How A Disagreement About Cigarettes Split Aldi In Half

The Aldi story usually goes like this; the brand was founded in Germany in 1961, as the country's first discount grocer. It was a success in Germany, and, in 1976, the first U.S. Aldi opened in Iowa City, Iowa. The model of affordable, white-labelled staples; small, navigable stores; and quick shelf stacking utilizing the boxes Aldi products are shipped in, worked just as well across the pond as it had in Europe. Soon, Aldi expanded across the Midwest, and beyond. Today, Aldi is America's fastest growing grocery store, after doubling its market share over the last six years. 

But this account glosses over the family drama at heart of the Aldi story. In reality, the company that became the Aldi we know and love was formed back in 1946, when Anna Albrecht gifted her two sons, Theo and Karl Albrecht, the family's small grocery store in Essen, Germany. The young men, who had just returned from fighting in World War II, committed themselves to an innovative, no-frills business model designed to suit the country's post-war economy; going on to run over 100 stores under the Albrecht-Diskont label by 1955. 

Five years later, the Albrecht brothers' business had expanded to 300 discount grocery stores, and they got to work changing the store's name to the unique and brandable "Aldi." But trouble was brewing. Karl and Theo began to argue over selling cigarettes and other tobacco products in-store — but neither was worried about the health of their customers. Rather, Karl believed that cigarettes would attract shoplifters and damage the bottom line for the business, while Theo thought they would sell well. The logical solution was clear, at least to Karl and Theo; the brothers split their business in two, geographically.

Theo and Karl Albrecht's North-South division of the country at the "Aldi equator" of Essen might not be the best known German split of the 20th Century, but it was surprisingly impactful for shoppers worldwide. Both Theo's pro-smoking Aldi Nord and Karl's tobacco-free Aldi Süd went on to great success, both domestically and internationally. 

Reportedly, there was also no bad blood between the brothers, although that's hard to confirm given their reclusive nature. Either way, they never stepped on one another's toes. Over the next few decades, Aldi Süd expanded across Southwest Germany, Eastern Europe, the U.K., Australia, and eventually the U.S. This is the Aldi most of us recognize. Aldi Nord, on the other hand, took Northern Germany and much of Southern Europe. 

The two Aldis have been run as separate businesses since the split, but since their retail models have always remained similar, the popular chains are often seen as a unit by the public. Together, the pair of discount stores have even been credited with keeping competitors like Walmart from gaining ground in Europe, simply because the niche was already filled. This is reflected in the stores' profits; Discount Retail Consulting reported that, in 2023 alone, Aldi Nord posted global sales of €29 billion (more than $33.5 billion), and Aldi Süd achieved sales of €83 billion (over $96 billion). 

The Albrecht brothers' businesses might have stymied growth potential in Europe for U.S. discount brands, but the same isn't true the other way around. After Karl Albrecht opened that first Iowa Aldi Süd, his brother wanted in on the action. Inspired by love, sibling rivalry, or simply business savvy, in 1979, Theo Albrecht acquired Trader Joe's under the Aldi Nord umbrella.

The unspoken connection between TJ's and Aldi isn't well known, but it makes sense. Both stores sell white-label products at a discount, and inspire a dedicated following. They also tend to be smaller than other grocery stores, and embrace that original no-frills, European aesthetic from the early days in Essen — in different ways. Trader Joe's saves money with small parking lots, while Aldi avoids paying staff to collect shopping carts by requiring a quarter to use them. Plus, the store has made a pretty penny selling official Aldi quarter holder keychains to solve a loose change problem it created.

While both Albrecht brothers have died, they left their families a large chunk of their businesses, their fortunes, and perhaps their love of a feud; both Theo's wife, Cäcilie, and his son, Berthold, attempted to cut Berthold's wife and children out of the Aldi Nord business in their wills. But all is not lost for family harmony just yet — following a reorganization of Aldi Süd's business a few years ago, rumors have been circulating about a potential merger between Nord and Süd. The brothers might approve of this, at least in the U.S., since neither Trader Joe's nor Aldi currently sells cigarettes.