so…And if you don’t mind, would you open a store in South Florida soon? The only time we get to shop you is when we visit family in Baltimore.

I imagine you can see by the response so far is this is not a critical issue to me unless there is something we do not know about the ingredients in the private label products.

However, I would be pleased if all companies using private label packagers would list who the packager is. At this time this is a non-issue for me.

Ed Dennis
Guest
Ed Dennis
10 years 9 months ago

I don’t know any PL item in any grocery chain that identifies the manufacturer. Why pick on Trader Joe’s? Is there anything wrong with this? No, because you have the store standing behind the PL. You got a problem, the store will resolve it or you can sue the store.

Mel Kleiman
Guest
10 years 9 months ago

Here is another example of someone who seems to have a soap box and is looking for something to say and hopes that an audience will show up and listen.

When the consumer buys a store brand they are holding the store responsible for the quality of the product not the manufacturer. If something is wrong with the product they will go back to the store, not the manufacturer.

Even if you find out who the manufacturer is and it is a brand-name company, nothing on the package says that it is the exact same product they put out under their own name.

Do you think the consumer really cares who makes Old Roy dog food? They care about the price and the quality of the ingredients.

Bill Hanifin
Guest
10 years 9 months ago

I thought the idea behind marketing private label brands was to offer quality products at lower prices.

As long as the grocer (Trader Joe’s in this case) labels the product with proper nutritional disclosures, I think they have met their obligation.

If a product recall occurs or some other liability results from sales of a private label product, Trader Joe’s is first on the hook, but the manufacturer will surely be dragged in as a responsible party at that point.

The call for blanket transparency might work for our financial institutions, but not for private label grocery products.

Much ado over nothing, in my opinion.

Gene Detroyer
Guest
10 years 9 months ago

An investigation? I doubt we will ever see this one on 60 Minutes. Does anyone really believe that Trader Joe’s or any other retailer is also in the manufacturing business? Would anyone be disappointed that Amy makes TJ’s pizza or that anyone else does? Is there a great conspiracy that TR is 3-degrees of separation from Aldi’s (a “German supermarket giant” of all things.)?

Craig Sundstrom
Guest
10 years 9 months ago

This is a solution wanting a problem (more specifically, it’s Ms. Westervelt trying to convince us her website provides a meaningful service). How does any brand/company actually have “transparency” unless one conducts an exhaustive study of its operations; and even then, simplistic and otherwise misleading conclusions are likely to be reached. As for wanting to know what’s inside a package, I suggest reading the label.

kimberly dean
Guest
kimberly dean
10 years 9 months ago

The bottom line is that, as consumers, we should be allowed to ask and know where our food comes from. Why is this so difficult to grasp for food manufacturers and retailers?

Steve Montgomery
Guest
10 years 9 months ago

I have to agree with the above “Who cares?” comments. I remember in college (as an agriculture and food economics major) learning during a factory tour that the difference between the name brand product and the PL was a change in the shape of the container and the label.

This promoted a great discussion about PL products from point of view of the manufacturer, retailer, and customer. Our conclusions–the manufacturer wanted to maximize the return on their investment in their plant. The retailer wanted to be able to offer a low cost alternative to its customers. The customers wanted choices and a variety of price points. Seemed like a triple win then and still does.

George Whalin
Guest
George Whalin
10 years 9 months ago

We have all seen good and bad things about the Internet. This is a prime example of the “bad.” Ms. Westervelt is so far off base on this it is almost laughable…almost.

Every retailer of any size sources and sells private label merchandise without identifying the source. I don’t quite understand why Ms. Westervelt has decided that Trader Joe’s has a responsibility to identify their suppliers for their PL merchandise. If she or any Trader Joe’s customer is unhappy with something they have purchased take it back and they will give you a refund. What else do you want?

Odonna Mathews
Guest
Odonna Mathews
10 years 9 months ago

Don’t you get it? Trader Joe’s IS the brand. Knowing the name of the manufacturer is meaningless to most consumers. What counts is the product, its quality and clear labeling. Trader Joe’s has developed unique private label products that are promoted in store through tasting demos and enticing signs and displays. Just last week they were sampling a new product-frozen mahi mahi burgers with their own wasabi mayonnaise. It tasted good so I bought it knowing that Trader Joe’s stands behind their brands.

Jeff Weidauer
Guest
Jeff Weidauer
10 years 9 months ago
I think the question is less one of knowing what company manufactured the product, and more one of knowing how it was made. Most shoppers understand that private brand products are made by other companies; they even expect that major CPGs are in this game. There’s a value for the retailer in protecting this information, as well as for the brand. But–in terms of transparency–there is the concern about where a product was made, and where the ingredients came from. That’s less about knowing “who” and more about knowing “what.” For example, I went to Trader Joe’s and asked if any of their vitamin or supplement products were sourced from or made in China. Given some of the problems coming from there in recent years, I think it’s a valid question. I did not ask for the manufacturer. No one at TJ could–or would–tell me the answer to this. Ultimately, transparency is going to be a requirement, either through consumer choice or government intervention. Country of origin will only grow in importance; wait till we… Read more »
Geoffrey Igharo
Guest
Geoffrey Igharo
10 years 9 months ago

It’s not unknown for food retailers to have their own food manufacturing facilities and farms. Morrisons and Waitrose in the UK are two prime examples.

That said, there is no reason why Trader Joe’s or any other retailer should be forced to name the company/ies that they outsource private label manufacturing to. But indeed the country of origin should be required information, as well as a detailed list of ingredients. For example they shouldn’t just say “spices” or “vegetable oil” but rather detail what the spices are and whether the oils are hydrogenated, etc.

Beyond that it should be enough to know that you are in a Trader Joe’s store and then it’s up to you as the consumer to do you research and know that “Trader Joe’s” is a DBA for Aldi, and learn what Aldi stands for as a company.

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