Aldi and Trader Joe’s

In the United States, you often hear people say that Aldi and Trader Joe’s are the “same company”, or that they’re “sister companies”. This isn’t entirely accurate. You’d be better off calling them “cousin companies”.

Aldi was founded in Germany in 1961 by two brothers, Karl and Theo Albrecht. Their father, a miner, developed emphysema from his work and so their mother opened a small shop in a suburb of Essen to provide for the family. Theo apprenticed there while Karl worked at a nearby delicatessen. In 1946, the brothers took over the shop – then called Albrecht’s – from their mother, and soon turned it into a small chain. The brothers’ “stack it high, sell it low” philosophy was incredibly popular in post-war West Germany, and by 1960 the chain had grown to 300 stores.

But then the two brothers came to blows over cigarettes, of all things. Theo wanted to sell cigarettes at Aldi stores, but Karl did not (he wasn’t opposed to smoking; he was afraid of shoplifters). The brothers decided to split the company – by then named Aldi for “Albrecht Discount” – into two companies: ALDI Nord (Aldi North) and ALDI Süd (Aldi South). Aldi North, run by Theo, operates all the stores in northern Germany, almost all of former East Germany, as well as the Netherlands, Luxembourg, Belgium, France, Spain, Denmark and Portugal. Aldi South, run by Karl, operates all the stores in southern Germany, Austria, Switzerland, Slovenia, Hungary, Poland, Ireland, Australia, the United Kingdom and the United States. So if you’re shopping at Aldi in the US, you’re giving your money to Aldi South.

Aldi has over 9,000 stores worldwide. In 2009 the two companies’ combined annual revenue was €53 billion ($65.63 billion USD). So it’s no surprise that the Albrecht brothers became insanely rich. Karl is worth around $25.5 billion, and is the richest man in Germany. Theo was the second richest man in Germany until his death in 2010. So naturally the brothers were always looking for places to invest their money.

Trader Joe’s started as “Pronto Market” in the Los Angeles area in 1958*. It was a small chain of grocery\convenience stores, kind of like an upscale 7-Eleven. But when the real 7-Eleven chain came to town in the early 1960s, Pronto founder Joe Coloumbe became worried that they’d run him out of business. While on vacation in the Caribbean, Joe noticed American tourists buying what were then exotic foods and spices to take home, like West Indian hot sauce and jerk seasoning. With “Tiki Culture” still popular in the US, Coloumbe thought he could make an exotic food specialty store work. He opened the first Trader Joe’s in 1967 on Arroyo Parkway in Pasadena, California. The shop developed a cult following, and soon there were Trader Joe’s stores throughout southern California.

Theo Albrecht – who, you will remember, owned Aldi North, which does not run the Aldi stores in the US – bought the Trader Joe’s chain in 1979. So Aldi and Trader Joe’s aren’t related to each other legally. Of course, Theo’s business philosophy of buying in bulk and selling private brands over name brands has taken over at Trader Joe’s, so there are a lot of similarities between the two businesses.

 

* – NERD ALERT: Don Draper shopped at a Pronto Market in the Mad Men episode “The Good News”, recapped here)

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