The German discount supermarket wars are coming to America.
Aldi—a chain that operates in Germany as Aldi Nord and Aldi Süd—has already made big inroads in the UK, jumping from the tenth to the fifth largest grocery chain within a decade. Now, Aldi Süd is setting its sights on price-conscious American shoppers with a $5 billion investment to build 900 new stores in the US over the next five years. By 2022, it’s hoping to have set up shop in 2,500 locations. It will also spend $1.6 billion remodeling the 1,600 stores it already has in the US.
Meanwhile, Aldi’s domestic rival Lidl opens its first US stores on Thursday and plans to ramp up to 100 by mid-2018.
The German discounters, which sell mainly private-label goods, will put major price pressure on Walmart and Kroger. Aldi CEO Jason Hart told Reuters last month that it intends to undercut its rivals by around 20%.
“There’s a tremendous amount of value at stake that will shift to Lidl and Aldi,” said Kent Knudson from Bain & Co told Bloomberg. “Traditional grocers can’t afford to lose sales right now given how competitive it is—it will be very disruptive.”
Extra Aldi stores are good news for US shoppers partial to cheap-and-cheerful booze. (This may remind you of the wine sold at Trader Joe’s—a chain owned by Aldi Nord, a division that split off from the original company that was formed in 1960, when the grocery store mogul brothers Karl and Theo Albrecht partitioned their business. Aldi Süd owns all the Aldi stores in the US.)
Last year, Aldi’s Veuve Monsigny Champagne Brut beat out three of the most expensive brands, including Laurent-Perrier, in a blind taste test. Aldi’s Oliver Cromwell London Dry Gin won a silver medal at the prestigious International Spirits Challenge this year. And Aldi’s $8 rosé was recently named one of the best wines in the world for the price at the International Wine Challenge, and was awarded a silver medal in the main competition.
Aldi describes the wine’s “subtle quartzy spice,” while the panel’s judges lauded its taste of “ripe summer stone fruits with generous acid palate and crisp bright finish.”
Clarification: An earlier version of this article suggested a closer relationship between Trader Joe’s and Aldi US than intended.