Credit crisis helps Aldi sales head for £2bn

The discounter Aldi is set to deliver record sales of nearly £2bn this year, as its soaring growth received a further "jolt" from this autumn's UK banking crisis.

Aldi delivered total sales of £1.5bn for the year to 31 December and the discounter's total sales have rocketed by 26 per cent this year to date, driven by middle-class shoppers flocking to its stores during the credit crunch.

In fact, Aldi's sales growth accelerated to 36 per cent in September and 33 per cent in October, boosted by the financial crisis in UK banking, notably the rescue deal for the ailing bank HBOS in September.

Paul Foley, the managing director of Aldi UK and Ireland, said: "You need sometimes a little jolt to try something new and the squeeze on consumers' finances has been an incentive to, at the very least, give us a try, and that is what I am putting down to the last two to three months' trend."

He added: "Thirty six per cent [sales] is record stuff. There is some [food] inflation, new store growth in that, but we have won a remarkable amount of new customers away from the supermarkets. We are continuing to grab more business and I think it will be very difficult to wrestle it away from us."

His comments will send a further warning shot across the bows of Tesco, which launched hundreds of discounter branded products in September in response to the threat from Aldi and its rival discounters Netto and Lidl.

Aldi, which entered the UK in 1990, has this year delivered a massive uplift in socio-economic group ABC1 customers, who now account for half of those coming into its stores.

Mr Foley said he knows Aldi is taking customers from all the other supermarkets because he sees them carrying their Waitrose or Marks & Spencer-branded sustainable carrier bags in its stores.

Aldi's pre-tax profits rocketed by 45 per cent to £70m for the year to 31 December. Mr Foley said this year's profits would be "robust" and at "similar cash levels", but he declined to provide a forecast. He added: "Profit growth will not be as dramatic as sales growth. We are investing in new stores, communications and advertising."

The discounter, which has 444 stores in the UK and Ireland, is opening about one store a week, and will open 50 stores this year. It has also extended 66 stores in 2008. Aldi wants ultimately to open 1,500 in the UK, which would increase its share of the grocery market to 10 per cent and make it the UK's fifth biggest grocer behind Morrisons.

Mr Foley said that Aldi was delivering strong sales across the UK and Ireland and that there was plenty of potential for growth, given that only 70 per cent of the population has so far used its stores. "I have never subscribed to the idea there is food snobbery," he said.

Mr Foley revealed that Aldi is involved in the ongoing bidding process to buy some of the Somerfield stores, which the Co-operative Group is not acquiring, but declined to comment further.

The Office of Fair Trading ordered the Co-operative Group, which it cleared to buy the 880-store Somerfield chain for £1.57bn, to dispose of 126 Somerfield stores on competition grounds. Other grocers, including Tesco, Sainsbury's, Iceland and Waitrose, are understood to have submitted second-round bids for the Somerfield stores with the bank Credit Suisse, which is handling the transaction.

A key element of Aldi's discounter model is that it only sells about 1,000 products, of which 95 per cent are own label, alongside its weekly special non-food products. A large grocer typically sells up to 40,000 products.

The Vickery effect: Chef nets huge sea bass sales

The celebrity chef Phil Vickery has had an explosive impact on Aldi's sales with his television commercials.

Aldi enjoyed a massive spike in sales of sea bass after one of his recipe advertisements in October. Paul Foley, Aldi's UK head, said that the discounter's sales of sea bass rocketed to account for 46 per cent of total sales of the fish in food retail, including supermarkets and restaurants, for a two-week period. "His recipes are proving hugely pop-ular," said Mr Foley. Previously, Aldi's sales of sea bass were proportionate to its share of the grocery sector of about 3 per cent, he added. This year, Aldi will have splashed about £8m on TV advertising, an area it has all but shunned previously in the UK.