Supermarket war: Aldi Australia’s profit plunge as shoppers fall out of love with its cheap products

Aldi Australia has posted weaker sales growth and a profit drop in 2025, with shoppers seemingly falling out of love with the retailer’s no-name brands and cheaper items amid a renewed supermarket price war.

The German discount chain has previously cashed in on the cost-of-living crisis as consumers traded down, and amid claims of price-gouging by the nation’s biggest supermarkets Coles and Woolworths and unprecedented political scrutiny.

But latest accounts filed with the Australian Securities and Investments Commission showed Aldi’s sales growth slowing to just under 5 per cent to $13.94 billion last year. That compared with the 10 per cent growth recorded in 2024.

Profit fell about 20 per cent from $417.03 million in 2024 to $337.4m in 2025, thanks to soaring wages and higher inventory costs.

Chief executive Anna McGrath said Aldi remained confident in its customer value proposition and it remained focus on delivering its price promise.

“We will not be beaten on the cost of the weekly shop and with a 16.8 per cent price gap, we support Australian families to put food on the table for less,” she said.

Aldi, which came to Australia in 2001 and now has just over 600 stores nationally, has 9 per cent of supermarket grocery sales nationally.

By comparison, Coles and Woolworths combined have about 67 per cent, according to the Australian Competition and Consumer Commission.

Aldi sells a range of own-branded groceries, but is best known for its “middle aisle”, which features a curated, rotating selection of bargain items like electronics, clothing, tools and homewares.

Analysis by JPMorgan last October revealed a renewed price war among the big three, with Coles and Woolworths lowering their prices to close the gap with Aldi.

According to the investment bank, Woolworths’ shelf prices were about 7.5 per cent higher than Aldi’s, while Coles prices were 7.6 per cent higher in October.

Aldi’s financial results come ahead of Coles and Woolworths this week, with the supermarket giants under pressure to reveal how they are responding to price hike requests from suppliers hoping to recover costs amid the fuel crisis.

Both supermarket chains have faced increased regulatory scrutiny and been forced to front multiple government inquiries into claims of profiteering.

Last year, the consumer watchdog foundfound Coles and Woolworths were some of the most profitable supermarkets in the world and their margins had increased over the past five financial years.

It confirmed Australia’s supermarket sector was highly concentrated with an oligopoly structure, dominated by the two grocers. But it found little evidence of price gouging.

Woolworths is currently defending itself in a blockbuster court case brought by the watchdog, which claims that it and Coles misled consumers by advertising discounts on products that were marked higher than their original shelf price.

The court heard Coles’ defence against the allegations in February.

With the Reserve Bank of Australia tipped to increase interest rates next month, which is set to further dampen consumer demand, UBS analysts Shaun Cousins expects supermarkets to emerge as winners from the shift towards cheaper products and away from dining out.

UBS expects consumers to trade down to promotions and private label, shop more with discount retailers like Aldi, as well as favour larger-format supermarkets where trips can be consolidated.