It‘s no secret that Aldi has been on a tear lately. The German discount grocery chain has been steadily expanding its footprint in the U.S., with plans to become the third-largest grocer in America by store count by the end of 2022. But Aldi isn‘t just growing – it‘s fundamentally reshaping the way Americans shop for groceries with its unique emphasis on private label brands.
The Power of the Private Label
First, some context. Private label brands – also known as store brands or house brands – are products that are manufactured by a third party but sold exclusively by a particular retailer under its own label. Think Costco‘s Kirkland Signature, Target‘s Good & Gather, or Kroger‘s Simple Truth.
Over the past few decades, private label products have gained an increasing share of the retail market. According to the Private Label Manufacturers Association (PLMA), sales of private label products in the U.S. reached $199 billion in 2021, accounting for roughly 1 in 5 products sold across all retail outlets.
In the grocery sector specifically, private label brands now make up 17.4% of total sales in the U.S. – a figure that has crept up steadily over the last 10 years. The rise of private labels has been fueled by a few key factors:
- A perception of improved quality compared to prior decades
- An increased willingness among shoppers to try store brands, especially after the 2008 recession
- The spread of cost-conscious shopping habits (think using coupons, buying in bulk, etc.)
- Investments by retailers in product development and packaging to make private labels more appealing
Enter Aldi, which has taken the private label trend to the extreme. Unlike conventional supermarkets that might devote 15-25% of their shelf space to private brands, Aldi stocks its stores with 90% or more private label products across all categories – from staples like milk and bread to snacks, cereal, condiments, frozen foods, toiletries, and much more.
It‘s a staggering figure, and one that has remained central to Aldi‘s identity since its founding over a century ago. But this unique approach begs the question: In a retail landscape where customers are used to having endless brand choices, how has Aldi convinced shoppers to embrace its private labels so completely?
Inside the Aldi Private Label Machine
To understand Aldi‘s private label success story, it‘s worth examining the company‘s history and business model. Aldi – short for "Albrecht Diskont" – was founded in Germany in 1913 by Anna Albrecht. The company began as a small grocery store, but under the leadership of Anna‘s sons Theo and Karl, it expanded rapidly in the years following World War II.
The Albrecht brothers built their business on a few core principles that remain central to Aldi today: a ruthless focus on efficiency, a no-frills shopping environment, and an emphasis on private label products to drive down costs. By the 1960s, Aldi had begun expanding internationally, and the company made its U.S. debut in 1976 with a store in Iowa.
Fast forward to 2023, and Aldi now operates over 2,200 stores across 38 states. The company has built a loyal following among shoppers attracted to its low prices, efficient shopping experience, and unique product mix. According to data from Bain & Company, 88% of Aldi shoppers rate their experience as "excellent" or "very good" – the highest mark of any grocer surveyed.
So what makes Aldi‘s private label strategy so effective? Here are a few key elements:
1. A streamlined selection
While a typical supermarket might carry 30,000 SKUs or more, Aldi limits its selection to around 4,000 core products – 90% of which are private label. This curated assortment allows Aldi to negotiate lower prices from suppliers, optimize shelf space, and keep overhead costs down.
As one retail analyst put it: "Aldi has a very clear point of view on what it takes for them to be successful, and they don‘t deviate from that. They have a limited assortment that includes the most popular products in any given category, and they focus on delivering those products at the best possible price."
2. A focus on quality
Aldi‘s private label products may be cheap, but that doesn‘t mean they sacrifice quality. In fact, Aldi is consistently ranked as one of the top grocers for private label quality, with many of its own brands outperforming national names in blind taste tests.
How does Aldi ensure its private labels measure up? The company employs a rigorous product development and testing process, with a team of in-house buyers and quality assurance experts who work closely with suppliers. Many of Aldi‘s private label products are actually manufactured in the same facilities as national brands, using similar ingredients and recipes.
"We test our products to meet or beat the national brands‘ quality," said Kate Kirkpatrick, an Aldi spokesperson. "We wouldn‘t put our name on anything we wouldn‘t be proud to serve our own families."
3. Continuous improvement
Aldi may be laser-focused on efficiency, but it‘s also highly responsive to changing customer tastes and preferences. The company regularly updates its private label assortment based on sales data, customer feedback, and market trends.
"If a product doesn‘t earn its spot on the shelf, we‘ll replace it with something else," said Scott Patton, VP of corporate buying at Aldi U.S. "We‘re constantly improving our offerings to make sure they meet our shoppers‘ needs and exceed their expectations."
This willingness to pivot has allowed Aldi to expand its private label offerings in key growth categories like organic, gluten-free, plant-based, and premium foods. The company has also introduced new product lines – like its Earth Grown vegan brand or Healthy Zest baby line – in response to consumer demand.
4. Strategic partnerships
While Aldi develops many of its private label products in-house, the company also partners with established brands to offer exclusive products under the Aldi label. For example, Aldi‘s popular Specially Selected chocolate bars are made by Moser Roth, a German chocolatier that supplies airlines and other major retailers.
These partnerships give Aldi access to high-quality products and production capabilities while still allowing the company to put its own spin on branding and pricing. They also lend an air of credibility to Aldi‘s private labels, signaling that the products can stand up to the "real thing."
5. A unique value proposition
At the end of the day, Aldi‘s private label success comes down to its unbeatable value proposition. By offering quality products at unmatched low prices, Aldi makes it easy for shoppers to switch from national brands to its own labels.
Consider these price comparisons of Aldi private labels versus leading national brands:
| Product | Aldi Brand | Price | National Brand | Price |
|---|---|---|---|---|
| Cheese crackers | Savoritz | $1.69 / 9.5 oz. | Cheez-It | $3.49 / 12.4 oz. |
| Peanut butter | Simply Nature | $2.15 / 16 oz. | Jif | $2.62 / 16 oz. |
| Greek yogurt | Friendly Farms | $3.49 / 32 oz. | Chobani | $4.49 / 32 oz. |
| Napkins | Boulder | $1.29 / 250 ct. | Bounty | $4.29 / 200 ct. |
Across the board, Aldi‘s private labels offer significant savings compared to national brands, without sacrificing much (if anything) in quality. For a family with a weekly grocery spend of $200, switching to Aldi store brands could easily shave 30% or more off the bill – that‘s over $3,000 in savings per year.
What‘s more, Aldi doubles down on its private label value proposition with a generous "twice as nice" guarantee. If customers are ever unsatisfied with an Aldi-branded product, they can return it for a full refund and a free replacement. This policy shows just how confident Aldi is in its private brands.
The Future of Aldi Private Labels
As Aldi continues its rapid U.S. expansion, it‘s clear that private labels will remain core to the company‘s strategy. In fact, Aldi has openly stated its goal to have a 90% private label penetration rate in all its stores globally.
But Aldi isn‘t content to rest on its laurels. The company is constantly innovating and improving its store brand offerings to keep up with changing consumer demands. In recent years, Aldi has made a big push into healthier and more premium private label products.
"We‘ve really focused on making sure our exclusive brand portfolio is comprehensive and relevant to our customers," said Joan Kavanaugh, VP of corporate buying at Aldi U.S. "Whether you‘re looking for organic, gluten-free, plant-based or gourmet items, we want to have an amazing Aldi-exclusive option in every category."
Some recent examples of Aldi‘s private label innovation:
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In 2018, Aldi launched its Earth Grown line of vegan and vegetarian products, including plant-based burgers, meatless meatballs, dairy-free cheese, and more. The line has since expanded to over 60 products and won multiple industry awards.
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Aldi has also greatly expanded its fresh produce selection, with a focus on organic items. The company‘s Simply Nature brand now includes over 250 certified organic products, from fruits and veggies to snacks and pantry staples.
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In the realm of wine and spirits, Aldi has won numerous accolades for its private label offerings. Aldi‘s $8 Côtes de Provence Rosé was recently named one of the best grocery store wines by Food & Wine magazine, besting bottles that cost three times as much.
What‘s next for Aldi private labels? According to Scott Patton, the company sees major opportunities in prepared and convenient foods – think meal kits, ready-to-eat salads, and heat-and-eat entrees. Aldi is also exploring sustainable packaging innovations and products that cater to diverse dietary needs.
"Our goal is to make sure our exclusive brands cover all the bases and offer something for everyone," Patton said. "Whether you‘re a busy mom looking for a quick dinner solution, a foodie searching for gourmet ingredients, or a health-conscious shopper on a budget – we want Aldi to be your one-stop shop."
Shopping Tips from an Aldi Private Label Pro
As a budget-savvy shopper and self-proclaimed Aldi superfan, I‘ve learned a thing or two about navigating the store‘s private label brands. Here are my top tips for making the most of your Aldi experience:
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Don‘t be afraid to experiment. Aldi‘s private label products are often as good as (if not better than) national brands, so try swapping out a few of your go-to items for Aldi versions. You might be pleasantly surprised by the quality and savings.
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Read the labels carefully. Just because a product is an Aldi private label doesn‘t automatically make it healthy. Some of Aldi‘s store brand snacks, sweets, and frozen foods can still be high in sugar, sodium, and preservatives. If clean eating is a priority, stick to Aldi‘s Simply Nature, Fit & Active, and liveGfree lines.
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Take advantage of Aldi Finds. Each week, Aldi introduces a new selection of limited-time private label products (known as Aldi Finds) in stores. These items often include seasonal favorites, trendy flavors, and unique buys you won‘t find at other grocers. If something catches your eye, grab it fast – Aldi Finds are known to sell out quickly.
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Stock up on staples. Aldi‘s everyday low prices make it a great place to buy household essentials in bulk. I always load up on baking supplies, coffee, canned goods, and paper products, which are often half the price compared to other stores.
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Be flexible with your list. Since Aldi has a smaller selection than traditional supermarkets, there‘s a chance it may not carry a specific brand or variety you‘re used to buying. Instead of making a separate trip elsewhere, consider trying the Aldi private label version or adjusting your recipe to work with what‘s in stock.
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Keep an open mind (and palate). Some of my all-time favorite Aldi private label products are ones I never would have given a second glance at another store. Case in point: the Specially Selected Sikil Pak, a zesty pumpkin seed dip that‘s become a staple in my fridge. Don‘t be afraid to try new and unfamiliar store brands – you may just discover a new craveable.
Conclusion
Aldi‘s expansive selection of private label products – from everyday staples to gourmet treats – has been a major factor fueling the company‘s rapid growth in the U.S. By prioritizing quality, value, and constant innovation, Aldi has cultivated a fiercely loyal following of shoppers who have come to rely on its store brands.
While not every Aldi private label product is a home run, the company‘s rigorous sourcing and testing practices ensure that the vast majority are at least on par with national brand equivalents. And with prices that are consistently 20-50% lower, Aldi private labels offer unmatched bang for your buck.
Whether you‘re a deal-seeker, a health nut, or a foodie on a budget, it‘s worth giving Aldi store brands a try. With a little experimentation and an open mind, you might just find that private label products suit your lifestyle to a tee. And your wallet will definitely thank you.
