If you do a lot of grocery shopping, odds are you have heard of Aldi’s before. This grocery chain giant has exploded in recent years and has been pursuing an aggressive expansion campaign across the continental US.
The German-owned grocery currently has over 2,000 stores in the US alone and operates locations in Denmark, France, Portugal, Spain, and more.
It is now the 9th largest grocer in the United States, even bigger than Amazon-owned Whole Foods.
Grocery stores have historically been a good type of dividend stocks. People will always need to buy food, so grocery chains are relatively recession-proof and they have very high cash revenues from the products they sell.
Given that Aldi’s records almost $100 billion in revenue each year, you probably are wondering how you can invest in the company.
So we put together this comprehensive guide on Aldi stock and how you can invest in the company.
Can You Buy Aldi Stock?
First, we should clarify that Aldi’s is actually two companies. Aldi Nord and Aldi Sud were both founded in the 1960s by the brothers Karl and Theo Albrecht. Karl owns Nord while Theo owns Sud.
The two companies are legally distinct entities and are registered separately, but they nonetheless operate under the same brand name, frequently work together, and share an international website.
The two companies also have different presences in the US. Aldi Nord owns Trader Joe’s, among other ventures, and Aldi Sud owns Aldi grocery stores.
So when people talk about investing in Aldi, they normally mean investing in one of the two companies.
Unfortunately, neither Aldi Nord nor Aldi Sud are publicly traded companies. This means that you cannot buy and sell their shares on a stock exchange.
Both companies are privately owned and operated by the Albrecht families. Theo and Karl Albrecht passed away in 2010 and 2014 respectively, so ownership of the companies has passed to their heirs.
Not buying or selling shares is both a benefit and disadvantage for the company. On the one hand, keeping private control allows the Albrecht family to run the business the way they want.
If the company was publicly traded, then shareholders could pressure the owners into practices that might be good for short-term profit but not for long-term sustainability.
However, selling shares gives businesses capital so they can expand projects and locations.
Aldi Stock Price
Since Aldi’s does not sell stock, they do not have a ticker symbol and they do not have a share price. You cannot buy or sell Aldi’s stock so it is difficult to speculate how much shares of the company would be worth if they existed.
Normally, refusing to sell shares is because the owners want to maintain as much control over operations as possible.
For example, Chick-fil-A is another privately-owned company worth billions, and the owners have frequently stated they do now wish to go public as they want to maintain the unique culture of the business.
Apparently, this strategy is working incredibly well for Aldi’s. When taken together, Aldi Nord and Sud are collectively the largest privately held companies in the world.
Their total revenue is over $60 billion per year, which is substantially higher than most other privately held corporations like Lego, IKEA, or State Farm.
However, unless you are a member of the Albrecht family, you won’t see any of those profits. The Albrecht family is known for their privacy, so not much is known about their personal lives.
but experts estimate their net worth is around $53 billion.
Who Owns Aldi?
Aldi Nord and Aldi Sud started off as a local grocery store run by Theo and Karl’s mother that was opened in 1913.
After WWII, the fraternal duo took over their mother’s business and by 1950, had opened 13 additional locations in Eastern Germany.
The business was characterized by a ruthless efficiency, with the brothers cutting anything from the shelves that did not sell completely. Locations were also kept small to reduce operating costs.
In 1960, the company split in two due to a disagreement between the brothers over whether to sell cigarettes.
In 1962, the Albrecht grocery store chain changed its name to Aldi, and the two companies Aldi Nord and Aldi Sud were legally incorporated in 1966. Although the companies were separate, the brother jointly managed operations.
In the 1970s, Aldi began expanding internationally and started opening stores in countries other than Germany. In 1976, Aldi Sud opened its first US location in Iowa, and in 1979, Aldi Nord bought Trader Joe’s.
After the fall of the Soviet Union and the reunification of West and East Germany, the company experienced rapid expansion to the present day.
Theo and Karl Albrecht were known for being very reclusive in their later years.
Part of their seclusionary nature was because Theo Albrecht was kidnapped and held ransom for 17 days in 1977. Very little is known of the brother’s private lives from the 80s until the present.
Theo passed away in 2010 and Karl shortly after in 2014. Ownership of both companies passed to their respective heirs.
The two companies are currently owned and operated by parent organization ALDI Einkauf GmbH & Co. oHG, a subsidiary of the Siepmann Foundation, a private family foundation set up by Karl Albrecht.
Theo’s heirs were his two sons Berthold and Theo Jr while Karl’s heirs are son and daughter Karl Jr. and Beate.
Can You Invest in Aldi Stock? Will There Be an Aldi IPO?
So, as of today, Aldi is still completely under the private control of the Albrecht family. It is unlikely that the company will ever go public either.
It is fairly clear that the Albrecht family has no desire to sell shares of the company, and Aldi seems to pull in enough money as is without the funds from selling shares.
Given that Aldi is defined by a very specific business model and operation, it is unlikely that we will see the company be changed to public hands anytime soon.
How Does Aldi Make So Much Money?
Aldi is a privately owned company but still puts out ridiculously high revenue numbers. How does this family-owned company make so much money?
The first major reason is Aldi keeps operating costs extremely low. They have smaller stores and overall sell fewer brands and products than larger grocery chains.
For example, the Aldi grocery store is about 16,000 square feet while the average Kroger Supercenter is over 100,000 square feet.
Smaller stores mean that Aldi has to spend less on rent, power, maintenance, etc. Trader Joe’s locations owned by Aldi Nord operate under a similar logic.
They have a simple layout, small product selection, and discounted prices.
Aldi also tends to have a “no-frills” simple design for their stores, with very little decoration or advertising.
Most of the items offered in the stores are Aldi’s brand products, although some locations may offer other more popular brands.
Aldi intentionally offers fewer types of products as a means to simplify shopping. In fact, that is one reason why so many people like Aldi’s; it streamlines the shopping experience and makes things less complicated.
Also, Aldi is very selective about what products it sells. If something is not selling well, they will remove it from the shelves rather than advertise and try to get it sold.
This means that they waste very little on unsold merchandise, which helps keep their overheads low.
Lastly, Aldi sells a lot because they have gotten extremely popular. Despite the discount prices, Aldi-brand products are high quality and taste great.
The company has won many awards for food quality and they sell organic and gluten-free products. The high-quality food and low prices have made Aldi very popular in the US, particularly in the Midwest and California.
The brand has an intensely loyal following and Aldi has recently partnered with Instacart, which further reduces Aldi costs.
These smart business decisions have made Aldi a threat to other large chain grocery stores such as Wal-Mart and Kroger.
The cheaper prices, streamlined layout, and high-quality food items are all reasons why Aldi has been so successful.
Part of the reason why the owners want to keep the company in private hands is to maintain the unique business model and business culture.
Aldi’s Competitors to Invest In
Unfortunately, you cannot invest in Aldi because the company is privately owned. However, there are several competitor grocery store chains you can invest in.
Kroger (NYSE: KR)
Kroger is one of the oldest and most well-known grocery chains in the country so it makes sense they would be a good company to buy shares in.
Kroger Co. has a current market cap of $29 billion and the company has an average annual revenue of $121.1 billion as of 2019.
Kroger owns over 2,700 locations in 35 states and operates 45 distribution centers, 1,500 fuel centers, and more.
Currently, Kroger is working with the Ocado Group to build automated warehouses for packing and shipping orders to customers.
These Customer Fulfilment Centers (CFC) are going to be placed in some of the country’s largest cities including Chicago, Atalanta, Dallas, and Washington D.C.
Kroger Co. itself also owns several smaller niche brands located around the US, including Fred Meyer, King Soopers, Harris Teeter, and Fry’s in addition to their thousands of Kroger-brand stores.
The company is also growing rapidly. Kroger’s revenues grew by an average of 10% in 2020 and reduced their long-term debt by over $1 billion.
Kroger is also a strong dividends stock because the company has a high cash flow. In 2020, the average quarterly annual dividend was 45 cents per share.
Costco (NASDAQ: COST)
Costco is another well-known American discount store. Costco is focused on bulk purchases, which is how they manage such low prices per unit.
Costco requires customers to have a membership to shop there and over 100 million people had a Costco membership in 2020. Costco also operates a no-frill storefront and focuses on a hyper-efficient selling strategy.
One major difference is that Costco locations are massive. The company makes so much money because they buy things discounted in bulk and sell them for a good markup.
Costco also does not spend on traditional advertising and only sends ads to its members.
This business model has attracted a highly loyal customer base. The company had an annual revenue growth rate of 16% through 2020 and generated more than $150 billion in net sales.
Costco is also known for being a great dividend stock. The company had a dividend yield of 0.79% as of this past February.
Wal-Mart (NYSE: WMT)
And of course, Wal-Mart is the single largest retailer in the world and has over 11,000 locations worldwide. The company also owns and operates all Sam’s Club locations.
Wal-mart is the largest grocery store chain by volume in the world and the company has managed to show increasing profits year over year for the past 5 years.
As of Q4 2020, Wal-Mart has an annual growth rate of 5.25% and the company generated nearly $4 billion cash flow during the same quarter.
Moreover, Wal-Mart has a relatively low stock price compared to its staying power. The company’s online sales have almost doubled in the past year and the company is looking to expand its operations through eCommerc Distribution Centers.
Can You Invest in Aldi Stock?: Conclusions
Aldi is one of the most well-known grocery chains in the country and for good reason. The company’s low operating costs, high-quality food, and consumer-friendly practices have made it a very popular chain.
Unfortunately, though, you cannot invest in Aldi because the company is privately owned by the Albrecht family and its heirs.
It is a shame too because a company like Aldi could do incredibly well if it went public. However, the privately-owned nature of Aldi is one reason why it is unique.
Either way, there are plenty of other grocery chains to invest in besides Aldi, so you have some alternative options.
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