Aldi insists it’s not bent on world domination.
Aldi insists it’s not bent on world domination.

'Draining enormous wealth': Dick Smith unleashes on Aldi

AUSTRALIAN businessman Dick Smith has unloaded on supermarket giant Aldi, calling it a "highly secretive" company "draining enormous wealth" from the country.

"We used to be known as the land of the fair go, but that seems to be changing," Mr Smith said.

"Our most successful retailer was once Australian-owned, but no longer. It's now the German-owned Aldi."

In a video posted on his Vimeo account, Mr Smith said Aldi had "no loyalty" to Australia and accused it of maintaining its low prices by employing fewer workers than its competitors.

"Now Aldi are not only known as our most successful food retailer at the moment. They're also known as being the lowest cost food retailer, but being the most profitable. Now hold on, how can you be the most profitable and the lowest cost? Well Aldi are incredibly astute," he said.

"Basically it's about sharing the wealth less. Our typical Australian companies have about 8 per cent of the dollar you spend spent on employing Australians. With Aldi it's less than 4 per cent."

By Mr Smith's reckoning, that means if Aldi employs 12,000 workers, 12,000 more "have lost their jobs, or haven't been employed in the first place".

"In effect, they've worked out a way of sacking Australians, or not putting them on in the first place, so more money can be made by the owners, and of course they can discount the food a bit," he said.

"We all love low prices, but not so low that more and more of our young people can never have a proper full-time career, or our farmers are forced into bankruptcy."

Mr Smith took particular aim at what he called the "extreme greed" of billionaire German siblings Karl Albrecht Jr and Beate Heister, who inherited the Aldi fortune from their father, Karl Albrecht Sr.

Mr Albrecht Sr founded the supermarket chain with his brother Theo. The pair split ownership in 1961 - Theo took control of the stores in northern Germany and the rest of Europe, while Karl claimed the ones in southern Germany, along with the rights to the brand in Britain, Australia and the United States.

He died in 2014 at the age of 94.

Mr Albrecht Jr and Ms Heister now control the family trust, which controls Aldi Sud, and in turn controls Aldi's Australian arm.

Mr Smith referred to the siblings as the owners of the business.

"Aldi are owned by two ultra-secretive Germans, Karl Albrecht Jr and Beate Heister. They are worth - wait for it - over $40 billion. And they're not even known as philanthropists," he said.

"Key the names of the Aldi owners into Google and you'll see they're noted as being obsessively secretive. And they've never done an interview with the media about what vision they have for Australia. How many more shops are they going to open? How many people are they going to sack? No, you won't find anything about that at all."

Mr Smith urged customers to boycott Aldi.
Mr Smith urged customers to boycott Aldi.

He said the two were "probably really decent people" but had "these Rasputin-like creatures advising them" to stay silent.

"Here's the most amazing thing. Aldi have recently become our most trusted brand. Now imagine that. They're above Qantas. Wow! And they do this by being secretive. I mean that's a message to every wealthy businessperson - don't talk to the media. Don't use the Australian tradition of openness.

"When I was younger, all of the wealthy people were open with the media.

"If the message gets out you can be highly secretive, there's going to be more and more of our wealthy business owners making no public statements at all and showing no leadership as they follow the Aldi formula."

Mr Smith said he had written a letter to Aldi's owners asking them about their plans for Australia, but they failed to respond.

"They don't even answer a simple letter from Dick Smith. Yes I suppose they say, 'Haha! We're worth $40 billion, we don't answer people from Australia!'" he said.

"Aldi has an Australian managing director, Tom Daunt. He's a good bloke. But understand, if he said one word that was out of line with the German billionaire groupthink, he would be sacked instantly. That's how these ruthless companies work."

He claimed that ruthlessness extended to Aldi's treatment of Australian farmers.

"Of course it's also well known they're ruthless in buying food.

"They're abandoning Australia's farmers and producers. They have no loyalty to Australia. For example, their peanut butter - it comes from South America, where farmers are paid subsistence wages. And once again we lose out."

The letter Dick Smith wrote to Aldi’s owners.
The letter Dick Smith wrote to Aldi’s owners.

When contacted Aldi, it pointed to statements it made in response to Mr Smith back in July.

The supermarket openly admits it employs fewer workers than its rivals, but says that allows it to save customers money through lower prices.

It says it has a great relationship with its 1200 suppliers, about 1000 of whom are Australian.

"Our international heritage and global presence is no secret, nor are our intentions in Australia. We want to supply great quality products at affordable prices. We do this by adopting a distinct business model that is different to our competitors," Aldi said.

"In addition to providing employment to tens of thousands of Australians, both directly and indirectly, we are proud to have influenced the entire grocery sector, which has lead to price deflation benefiting all Australian shoppers.

"Our estimates suggest that we are saving Australians more than $1.5 billion per year. This is money that is returned to the economy for bills, holidays, education and other vital expenses.

"We are not a business trying to artificially accelerate market share and we're not looking to match the store count of our competitors. We do not cut corners, we do not abuse our market power, we do not mislead our customers. We do not avoid tax payments, we do not squeeze our suppliers. We keep things simple and we focus our attention on what matters most to consumers."

In short, Aldi says its plan is to run a profitable business, not take over the world.

Its boss Tom Daunt expanded on that philosophy in an extensive interview with The Deal published last week.

Mr Daunt said the key to Aldi's global success was one word: simplicity.

"It is choosing what not to do, right? And we decide every day things not to do because that keeps our business simpler and more efficient. And that efficiency is what underpins a very low cost of doing business, which underpins our ability to serve great quality products at the lowest price," Mr Daunt said.

He also responded directly to the criticisms levelled by people such as Mr Smith.

"Look, I always hesitate to criticise anybody, whether it be a former Australian of the Year or anyone," he said.

"We've got a lot of customers who are really loyal to us. The reality is that over 17 years we've built a market share of around 10 per cent now and ... by deduction, 90 per cent of all grocery business in Australia doesn't occur inside Aldi.

"So I would politely say it's a little bit of a long bow to draw a parallel between our entry and some of the accusations that have been made."

Aldi insists it’s not bent on world domination.
Aldi insists it’s not bent on world domination.

Still, Mr Smith remains undeterred. In his video, he urged Australians to send Aldi a clear message by boycotting the supermarket.

"If you can afford it, never buy from Aldi again until the owners come to Australia and tell us what their plans are.

"Perhaps they could float on the stock exchange and let us share some of the wealth. Perhaps they could employ a few more Australians per dollar turnover.

"In the meantime, stick with the Aussie-owned companies employing lots of people - and the profits stay here.

"Remember, Aldi hasn't come to Australia as a charity to help us. It's primarily about sucking wealth out of our country.

"It's going to take business off the Australian companies, which means less staff are going to be working there.

"So when you go to Aldi and buy something dirt cheap, it could be at the expense of another Australian losing their job."

Appearing on Channel 9's Today program this morning, Mr Smith warned if Woolworths and Coles were forced to match Aldi's prices, they would have to sack 100,000 Australians.

"It's what I call extreme capitalism," he said.

"This is ridiculous. Can't we own our own grocery shops?

"We have good supermarkets - the IGAs, the friendly grocers, but at the rate we're going they will be run out of business. The greed of this company is unlimited. Imagine, the owners are worth $40 billion but they want more money.

"They're here to take huge amounts of money out of Australia. I have a problem when something like a grocer shop, that we should be able to own and keep the money here for our super funds and for typical Australians - why is that shipped of to two of the wealthiest people on this Earth? There's something wrong with our system."