THE German supermarket chain Aldi has increased its Australian profits by almost 30 per cent and will allocate more than $1 billion in new capital funding to support its aggressive growth strategy.
Aldi, which has more than 230 stores up and down the eastern seaboard, has targeted the country's most populous states, NSW and Victoria, to open more of its discount supermarkets as it continues to attack the duopoly of Woolworths and Coles.
The $1 billion capital commitment from its German parent comes as industry analysts say Aldi may have upped its share of the national grocery market to between 4 per cent and 5 per cent from a little less than 3 per cent.
The research company IBISWorld believes Aldi has performed particularly well in picking up younger shoppers, such as families with young children, who make up more than a third of its consumers.
Aldi posted a net profit of $91.94 million for calendar 2009, an improvement of 27 per cent from a profit of $72.6 million booked in 2008.
The private company has not disclosed the revenue generated by its store network. Estimates of its Australian annual sales range from $700 million to more than $1.5 billion.
Aldi's 2009 after-tax profit was distributed to the company's two Australian partner companies, Aldi Foods Pty Ltd and Aldi Pty Ltd, in the ratio of 20 per cent and 80 per cent respectively.
A spokeswoman for Aldi said the profits would be reinvested in the business. The group was already spending $35 million on a product development and quality assurance centre in Minchinbury, in Sydney's west, $145 million on a warehouse and distribution centre in Prestons, also in Sydney's west, and $140 million on a warehouse and distribution centre in Dandenong, Victoria.
"By creating two new distribution centres, Aldi has increased its supply chain capacity to support its future growth in NSW and Victoria," she said.
The spokeswoman said Aldi had committed another $1 billion between this year and 2013 to open more stores and distribution centres in support of its growth plans.
The IBISWorld analyst Naren Sivasailam said he believed Aldi had a 4 to 5 per cent market share in Australia.
"Given they only entered the country in 2001 that is a relatively decent penetration against the duopolistic structure of the Australian supermarket industry," he said.
"Young families are definitely the biggest demographic for Aldi, and they [along with young people] represent roughly 36 per cent of all shoppers."
Mr Sivasailam said Aldi had done well to limit its advertising spending, relying more on word of mouth from customers and using the savings to fund its expansion.
Frequently Asked Questions about this Article…
What were Aldi Australia's profits in 2009 and how much did they grow?
Aldi Australia posted a net profit of $91.94 million for calendar 2009, a 27% increase from the $72.6 million profit recorded in 2008.
How much capital is Aldi committing to its Australian growth strategy?
Aldi's German parent has committed more than $1 billion in new capital funding for Australia, and the group said it would commit another $1 billion between this year and 2013 to open more stores and distribution centres.
How many Aldi stores are in Australia and which states is Aldi targeting for expansion?
Aldi operates more than 230 stores up and down the eastern seaboard and is targeting Australia's most populous states, New South Wales (NSW) and Victoria, to open more discount supermarkets.
What is Aldi's market share in the Australian grocery sector?
Industry analysts cited in the article estimate Aldi's share of the national grocery market has risen to about 4–5%, up from a little less than 3%.
Which customer groups are driving Aldi's sales in Australia?
Research firm IBISWorld says Aldi has performed particularly well with younger shoppers — especially young families with children — with that demographic and young people together accounting for roughly 36% of all Aldi shoppers.
How is Aldi funding its expansion and supply-chain improvements?
Aldi plans to reinvest profits into the business, has limited advertising spending in favour of word-of-mouth growth, and is investing in supply-chain projects such as a $35 million product development and quality assurance centre in Minchinbury and warehouse/distribution centres costing $145 million (Prestons) and $140 million (Dandenong).
Does Aldi disclose its Australian sales revenue and what are the sales estimates?
As a private company Aldi has not disclosed revenue for its Australian store network; public estimates of its annual Australian sales range from about $700 million to more than $1.5 billion.
How were Aldi's 2009 after‑tax profits distributed and will they be reinvested?
Aldi's 2009 after-tax profit was distributed to its two Australian partner companies, Aldi Foods Pty Ltd and Aldi Pty Ltd, in a 20% / 80% ratio, and a spokeswoman said the profits would be reinvested in the business to support expansion.
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