May 22, 2024

Aldi is pushing suppliers to cut costs and be more environmentally friendly as it expands in the U.S.

The U.S. arm of German supermarket chain Aldi on Monday urged its suppliers to cut costs, increase production of products such as cheese, bring operations closer to stores, maintain the chain’s competitive advantage and focus on sustainability.

At its first supplier summit in the US, Aldi US called on its suppliers to ensure timely and complete product delivery, while increasing production in the North and South East regions, as the Aldi Sud-owned supermarket chain undergoes significant expansion.

In return, Aldi promised to help suppliers set up additional production lines or facilities, sign long-term supply contracts and work together on business development.

Why is this important?

Over 90% of the products sold by Aldi are own brands. This puts the supermarket chain in fierce competition with rival grocers who are expanding their own private label food products.

Due to current inflation, Americans are turning to cheaper private label products instead of expensive national brands.

environment

Walmart last week launched a private-label grocery line with 300 items, 70% of which are priced under $5.

Kroger announced in March that it is adding more than 800 items to its “Our Brands” private label products, while Target is adding hundreds of new items to its “Favorite Day” and “Good & Gather” private label brands.

Key quotes

“You, our suppliers, are our unsung heroes,” said Joan Kavanagh, Aldi’s vice president of national purchasing.

“I can’t stress enough how important it is to keep costs down,” said Scott Patton, vice president of national purchasing at Aldi.

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numbers

The company will open 800 new stores by the end of 2028, mostly in the North and Southeast United States, after Aldi bought Winn-Dixie and Harveys Supermarket parent company Southeast Grocers.

According to data firm Numerator, the target for Good and Katherine in the first quarter of 2024 was 40.3% versus 50% for Walmart.