Not Made in the USA: Trader Joe's

By Steve Reiter  SEP 25, 2009 7:20 AM

Say it ain't so, Joe.


It was so packed that as soon as I walked in the door, I found myself at the end of a checkout line that wrapped around the entire rim of the store.

This is the daily scene at the Trader Joe’s in New York City’s Union Square, where eco-friendly consumers go to do their guiltless shopping. But this isn’t your average grocer. This isn’t even your average organic grocer.

The name of the company refers to its founder Joe Coulombe, or for our convenience, Trader Joe. He opened a small chain of convenience stores outside of Los Angeles in 1958 and he later switched to the grocer model in 1967 with his first Trader Joe’s. From that starting point, the expansion has been steady.

Trader Joe’s doesn’t pack its shelves with Chips Ahoy (KFT) and Coca-Cola (KO). Its cereal aisle doesn’t feature Lucky Charms (GIS) and Sugar Smacks (K). For those unfamiliar with this chain, the overwhelming majority of its offerings are its own quirky brands.

I like to think that Trader Joe was tired of selling Americans the foods they're so used to eating every day, so he traveled the globe and picked up some tips and tastes along the way.

Look carefully when you browse Trader Joe’s fare and you’ll see the fruits of these hypothetical pilgrimages. You may want to taste some of Trader Jose’s Salsa Verde with its frozen taquitos. Maybe you’ve got a hankering for a slice of Trader Giotto’s Four Cheese Pizza. Baker Josef’s flour is a staple for every kitchen. Head over to the refrigerated section and pick up some Trader Quixote’s Gazpacho or Trader O’Joe’s Celtic Cheddar. I’m not making any of this up. These are all flanked by the standard Trader Joe’s labeled pastas, soups, peanut butter, and even pet food.

The chain is so beloved for its sense of humor, product quality, and competitive pricing that in the May 2009 issue of Consumer Reports it was named the second-best supermarket chain in the US, right behind Wegmans. (See Outpacing Whole Foods Means Not Charging Whole Paycheck).

What could be more American than funny product names, organic food offerings, and, oh yeah -- did I mention free samples?

What could be more American than a guy named Trader Joe?

Now brace yourself: Who would have guessed that a chain with over 300 locations, all of which are located within the continental United States, is not American-owned? In 1979, the all-American company was bought by  Theo Albrecht, the German billionaire behind the supermarket giant Aldi, which is short for Albrecht Discount. The connection between the two markets makes a lot of sense when we break it down, though. Let’s start from the beginning. In 1913 the first Aldi opened outside of Essen, Germany and by 1950, Karl and Theo Albrecht -- the sons of the founders -- had expanded to 13 locations. It quickly separated itself from the pack by eliminating the tedious rebate system and simply cutting the initial cost -- a novel idea in Germany at the time. The stores also actively removed and replaced items that weren’t selling well.

Today, Aldi is an international powerhouse. It operates over 8,000 locations, including 1,000 in the US.

The business practices and principles of Trader Joe's have been maintained from the time Joe opened the first of the chain, through its new ownership, to present day. By offering its own specialty products, Trader Joe’s cuts out all middlemen. It also buys directly from producers. The result: low cost items, mostly falling between $2 and $4.

Additionally, environmentalists around the world can agree on the strong green awareness in the pair. For starters, Aldi doesn’t offer disposable bags for free -- it charges for them. Patrons typically bring their own carts or bags -- they’ll even pick up emptied cardboard boxes found in the store.

At Trader Joe’s, except for a conflict with Greenpeace over the selling of endangered fish, the company prides itself on eco-friendly goods: It sells only products with no artificial flavors, colors, preservatives, MSG, or added trans fats.

In the end, I have to tip my cap to men like Trader Joe, who stuck to his guns, sold products he believed in, and upheld a moral standard that a whole lot of companies can learn from. And to Aldi, for being confident with its purchase of Trader Joe's -- confident enough to be content with keeping it exactly the way it is, long lines and all.

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