Discount grocer opens up new line of attack in supermarket wars by selling wine per case in its first online venture

Aldi is to open a new front in its assault on the UK grocery market early next year when it begins selling wine online.

The move comes despite the impact of the continuing price war on the group, which has suffered its first fall in operating profits in six years. Matthew Barnes, chief executive of Aldi in the UK and Ireland, said a huge part of an £11m decline in operating profits last year, to £260m, was due to price cuts, as Aldi responded to waves of activity by its bigger rivals.

However, Barnes said the company was determined to keep its prices well below rival grocers: “There is no doubt that the price wars have registered in our results and will continue to do so in 2015 but the 15% price gap is cast in stone and one of the foundations of our business,” said Barnes. “We have a frank approach to making sure we are hands down cheaper than any of our rivals.”

Sales rose more than 30% to £6.9bn for the 12 months to December 2014 as the company opened more stores and attracted 1.4m new shoppers.

Julie Palmer, partner at insolvency specialists Begbies Traynor, said Aldi’s fall in profits was disappointing after growth of 65% in 2013 and 124% in 2012.

“Today’s results show that even Aldi can’t escape the clutches of the ongoing supermarket price war. As its bigger rivals have committed to investing billions of pounds worth of price cuts over the next few years, Aldi has been forced to react in kind,” she said.

Barnes said he expected supermarket prices across the industry would continue to fall this year but believed the pace was slowing.

“Competitors realise they are not going to win that battle,” he said.

Aldi was by far the fastest-growing supermarket in the UK last year.

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Sales increased by 17% in the past three months as sales at rivals Tesco, Morrisons and Asda fell, recent industry figures showed. Aldi’s growth is largely driven by new stores. The group is on course to open 65 of its no-frills stores this year, up from 54 openings in 2014. While rivals including Tesco, Sainsbury’s and Morrisons are shutting outlets, Aldi is aiming for 1,000 stores by 2022, up from 598 today.



Barnes said underlying sales, excluding new stores, were growing strongly as it lured shoppers by introducing more fresh fruit and vegetables and British fresh meat. The company has attracted 800,000 new shoppers so far this year.

The pace of growth for both Aldi and fellow German discounter Lidl has slowed over the past year, but Barnes said the no-frills chains would continue to take market share from traditional players such as Tesco, Asda, Sainsbury’s and Morrisons.

‘It’s not a temporary phenomenon. It’s structural. It’s a permanent shift in behaviour, as millions more people make a more informed choice about their shopping – a choice which means they can feed their families quality food while saving money,” he said.

Aldi’s long-rumoured wine service will be the grocer’s first move into internet retailing in Britain and will start in the first three months of 2016. Aldi will sell all of its in-store wines by the case on the internet and some wines will only be available online.

In the second quarter of the year, Aldi will start selling non-food items, known as Specialbuys, online. These items, currently available in stores, range from cycling gear to power tools and Halloween outfits. It will offer customers a choice of home delivery or collection from pick-up points.

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Barnes said Aldi would be investing £35m in the online launch: “This will enable us to introduce the Aldi brand and some of our bestselling, best quality and best value products to thousands more customers across the UK.”



Aldi said it had no plans to offer other groceries online at present as such moves had proved unprofitable and complex for other retailers and it needed to keep costs low to maintain its leading price position. Barnes said he did not expect Aldi’s online operation to make much profit in the short to medium term but would be an “opportunity to learn” about a fast-growing part of the market.

Online growth has helped the UK’s big four supermarkets – Asda, Tesco, Sainsbury’s and Morrisons – to offset falling sales at large supermarkets caused partly by the growth of Aldi and Lidl.

Online grocery sales are expected to be the fastest growing part of the UK market, more than doubling in value between 2014 and 2019 to £17bn, to make up 8% of overall sales.



Both Aldi and Lidl have used wine as a way to broaden their appeal to middle-class British shoppers looking for low prices. Lidl is also considering launching a wine website as a first move into internet retailing in Britain.