Discount Retail Chain Aldi USA is having a big year as it moves forward with its rapid expansion plans to open hundreds of new U.S. locations over the next five years.
That could be trickier for the small-format discount chain than the average company, due to its efforts in environmental sustainability initiatives.
Aldi plans to increase its footprint by 30%, the grocer now operates 2,372 U.S. locations according to ScrapeHero, by 2028, adding an estimated 800 locations, and as it expands the company is urging its private-label suppliers to remain focused on sustainability.
Aldi made headlines in early May with its first-ever supplier summit, where it encouraged suppliers to keep innovating with speed and double down on reducing waste. As the company grows, so does its environmental impact.
“By some estimates, the global food system now accounts for nearly one third of greenhouse gas emissions,” Aldi USA CEO Jason Hart said during the summit. “We strongly believe we all have a part to play, and playing that part is something our shoppers expect. That’s why we want to work together to reduce emissions and waste throughout our entire supply chain and product lifecycle.”
Green packaging
Supermarket News caught up with Emily Wiora, Aldi’s director of sustainability, who said in an email interview that working with suppliers, in part, means making small changes to products.
For example, Aldi cut nearly 50 tons of plastic from circulation annually just by removing the plastic windows in packaging that enable shoppers to see inside of its private-label brand pasta and that’s just one product.
“In addition to eliminating the clear plastic windows from our pasta boxes … our suppliers also helped us streamline the design of our Aldi-exclusive vinegar bottle to use 33% less plastic, and our Fudge Marshmallow Cookie tray design to use 20% less plastic,” Wiora explained. “We are always eager to partner with our supplier base to identify new improvements in packaging innovation.”
In 2022, the discounter enshrined its sustainability goals with suppliers through the release of its Aldi International Recyclability Guidelines, a 95-page document that establishes parameters for a broad range of sustainability goals, such as biodegradable plastics, compostable materials, and more.
Aldi now reports that 75% of its private-label products, which constitutes roughly 90% of its inventory, is reusable, recyclable, or compostable. The grocer also includes How2Recycle logos on its packaging that explains how shoppers can best recycle packaging.
“We know we are one piece of the packaging value chain, and we work across the industry to accelerate progress on key packaging challenges,” Wiora said in an email. “For example, in August 2020, Aldi U.S. became a founding activator of the U.S. Plastics Pact, where together we’re working to create a path towards a circular economy, and we are also a part of the Sustainable Packaging Coalition. We believe collaborative platforms of this nature are critical to move our industry forward.”
Beyond plastic
While packaging waste remains one of the biggest impacts grocery stores have on the environment, pollution from carbon dioxide emissions is another major issue for the industry.
At the supplier summit, Joan Kavanaugh, vice president of national buying at Aldi USA, said the company’s ambition to become the most sustainable grocer in the nation also means focusing on emissions. That’s why the company is encouraging suppliers to locate as close to distribution centers as possible.
“By combining our efficiencies and our scale with our supplier partnerships, we can create the most affordable shopping experience as we look for more ways to pass on savings to our customers,” she told suppliers. “For example, when a supplier is located closer to our store network, we can cut our transportation costs, and that's a win-win for us both that translates to lower prices for our shoppers and it's better for the planet.”
That could mean doing things differently than Aldi has in the past, such as establishing new relationships with suppliers, according to Kavanaugh.
“For some suppliers, it may make sense to enter a long-term agreement with Aldi to further reduce your risk. This is something you've asked us for, and we're more open to it than ever before,” Kavanaugh said at the supplier summit. “We have quite a few success stories already of these long-term agreements, and as your partner we want to make sure that you feel confident in growing with us.”
Scott Patton, Aldi USA vice president of national buying, said during a presentation at the summit that many suppliers have voiced interest in long-term agreements with the company.
“(Long-term agreements) and joint business plans can help allocate capital in ways you can feel confident about and help you grow your business securely,” he told suppliers. “Over the past three years, we've entered into several types of these agreements that have allowed our key partners to invest in new facilities, new production lines, and new technology.”
Sustainable refrigeration
The growth of Aldi’s brick-and-mortar footprint also means a reduction in environmental refrigerants that leak carbon monoxide into the atmosphere.
The grocer was recently recognized by the non-profit Environmental Investigation Agency (EIA) as the U.S. leader in the adoption of ultra-low Global Warming Potential (GWP) refrigerants. These green refrigeration systems replace hydrofluorocarbons that leak CO₂ into the atmosphere.
“Emissions from refrigerant leaks among all U.S. supermarkets are estimated to equal 65 billion pounds of coal burned in a year,” the EIA report, released on May 6, noted.
The EIA said Aldi is one of the only five grocers that discloses its annual leak rate, which stood at 20%.
“This year, the company committed to using natural refrigerants in all new and existing stores by 2035, the first U.S. company in the sector to set this target. It uses entirely ultra-low GWP refrigeration systems at 30% of stores, in all standalone equipment, and in all distribution centers.”
Aldi has deployed environmentally friendly refrigeration systems at more than 700 stores, Wiora told Supermarket News.
“As we advance our growth journey, Aldi is committed to using natural refrigerants that keep our products fresh while supporting a healthier planet,” she said. “Our leadership in natural refrigeration was further solidified by Aldi once again receiving the EPA’s GreenChill Store Certification Excellence recognition in 2023.”
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