Germany's Richest
March 6, 2008
In Germany, everyone knows the ALDI supermarket chain. Less well-known are the reclusive brothers Karl and Theo Albrecht, the chain's founders.
While the brothers stay well out of the public eye, their astounding transformation from small-time shopkeepers in Germany's Ruhr Valley to worldwide discount kings is the stuff of legend.
Karl had an estimated fortune of $27 billion (17.7 billion euros), according to Forbes magazine's 2008 list of the world's richest people, making him the wealthiest man in Germany. His younger brother Theo was "only" valued at $23 billion, which made him the world's 16th richest person -- six spots behind his big brother Karl.
Legendary investor Warren Buffett, the chairman of Berkshire Hathway, has knocked Microsoft founder Bill Gates off the top of the list the magazine reported on Thursday, March 6. Buffett's fortune was listed at $62 billion, while Gates' $58 billion was enough for third place on the list behind Mexico's Carlos Slim's $60 billion.
No silver spoons in sight
Karl was born into difficult circumstances in 1920, his brother Theo two years later. Their father was an out-of-work miner affected with black lung disease, who worked as a hired hand in a bread factory. Their mother ran a small grocery store in a working class neighborhood.
Both sons apprenticed in food retail, Theo at his mother's shop and Karl in a well-known gourmet store. Their studies were interrupted by World War II, which saw Theo go to Africa and Karl to the eastern front.
After the war, the 1948 currency reform -- which wiped out the black market virtually overnight and allowed shops to stock a variety of legal foodstuffs -- gave the pair their first shot at a foothold in the market. They founded their own grocery store, based on a novel idea: offering a small array of goods with reduced services, at everyday low prices.
Successful strategy
Within 10 years they had 300 branches and sales of over 100 million deutsche marks. The first store to be called ALDI (a composite of ALbrecht and DIscount) opened in Dortmund in 1962. Around the same time, the brothers decided to divvy up their empire, with Karl taking over the stores is southern Germany (ALDI-Süd) and Theo in charge of the northern stores (ALDI-Nord). They continued to work together closely, however. The fortune remains family held, kept in a complex web of private trusts and holding companies.
ALDI built its success on a formula: the product assortment is kept to a minimum (around 700 products compared with around 25,000 in regular supermarkets,) and goods only come into the inventory if assured a minimum sales value, and volume. The stores have small staffs and save money on expenses like decor, advertising, and even shelf-stocking -- wares are sold directly from loading pallets. Savings are passed on to customers.
Reclusive lives
ALDI long ago expanded to non-food items like textiles and hardware. It is now Germany's number one computer seller, with 60 percent of that market. The wild success of ALDI at home led to expansion overseas, and today ALDI stores can be found around the globe. In the United States, it owns the popular supermarket chain Trader Joe's.
Despite their outlandish business success, the brothers have managed to keep their private lives almost entirely under wraps, Howard Hughes-style. Any chance of their opening up to the public was definitively quashed after Theo survived a kidnapping attempt in 1971; he was freed from 17 days in captivity after paying a 7 million mark ransom.
But word does occasionally leak out about them. Karl retired in the 1980s, leaving the company in the hands of non-family members. (His two children do not work at ALDI.) Rumor has it he raises orchids and enjoys playing golf on his own 27-hole course, in Donaueschingen, Bavaria. Theo, who is said to collect old typewriters, is still an active manager, having failed to groom a successor.