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. 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’ “no frills, just dirt-cheap prices” 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. Theo wanted to sell cigarettes at Aldi stores, but Karl did not, because he thought cigarettes would attract 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 the 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 UK and the US. 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 jerk seasoning and West Indian rum. 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.

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

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 as a personal investment 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.

UPDATE: This article was written in 2012. Karl Albrecht died in 2014. The Albrecht family inherited the company from their respective fathers. Since Karl’s death there have been several proposed plans to combine ALDI Nord and ALDI Süd into one gigantic company. As far as I know, none are have been approved. The family seems certain, however, that one day the company will be merged.

I feel I should also mention that Trader Joe’s is now officially part of Aldi Nord. As Wikipedia says,

In 1979, owner and CEO of Aldi Nord Theo Albrecht bought the company as a personal investment for his family.

At some point shortly before or after Theo’s death, Trader Joe’s was sold to Aldi Nord and is  now part of its official corporate structure.

Here’s one last thing you might not know: Theo Albrecht was kidnapped in 1971. His family paid 7 million Deutschmark (around $2 million in 1971, or $15.1 million in 2023 dollars). Albrecht tried to claim the ransom as a business expense (i.e. a tax deduction) but lost his case.

The Albrecht family (Theo’s side especially) are very reclusive. The family released a photo of Theo in 1971 for the newspapers the day after the kidnapping; the only known photo of Theo taken after that was with his brother in 1987. The family was said to own an island in the North Sea with a private golf course. To this day, most of the Albrechts eschew the public eye.



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