Thread: You can`t take it with you (Money that is )

Theo Albrecht
Theo Albrecht , who died on July 24 aged 88, was the reclusive co-founder of the Aldi discount supermarket chain, and one of the richest men in Europe.

Published: 6:29PM BST 30 Jul 2010

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Theo Albrecht in 1971 Photo: EPA Built up by Theo and his older brother Karl from their mother’s corner shop in the bombed-out rubble of postwar Essen in Germany, the privately controlled Aldi empire now extends to more than 8,000 stores around the world, including 300 in Britain — where its no-frills low-price format rapidly gained popularity during the recession. Though challenged in recent times by rival “discounters” such as Lidl (also German-owned), Aldi achieved sales in 2009 of more than 50 billion euros worldwide.

Little is known of the private lives of the Albrecht family, but Theo’s wealth was estimated by Forbes last year at $16.7 billion, making him the 31st richest person in the world and Germany’s second richest behind Karl at $23.5 billion; the brothers fortunes combined were exceed only by those of Warren Buffett, Bill Gates and the Mexican Carlos Slim.


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Waitrose budget range flies off shelves as middle-classes cut costsThe Albrechts’ obsession with privacy — living behind fortress-like security on estates overlooking the Ruhr valley, rarely snapped by paparazzi, never making public statements — derived in part from Theo’s experience in December 1971, when he was kidnapped at gunpoint by Heinz-Joachim Ollenburg, a lawyer with gambling debts, and his accomplice Paul Kron. Theo was held for 17 days in Ollenburg’s Düsseldorf office, but so nondescript was his appearance — he favoured cheap, ill-fitting suits — that the kidnappers demanded to see his ID to make sure they had snatched the right man. He responded by haggling over the ransom sum, which was eventually fixed at seven million Deutschmarks, and was delivered to a highway rendezvous by the Bishop of Essen. Ollenburg and Kron were caught and jailed, but only half of the money was recovered. Albrecht went to court to claim it as a tax-deductible business expense.

Theodor Paul Albrecht was born in the Schonnebeck suburb of Essen, in the industrial Ruhr region, on March 28 1922, two years after his brother Karl. Their father was a miner until emphysema rendered him an invalid; their frugal, hard-working mother ran a small food shop and, in the 1930s, the two youths sold buns around the district from a wooden cart. Both served in the German army during the war: Theo with Rommel’s Afrika Corps until he was eventually captured by US troops in Italy in 1945.

When the brothers were released from prisoner of war camps to return to Essen they found most of the city (a major railway centre which had also been the site of Krupps munitions factories) reduced to ruins, But their mother’s house and shop was intact. They began to expand the business with other grocery outlets, experimenting with a no-frills self-service format and a limited range of merchandise. Within a decade, as Germany’s economic recovery gathered pace, they owned more than 100 stores.

In 1961 they adopted the name Aldi (a contraction of Albrecht Discount) and divided the map of Germany in half — along the so-called Aldi Equator — reportedly after disagreeing over whether or not to sell cigarettes. Theo took control of Aldi Nord, still based in Essen, while Karl, reputedly the more dynamic of the duo in their younger days, ran Aldi Sud from Essen’s sister city of Mulheim.

They later divided the rest of the world, if not quite in such a logical way: Theo’s empire expanded into France, Spain, Portugal and Poland, while Karl’s eventually reached Britain and Australia. And both brothers built operations in the United States, Karl under the Aldi banner and Theo as owner of the Trader Joe’s chain of 340 “gourmet” grocery stores that he acquired in 1979.

At home in Germany the group expanded to 4,000 stores, owned via a number of legally separate operating units which allowed the brothers to co-operate when it suited them but to circumvent laws on accounting disclosure for large businesses and to avoid having to deal with a nationwide workers’ council. They ran their operations with military discipline and attention to detail, and in such secrecy that Aldi managers were forbidden not only to talk to the press but even to talk to their own colleagues in other districts.

Growth was funded out of retained profits rather than public capital-raising, and success was achieved by offering no more than a few hundred well-chosen product lines (rather than the tens of thousands found in other supermarkets) at low prices made possible by massive purchasing. This was combined with a high ratio of sales per square metre of floor space, and ferocious cost control — the latter being Theo’s special skill.

Little money was wasted on marketing, and none at all on making Aldi stores look elegant: goods were simply piled up along the aisles in packing cases. Theo himself made a point of using pencil stubs rather than expensive pens. Asked to approve the plans for a new outlet in Holland, he replied that the design was good but the paper it was drawn on was too thick: “If you use thinner paper we will save money.”

A devout Roman Catholic, Theo Albrecht retired from the day-to-day running of the business in 1993, but remained active as chairman of the foundation that is Aldi Nord’s principal shareholder. He is survived by his wife Cilli, their sons Theo Jr and Berthold, who hold management positions in Aldi, and his brother Karl, now 90.

Interesting life !

More "interesting" than most people want.....

BERLIN (AP) - Theo Albrecht, the secretive co-founder of Germany's worldwide discount supermarket chain Aldi, a co-owner of Trader Joe's in the United States and one of Europe's richest men, has died at age 88.
The retail machine that Albrecht built with his brother Karl has won over German consumers with their no-thrills but super-cheap offer, making billionaires of the two and spawning imitation "hard-discount" stores across Europe.
The company's Aldi Nord division said in a statement Wednesday that Albrecht was the driving force behind Aldi's internationalization, expanding stores to France, Spain, Portugal, Poland and the United States, among other nations.
The company said he died Saturday in his home city of Essen, but gave no cause of death.
Even that bare-bones statement marked unusual openness for a company known for its extreme secrecy.
When Forbes featured the brothers in 1992 as two of the world's richest men, the magazine had to uses silhouettes rather than photographs to illustrate the article since no pictures of them had been published in many years.
The German Retail Federation said the country had lost one of its greatest entrepreneurs.
"There are only a few people who have stamped their mark on an entire business sector of the economy. Theo Albrecht achieved just that," the federation's managing director, Stefan Genth, said in a statement.
Albrecht and his elder brother Karl both served as German soldiers in World War II then returned home to Essen and took over a grocery store their parents owned.
They flourished as the German economy, in shambles after the war, came back to life in what is often called the "economic miracle."
By 1950, they were already running 13 stores and five years later, they had expanded throughout Germany's western industrial Ruhr basin.
The first Aldi stores - an acronym standing for "Albrecht Discount" - opened in the early 1960s under the motto: "concentrating on the basics: a limited selection of goods for daily needs."
It was a formula that sold well: Aldi carries a limited selection of fastest-selling, nonperishable consumer items, a strategy that allowed them to increase order volume, cut handling costs and waste, and buy their goods cheap - savings passed on to the consumer.
Aldi now has more than 4,000 outlets in Germany alone, where it is known for its no-frills shopping environment, streamlined processes and a limited range of discount products.
The two brothers in the 1960s decided to divide up what was then West Germany, with Theo running stores in the north. However, they used their combined bargaining power to lower purchasing prices, enabling them to garner higher profit margins while keeping prices low.
As their concept proved successful, Aldi started to expand around the world. In the U.S. alone, the company says it now has about 1,000 shops.
Aldi does not publish sales or profit figures. Aldi Nord says it employs more than 50,000 people around the world but will not reveal how many stores the company has worldwide.
In 1979, a family trust established by Theo Albrecht bought the U.S. specialty grocery chain Trader Joe's. In keeping with Aldi's culture of secrecy, Trader Joe's refused Wednesday to comment on Albrecht or Aldi, even refusing to confirm that the chain is owned by the Albrecht family. The business information provider Hoover's confirms that billionaire brothers bought the U.S. company in 1979.
Albrecht quietly managed Aldi Nord until 1993, when he stepped back from its day-to-day operations. But he still wielded huge influence as chairman of a foundation that holds the biggest stake in the company.
The publicity-shy Albrecht - of whom barely any photos exist - kept a very low profile. In 1971, he was kidnapped in Germany and released after 17 days after paying a ransom of 7 million German marks.
The Albrecht brothers have regularly led lists of Germany's richest people.
Forbes magazine's 2010 list of the world's richest people estimated Theo Albrecht's fortune at $16.7 billion, making him one of the wealthiest people in Europe. Karl Albrecht, 90, is said to have an estimated wealth of $23.5 billion, making him number ten worldwide.
Albrecht is survived by his wife Cilli and his two sons, Theo and Berthold. German media say he was buried on Wednesday in a small family ceremony.

Here's more detail:

29.11.1971: ALDI Boss Kidnapped

Just after midnight, the phone rang at the Albrecht family home in Essen. His wife Cilly, who was worried by this stage, answered only to hear the voice of her husband’s captors.

"We have kidnapped your husband. No police, no press. You will hear from us,” the voice on the other end of the line said.

Intimidated and in fear, the Albrecht family only called Essen public prosecutor’s office and the police two days later. Guntram Lauer, one of the leading lawyers, remembers the incident well.

"At that time we thought it was the work of criminal gang, that it was a well thought out plan and that we should approach the matter with care. We believed that Mr Albrecht was in grave mortal danger."

A 70-man investigative team was set up at Essen police headquarters. It was the first time such a kidnapping had taken place in Germany and the officers working on the case had little experience.

Theo Albrecht’s captors demanded a ransom of DM 7 million (3.3 million Euros). But after tense negotiations, the Albrecht family reached an agreement with the kidnappers. Interestingly, the police had assumed a low profile in the talks, as the Albrecht family had requested.

In tough negotiations the Albrecht family was able to reach an agreement with respect to the handover. Theo’s brother Karl negotiated his brother’s release.

Although the police tapped phone conversations and continued their investigations, they were not present at the handover. The Albrechts, fearing for Theo’s life, had agreed that they would be the only ones there.

Ruhr Bishop Hengstbach acted as a mediator, handing over the ransom money in return for Theo Albrecht, who later told the press about his experience.

"Well, I am healthy,” he told reporters. “I am, of course, very, very tired. It was a very exhausting business."

The kidnappers turned out to be amateurs and were caught after a recording of their voices was broadcast on the radio. An owner of an electrical appliance shop contacted the police to say that a man whose voice matched that broadcast on the radio had come into his shop the previous day to settle his debts. His name was Paul Kron and he had paid the owner with two DM 500 notes which had come from the ransom money.

Kron, who was known as Diamond Paul, had been previously convicted for several burglaries. He was arrested the same day.

His accomplice turned out to be his former lawyer Heinz-Joachim Ollenburg. Ollenburg, who was always in debt and enjoyed a party life, had represented Kron in court. The Düsseldorf lawyer with a fake high school diploma was already far away by this time, in Mexico. Yet the Mexican police arrested him and extradited him to Germany.

It was just a month later that Kron and Ollenburg were brought to trial in January 1972.

"Mr Kron did, of course, keep stressing the fact that he was lead astray, whilst Mr Ollenburg attempted to represent the whole thing as a sporty adventure," remembered prosecuting lawyer, Guntram Lauer

Despite the prosecution demands for a 12 year sentence, Kron and Ollenberg were each given eight and a half years’ imprisonment. It was also a bitter blow for Theo Albrecht who had been mentally scarred by the kidnapping.

Albrecht only received a portion of the money back. Kron claimed he had not seen any of the ransom money with the exception of a few thousand Deutschmarks. Ollenberg insisted that he had gone fifty fifty and voluntarily returned half of the money. The other DM 3.5 million have not turned up to this day.