EIn the new high point in the smoldering family dispute of the Aldi clan, according to company experts, underlines the need for a fundamental reorganization of the discount empire. “The separation into Aldi Nord and Aldi Süd is historical,” says Jörg Funder, professor of trade management at the University of Worms.
The split, which goes back to an almost 60 year old agreement between the founding brothers Karl and Theo Albrecht, is increasingly being called into question. There is currently a lot of pressure in the market. There was such a competitive dynamic that a further convergence was mapped out.
Whether it comes to a formal merger ultimately depends on legal issues and evaluation questions. “If this decision had been made, the transaction could take place in twelve to 18 months,” Funder told WELT. However, this is not a necessary prerequisite for further interlinking the business processes.
Aldi Nord has always been considered the weaker part of the trading group, and the quarrels between the owners could continue to slow down. A dispute over money and influence has been simmering among the heirs for a long time, which has now culminated in allegations of infidelity.
The Kiel Chief Public Prosecutor Henning Hadeler confirmed WELT reports that a private criminal complaint was received in August on charges of infidelity. The allegation will be examined, said Hadeler. A son of the Aldi-Nord heiress Babette Albrecht is said to accuse his mother, four sisters and a lawyer of infidelity to the detriment of the Jakobus Foundation, one of the owner foundations. You have wrongly made millions in distributions to these family members. Hadeler did not want to comment on the ad’s chances of success.
The Jakobus Foundation has a 19.5 percent stake in Aldi Nord. Two other foundations, named by the deeply Catholic founding family after the biblical figures Lukas (19.5 percent) and Markus (61 percent), share the rest of the company’s capital.
Shortly after the death of co-heir Berthold Albrecht in November 2012, a bitter legal dispute broke out about the composition of the Board of Directors of the Jakobus Foundation. In the opinion of Berthold’s widow Babette Albrecht and her lawyers, an amendment to the foundation statutes signed by her late husband, which provides for a restriction of the family’s influence in favor of the management of Aldi Nord, was invalid.
Berthold Albrecht was not legally competent at the time of the amendment to the statutes, it was said to justify. The lawsuit was formally directed against the Rendsburg-Eckernförde district, which oversees the Aldi foundations.
In 2017, however, the Schleswig-Holstein Higher Administrative Court (OVG) declared the amendment to the statutes to be legal. In addition to two family members, two managers should be in charge of the foundation’s board.
The leadership at Aldi Nord reacted with relief. “The judgment and the resulting situation of clarity are important for the future security of the group of companies,” said a statement from the company.
But the sigh of relief was premature. The legal dispute dragged on to the Federal Administrative Court, which confirmed the OVG verdict in 2019. After that, the board of directors of the Jakobus Foundation, which consists of two daughters of Babette Albrecht and the lawyer, would have to be filled.
Apparently this has not yet happened. Resolutions on payments of around 25 million euros annually to the heirs are therefore not effective, argue the opponents.
Family business disputes are no exception
Disputes in family businesses are not exactly rare. The consulting firm PwC once described Zank in the clan as the “Achilles heel of family businesses”. Among many others, food giant Dr. Oetker, the Darboven coffee dynasty and the Bahlsen baked goods group.
A tough dispute does not have to throw the companies concerned off course, but it can cause lasting damage to the company. “Disputes usually have a negative effect on the success of the company and in the long term can even lead to its break-up or bankruptcy or sale,” concluded a study by the University of Marburg.
In case of doubt, Aldi Nord would have a better alternative. The company can seek closer ties to Aldi Süd, the stronger of the two sister companies. Aldi Süd already has a simpler ownership structure.
So far, there have been no known tensions around the Siepmann Foundation, which controls the entire equity capital, to an extent comparable to that of Aldi Nord. Together, the discount twins from the Ruhr area would be among the most powerful players with an estimated global turnover of 106 billion euros.
In Germany they would leave their eternal rival Lidl behind with 29.5 billion euros (2019) in 4128 branches. However, 16.4 billion of the Aldi business is accounted for in the southern part, which is also considered to be the more profitable.
In fact, the process of rapprochement on the working plane has long since begun. “In purchasing, both companies are already working closely together in the non-food segment,” said Funder, who has been with discounters and other retailers for a long time. It was only in mid-March that both Aldi sisters announced that they were merging their own brands.
“By the end of 2020, the majority of own brands in the standard range and in the promotional items should be identical,” they announced. This is more than just any step. Rather, Aldi’s own brands lay the foundations of the core of the entrepreneurial idea and the seeds of growth with which Karl and Theo Albrecht, with their revolutionary concept from the beginning of the 1960s, unhinged the world of the grocery trade and made their family one of the richest in Germany.
Although the former cheap home-based company has meanwhile put countless branded industrial products on the shelves, own brands such as Almare (fish products), Feurich (chips) or Moser Roth (chocolate) continue to form the center of the Aldi cosmos. “90 percent of the range consists of brands that are only available from Aldi,” said the dealers.
Knowledgeable people had always puzzled about the usefulness of the decades-long brand split – for example for dairy products in Milfina (South) and Milsani (North). The harmonization is now accompanied by a general overhaul of the own brands, which is intended to strengthen competitiveness against Lidl, but also against the strong supermarket chains such as Edeka and Rewe.
The two Aldis are already cooperating in other areas, including IT infrastructure, marketing and public image. Funder goes one step further. “From a market point of view”, an end to the division of the Aldi brand itself with its different lettering and logos of “North” and “South” is better.
The pressure to get as much efficiency as possible out of business processes is growing. Structural problems had arisen at Aldi Nord over the years, not least a modernization backlog in thousands of branches. Management counteracts this with high investments, but this is at the expense of earnings.
The discounters are also no longer the natural growth kings of the food trade. With the increased entry into branded articles from Henkel, Haribo and Coca-Cola, they have said goodbye to the absolute cost-consciousness – and meet the determined resistance of the top dogs.
Rewe boss Lionel Souque let it be known that he would not tolerate Aldi price leadership in branded goods. Even with the current price hunt against Lidl in the course of the temporary VAT reduction, it is far from certain that Aldi will be ahead in the end.
Whether and when the standardization in everyday business will also result in a merger under company law will probably not only depend on rational considerations. The ongoing arguments show how strongly the participants’ emotions play a role. So far, the companies have reliably denied such speculations.