Aldi sales growth triple that of rivals

21 Jan, 2015 06:55 AM
Comments
7
 
Aldi's Tom Daunt has welcomed the year’s strong performance. Photo: Daniel Munoz
Despite our success over 14 years we do remain somewhat of a niche retailer
Aldi's Tom Daunt has welcomed the year’s strong performance. Photo: Daniel Munoz

DISCOUNT retailer Aldi Australia has vowed to maintain pricing pressure on rivals in the $85 billion grocery market, after increasing sales by 13 per cent in 2014, outpacing food and liquor sales growth at Coles and Woolworths almost threefold.

Aldi Australia's sales reached $6 billion in the 12 months ending December 2014, compared with $5.3 billion in 2013. The growth was underpinned by strong same-store sales growth and 25 new stores.

In comparison, Woolworths' Australian food and liquor sales grew 4.7pc to $41.7 billion in fiscal 2014 and Coles' food and liquor sales rose 4.6pc to $29.2 billion.

"We're very pleased with the progress. We had a successful 2014," Aldi group managing director Tom Daunt said on Tuesday.

New stores took store numbers to 366, lifting Aldi's market share in eastern states to 11pc.

UBS expects Aldi's sales to reach $9.3 billion in five years and says revenue could hit $13 billion, challenging Coles' and Woolworths' stranglehold over the grocery sector, if it fixes issues such as checkout queues.

Mr Daunt agreed that UBS's $9.3 billion forecast was "perfectly possible" and said Aldi's national market share could approach 15pc over time as it opened up to 120 stores in Western Australia and South Australia and added 20 stores a year in the east.

"We have about 11 per cent share on the eastern seaboard (and) I'd expect we'd obtain that sort of success in the new markets of Western Australia and South Australia. There's probably a little bit more market share that we could obtain out of existing markets on the eastern seaboard," he said.

Aldi would maintain its lowest-price position in the market, despite renewed discounting and price investment by the big chains, Mr Daunt said. A basket of branded and private label groceries at Aldi was 20 to 30pc cheaper than a similar basket at Coles or Woolworths and the discounter enjoyed strong relationships with suppliers, he said.

"At the core of our business model is the need to offer the highest-quality product at the lowest price. It's a very dangerous territory to get into for a discounter to allow others to encroach on that area and that's certainly not part of our plan.

"We will always select the lowest price we're able to afford to sell the product at, which is very different to the standard retail convention, which is to price products at the highest you're able to get away with."

But Mr Daunt played down speculation that Aldi's sales could double or triple in the foreseeable future, saying "it's not going to happen".

"Despite our success over 14 years we do remain somewhat of a niche retailer, with a limited range of very high-quality products sold at heavily discounted prices. The niche nature of our business model won't change into the future, even though Aldi has added more national brands to its private label range and is expanding its fresh offer," he said.

"We're a company that's not focused on year-by-year sales growth and we're not focused on market share. What we are focused on is investing in Australia over a long period of time to produce a sustainable, successful operation."

Mr Daunt defended Aldi's limited partnership structure, which averts the need to lodge detailed accounts with the corporate regulator, and has no plans to lift Aldi's financial disclosures.

"We have set up the company to be a private company because we believe it gives us distinct advantages. That allows us to focus internally on the operations of the business and what our customers need," he said.

However, unlike multinationals such as Apple and Google, Aldi appears to have paid a full corporate tax rate since becoming profitable five years ago and has no intercompany loans or licence fee arrangements with its German parent. Aldi Australia's average corporate tax rate in the past few years was almost 31 per cent of net profit and in 2013 it paid $80 million in corporate tax.

Mr Daunt said Aldi Australia was keeping an eye on other markets in Australasia but had no plans "at this stage" to expand in Asia.

Page:
1
AFR
Date: Newest first | Oldest first

READER COMMENTS

Bushfire Blonde
21/01/2015 7:18:26 PM

Good on you Aldi - put it to the duopoly. May you do well.
Jo
22/01/2015 6:04:02 AM

Onya Aldi for trying to keep to Duopoly honest. Yes, a foreign company with profits going overseas but they use a lot of Aussie products & pay corporate tax, employ locals etc., Please just extend your range so I can buy everything from you!
Andrew moon
22/01/2015 6:17:38 AM

Well done, aldi, unfortunately when in reference to aldi Vs coles and WW it is never mentioned that the profits go out of Australia while WW and Coles stay in the country it is also never mentioned that coles and WW have a strong policy on no imports if they can source the same product in Aus, Aldi buy what ever they can get there hands on, most of Aldi's fresh produce is supplied under cost of production. I for one won't supply them for that reason. It wouldn't hurt the media to do a bit of research on this prior to reporting and put Apples with Apples you might find Aldi is an Orange.
Invey
22/01/2015 7:15:58 AM

I will have to disagree with you Andrew, Colesworth from what I can see do not have a strong buy AU policy at all. Coles brings bread from Ireland, when they have their own bakeries in store. Colesworth are about maximum profit and that comes from purchasing low quality, cheaper product from overseas and selling it for less than branded AU product. For reasons I don't understand, most Australians won't buy a cheap phone or car but are happy to eat low quality cheap food. You won't find homebrand in my trolley and I don't own an I phone or a BMW either. Priorities?
Jon Noble
22/01/2015 10:34:11 AM

People buy Aldi as a vote against Woolworths and Coles I shop at WW and Aldi Coles seems more expensive. I suggest that IGA has a better go at the market. if we want style bring in the french supermarkets. Any way food from supermarkets is killing the human race with such high processed junk food educate and then the market will die a natural death. The life expectancy of the the latest generation is going down so Joe Hockey need not worry except about himself 150 years what of sugar products? Try Dr. Atkins so I can sell lean grass fed beef they feed armies on it!
Kanzi
22/01/2015 3:14:05 PM

People clearly haven't done their research. Aldi were the first to discount milk to a dollar and Coles got the blame. The push to ever lower prices as Aldi do, will simply put ever more pressure on the supply chain, which includes farmers. So learn the hard way people and give your money to rich German families, rather than Australian owned businesses. Then complain bitterly when it hurts. The irony is quite amusing. We are not the smartest bunch, as the Europeans will find, as they exploit us.
John Hine
27/01/2015 4:08:12 AM

Trick is Aldi is doing well as years of low wages means people can't afford Coles or Woollies. Same thing is happening in the UK with Sainsburys and Tesco suffering as people go to Aldi and ASDA for the lower prices.

POST A COMMENT


Screen name *
Email address *
Remember me?
Comment *
 

COMMENTS

light grey arrow
I'm one of the people who want marijuana to be legalized, some city have been approved it but
light grey arrow
#blueysmegacarshowandcruise2019 10 years on Daniels Ute will be apart of another massive cause.
light grey arrow
Australia's live animal trade is nothing but a blood stained industry that suits those who