Aldi slashes sale of brands - Nestle

Eurofood, March 11, 1999

Swiss multinational Nestle has reacted with equanimity to the decision of German discounter Aldi to slash its branded product lines in favour of own-label goods. Nestle's turnover in Germany rose 3% to SFr603m (??379m) in 1998, but Nestle does not expect to see very strong growth in Germany in the year in progress, although perennial favourites such as After Eight, Smarties, Yes and Kitkat should continue to do well. It is primarily confectionery, chocolates and muesli products that Aldi has decided to drop from its assortment, as well as products supplied by US food group Kellogg.

Aldi operates 3 100 shopping centres which together generate annual turnover of some SFr30bn. Around 90% of this is already accounted for by Aldi brands or so-called `no-name' products, which are often produced by well-known manufacturers. However, many producers still view Aldi's move with mixed feelings, although market analysts estimate that the decision should only affect sales volumes worth SFr85m. They predict that Aldi buyers will still order brands, but will insist that the products are supplied with made-up names printed on the packaging.