Cooperation Aldi Nord and Süd bridge differences

Amid rising competition, the two German grocery giants are joining forces to market products. But increased cooperation doesn’t mean a merger is on the horizon.
Quelle: dpa
Putting their eggs in one basket.
(Source: dpa)

Half a century after two brothers divided their mother's grocery shop into Germany’s leading discount retailers,  the two chains -- Aldi Nord and Aldi Süd -- are joining forces to peddle brands like Tandil detergent, Moser Roth chocolate and the meat label "My Butcher." The cooperation extends to the mobile service provider Aldi Talk,  online flower sales and they are even producing TV commercials together.

Amid rising competition from chains like arch-rival Lidl, Edeka and Rewe, as well as market shifts to online sales, the two Aldi companies are increasingly joining forces.

Both companies are now planning on jointly procuring some goods, and merging brainpower on quality control, corporate responsibility, advertisement and logistics.

A younger generation of managers wants to overcome these divisions.

That’s quite a remarkable development for the German supermarket giants. Aldi, founded by the Albrecht brothers Theo and Karl, was split into two firms along geographical lines between the German North and South, known as the Aldi equator, in 1961. Each brother took over one company and since 1966, the two Aldis have been legally and financially separate entities. A younger generation of managers leading both discounters wants to overcome these divisions, especially since Theo Albrecht's death in 2010.

Nonetheless, despite their increasing closeness, Aldi Nord and Aldi Süd are ruling out getting back together again. In a joint statement, the companies said: “A merger is not planned or anticipated as a result of the cooperation.”

Employees need not be worried: Becoming more efficient does not mean either company is planning staff cuts. Quite the opposite: Aldi Nord and Süd are growing business entities “that continue to need skilled workers". Aldi Süd employs more than 43,000 people in Germany and more than 35,000 work for Aldi Nord.

Under antitrust law, their close cooperation is technically not a problem. Competition watchdogs argue that although they are separate entities, the same family – one of the richest in Germany - stands behind them, so such close cooperation is largely tolerated. Nevertheless, both companies are playing it safe: They each have law firms busy examining potential antitrust issues.

Even around the globe, the two Aldis have drawn battle lines. Aldi Nord operates in the Netherlands, Belgium, Denmark, France, Luxembourg, Spain, Portugal and Poland. The southern business focuses on English-speaking countries such as the US, UK, Australia and Ireland as well as Hungary, Switzerland, Austria and Slovenia. In China, Aldi Nord is available online. In the US, the discounter has become a go-to for thrifty shoppers, and Aldi Nord also owns the popular Trader Joe's chain.

But after decades of competition, they are now banking on cooperation.

Florian Kolf leads a team of reporters covering the retail, consumer goods, luxury and fashion markets, Stephanie Ott is a writer and editor for Handelsblatt Global in New York. To contact the authors: [email protected] and [email protected].