ALDI and the Case for Cleaner Casing

Privately-owned grocery store, ALDI has recently announced in a press statement to shift the material of their manufactured plastic packaging to be either reusable, recyclable, or compostable by 2025. The statement comes as a result of many petitions and public policies designed to incentivize grocery and retail chains to reduce or eliminate the use of plastic bags and packaging in order to reduce urban pollution levels and plastic sea waste levels. For an example of a recent success on this front, Chicago’s plastic bag taxes, which charge consumers seven cents per plastic bag used in as store, and conversely subsidizes them for bags brought from home, have reduced plastic bag purchases to just above 50%. But is that enough? Should not corporations that have a hand in pollution through the plastic waste generated by their packaging also maintain a responsibility for the environment? ALDI recognizes this need and has set out a goal to reduces its own carbon footprint, and ideally such policies may be adopted by similar corporations when the potential economic benefits from doing so are realized. So what savings, if any, may ALDI be hoping to receive out of this sustainable goal? Well that’s what we are here to hopefully uncover, since a lot can change from now to 2025.

Let’s take a look at how ALDI compares to their competitors in terms of product line, size, and growth potential. As stated before, they are a privately owned by a German family and like most other grocery chains carry a generic brand for all popular items. But where ALDI differs from its competitors is that over 90 percent of the products on its store shelves are sourced, manufactured, shipped, and handled by ALDI themselves. Clearly, they are uniquely positioned as one of the only companies that can update the packaging of quite nearly all the goods they carry in an operationally efficient manner.

However, the size of ALDI's product line becomes both a blessing a curse, as ALDI is rapidly becoming one of the largest grocery store chains in America, with more than 1,800 U.S. stores in 35 states, serving more than 40 million customers each month. And since ALDI was able to get this big by minimizing its labor costs, and undercutting even low-price competitors like Walmart, it is constantly at risk of running into the red if it is not cost-effective in managing its growth-strategy with its costly packaging updates. Therefore, as ALDI gets bigger, both in terms of stores and product line, its costs of implementing this environmental strategy start to scale up, but the average cost of producing this packaging should decrease as they reach economies of scale. All that is left now is for us to see fi they can reach such efficiency in time for this packaging update to become worth the investment beyond the typical environmental appeal to morals.

To give some final perspective on the timeline and scope of this endeavor, ALDI hopes to complete the following by the stated dates:

• By 2025, 100 percent of ALDI packaging, including plastic packaging, will have reusable, recyclable or compostable packaging;
• By 2025, packaging material of all ALDI-exclusive products to be reduced by at least 15 percent;
• By 2020, 100 percent of ALDI-exclusive consumable packaging to include How2Recycle label;
• By 2020, implement an initiative to make private-label product packaging easier for customers to reuse;

All in all, ALDI has been successful in making major updates to its product line in the past, becoming the "healthiest grocery store" in the United States behind Whole foods, so I have no doubt that even if they do not succeed in terms of timeliness, they have already succeeded in ambition.