The Albrecht family feud tearing Aldi apart

The Albrechts, like their Aldi stores, are renowned for their austere approach to life. Will their feuding tarnish the brand?


Babette Albrecht: an eye for art and vintage cars

The Albrecht family behind the German supermarket chain Aldi was once described by Forbes as "more reclusive than the Yeti". But an increasingly vitriolic row between the heirs to co-founder Theo Albrecht's $15bn fortune has put paid to that. The battle for control of the northern branch of the empire has been gripping German tabloid readers, yet there's more at stake than idle tittle-tattle, says the German business weekly Handelsblatt. If the feud continues to escalate, it could tear the world's largest discount store apart.

The Albrechts, like their stores, are renowned for their austere approach to life making it all the more eye-opening that the scandal is focused on "extravagant spending", says Bloomberg. Theo's elder son, Theo Jr, 65, has attacked his widowed sister-in-law, Babette (pictured), for splurging on art and vintage cars and for making hefty withdrawals (€25m annually) from one of the firm's controlling foundations.

Babette counters that she and her five daughters are entitled to the cash and to spend it how they like and that Theo Jr's real aim is to "wrest influence" from their branch of the family.

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At the heart of the conflict are a pair of trusts dubbed Markus and Jakobus in a reflection of the family's Catholic roots that gave equal control to the founders' sons, Theo Jr and Berthold. Following the latter's death from cancer in 2012, it emerged that the board of the Jakobus trust had been quietly revamped.

Berthold's widow and children cried foul, arguing that he had been "too ill to make a competent judgement when he agreed to the changes". Earlier this year, a judge agreed with them. Theo Jr has lodged an appeal. The danger, as he sees it, is that his spendthrift sister-in-law and nieces "could lead this company around by the nose".

Aldi (a contraction of Albrecht Diskont) grew out of the rubble of World War II from a single grocery store in Essen, says The Washington Post. The founding brothers, Theo and Karl, expanded swiftly, undercutting rivals with a product range that was basic even then. The strategy certainly worked: by 1961 when they split the company into two groups Aldi Nord and Aldi Sd it consisted of 300 stores. Both branches of the empire have grown consistently ever since.

The brothers' penny-pinching ways were legendary: when Theo Snr was kidnapped in 1971, he successfully deducted the ransom payment from his taxes as a business expense. No other company better exemplifies the Teutonic "sense of order" and "devotion to efficiency", noted Der Spiegel approvingly in 2010. "Aldi is Germany and Germany is Aldi."

The feud has highlighted what some analysts call Aldi's "outdated" principle of austerity, says Bloomberg. Aldi Nord is taking tentative steps upmarket, but if the revamp stalls it risks falling further behind rivals such as Lidl. While the feud continues, the business is in a strategy vacuum both sides need to sign off investment plans. Without a truce, the battle for Aldi could get nastier still.