When Tip Top Proper Cocktails was looking for ways to introduce its trendy canned alcoholic drinks to a wider potential audience, the upstart spirits brand quickly concluded that striking a deal with Trader Joe’s could be an effective way to build its brand.
But while the beverage startup figured that it could benefit from the chain’s reputation for offering a wide array of specialty private label products alongside a curated assortment of other brands, determining how to connect with Trader Joe’s shoppers was harder than Tip Top expected.
Tip Top’s efforts to work with Trader Joe’s highlights a trend in the grocery industry that has seen multiple food retailers look to emerging brands to connect with shoppers — and underscores the delicate task producers face as they jockey for influence.
When the company’s product first appeared on shelves in Trader Joe’s stores in November 2023, for example, Tip Top thought that selling eight servings in a multi-pack for between $35 and $40 each would attract shoppers used to spending that amount for a single bottle of whiskey, gin or rum, said Neal Cohen, Tip Top’s co-founder and chief brand officer. But the brand realized that grocers would rather put its products in the ready-to-drink section where that price point was too high, he said. That led Tip Top to instead focus on packages of four 100-milliliter cans (about 3.4 ounces) priced at between $18 and $20, depending on the market — an approach that turned out to work better, according to Cohen.
“The idea that you can grab a four-pack of margaritas and bring it to someone’s house, and it’s basically the equivalent of a bottle of wine as far as the price point and number of servings … that math actually adds up,” Cohen said.
Another challenge for niche brands like Tip Top that want to break into Trader Joe’s private label-focused universe is that the grocer can use a partnership with a smaller vendor to test customer interest in a product with little risk and then ultimately decide to market a version of the item under its own name if customer interest is strong enough, said John Clear, senior director in the consumer and retail group at consulting firm Alvarez & Marsal.
Private labels account for almost 70% of the products that Trader Joe’s carries, according to data Clear’s firm released this month.
Neal said Tip Top wanted to work with Trader Joe’s because the grocer is known for attracting shoppers open to trying new products and recognizes that the grocer’s heavy focus on its own brands could pose a challenge.
“We come in with the understanding that [sometimes] they bring in a brand and they learn from what that brand can do. Maybe they decide to emulate that, or maybe they decide that, hey, this brand does something really well that we don’t have the appetite for doing” in-house, he said.
A Trader Joe’s spokesperson wrote in an email the company looks for products “that we believe will find a following among our customers,” without referencing Tip Top directly.
“To earn a spot on our shelves, each potential product is submitted to a rigorous tasting panel process, in which all aspects of quality and value are thoroughly investigated. If a product is widely loved by the panel and represents an outstanding value, it earns its place on our shelves and becomes part of the Trader Joe’s shopping adventure,” a Trader Joe’s spokesperson said.
Tip Top is looking to ramp up its presence in grocery stores at a time when canned cocktails are proving popular among consumers and grocers have shown interest in expanding their assortments of products from emerging brands.
The company believes finding success for its brand in the grocery channel is key to helping it grow, Neal said. “We do need to be successful there because we want to reach people when they’re stocking up their house just as much as if they might be just going to a specialty package store … or just thinking about what they're going to drink that night,” he said.
Tip Top’s products are currently available in Trader Joe’s locations in 11 of the more than 40 states where the grocer operates, although most stores carry only two of the more than a dozen types of spirits Tip Top produces, according to the company.
In addition to Trader Joe’s, the beverage company also has relationships with grocers including Whole Foods Market, Gelson’s Markets and Pavilions. The company’s products are also available online and through alcohol retailers including Total Wine & More and ABC Fine Wine & Spirits.
Cohen added that the company is exploring whether its products will resonate with grocery shoppers if they are also displayed individually in refrigerated cases near checkouts, where people might buy them on impulse.
“What I’ve seen working [with] Trader Joe’s is they are often merchandising the four-pack right next to the singles at the counter, right at the checkout line, where they do so well with all those little impulse chocolates and mints and things that they have up there,” he said.
Clear said Trader Joe’s heavy focus on private label goods makes it a good fit for smaller brands like Tip Top, in part because carrying a niche product plays into the “treasure hunt” experience the grocer is known for.
“I think that naturally customers who are shopping in a Trader Joe’s are kind of curious about food products and are willing to try a lot more products than maybe other people who shop in other places,” Clear said.
That customer mindset can help brands like Tip Top that score space in Trader Joe’s expand their reach in the grocery sector, Clear added.
“The customers themselves are not probably looking at [a product] and thinking, ’Oh, here’s a national brand that I’m going to buy,’” he said. “They’re seeing it as an extension of the Trader Joe’s assortment, which is kind of a fantasy assortment, and so [a vendor can use] the Trader Joe’s halo effect a little bit.”