Brothers Albrecht

Victor Jules Bergeron, Jr (1902-1984) was quite the entrepreneur.  Always from San Francisco, he grew up in a food and service family. His father, Victor Jules Sr, was a longtime waiter at the very high end restaurant in San Francisco’s famous and historic Fairmont Hotel.

In 1934 Victor Junior founded a restaurant with $500 he had borrowed. He called in Hinky Dinks. There he developed his own version of South Seas food and creative “beach” drinks.  He used a lot of rum. It was located across the street from a small discount grocery store his parents had spun up.  The restaurant had tiki torches and faux grass “roofs” and Polynesian themed meals to sell a relaxed atmosphere image: clever marketing.  ^[1]

In promoting the south Pacific/Polynesian theme, he started the rumor – and encouraged it to circulate – that his missing leg had years before become a shark’s meal.  In reality, he suffered from a congenital condition that required amputation when he was only 6.  He’d never been in the tiki realms.

The model caught on and he soon renamed the restaurants “Trader Vic’s”. Riding a wave of South Pacific themed popularity, he expanded to dozens of restaurants over the decades. The name Trader Vic came from his wife Esther, who couldn’t help but notice his habit of trading restaurant meals and drinks in exchange for restaurant supplies and services.

He’s credited with inventing the sunny warm beach umbrella drink, the MaiTai. [A contemporary and competitor, Donn Beach who ran the similarly themed Beachcomber restaurants, also claims this title.  Vic’s was birthed shortly after Beachcomber, so perhaps a copycat].

____________________________________________________________

Brothers Karl and Theodore, were born in the heavily industrial city of Essen, Ruhr district, Germany, in 1920 and 1922 respectively, to  Anna and Karl Albrecht, Sr. ^[2] The cloudy history of Karl Sr says that he had lung issues, perhaps black lung, from working in coal mines, or asthma from working in a bakery.  In any case, he and Anna needed income and founded a small discount grocery store in Essen, in 1913, largely run by Anna.  The business operated on tight cash flow efficiency, with Walmart-like just-in-time inventory and low-cost procurement, to sell at the lowest prices possible.

During the difficult depression era ‘30s, Anna applied for and obtained a liquor license.  This helped augment grocery sales.  It’s a good business, as it’s said: people drink when they’re happy, and when they’re down.  The ‘30s was a down decade for all.

After the brothers returned from  WWII service – one emerging from a prisoner of war camp, the other with a serious leg wound – they took over running the small family grocery store.  In 1948 they fully inherited the business.

They continued the practice of thrift, efficiency, brutal cost cutting and tight cash flow controls to build an ever more profitable business.  They called it Albrecht Discount.  This logo says Karl Albrecht Groceries, I reckon named after their father.

The goal of high efficiency drove the design of their small grocery stores as they expanded. Laid out in a short simple and intuitive track through the store: get in, get stuff, few selections, pay, get out.  Limited product selection, just the basics, but good quality.  At low cost.  Easy to find and get to, yet usually in low-cost locations.  It was hugely successful.

_____________________________________________________________________________________________

Joe Coulombe is one of those successful entrepreneurs whose name and story have been somewhat forgotten.  Born in 1930 in San Diego, he began his career working with Rexall, which ran a huge national chain of drugstores, mostly franchised.  In 1957, at management request, he started a chain of six discount groceries in the LA area, which were called Pronto Markets.  They wanted to challenge 7-Eleven. Tall order. That didn’t quite work out, and, after several years, Rexall told Coulombe to liquidate them. ^[3]

It looked like Joe had no future with the company.  He felt he had failed in Proto Markets, and once they were sold, then what? Joe went on a Caribbean soul-searching vacation to spend time musing about what to do.  Was his Rexall career over?

When he returned to California he did indeed liquidate the stores.  Financed with loans, he sold the stores to himself.  He was now not just in the discount grocery business, he was in deep.  He and his family had invested thousands of hours in researching the local grocery scene, including market research of neighborhoods.

Coloumbe noted that Beachcomber and Trader Vic’s, competing to see whose knock-off style of a Polynesian “feel” could be more outlandishly over-the-top, were still a rage.  People were looking for a special, out-of-the-ordinary experience in dining. Why not grocery shopping too?

That was something Joe could follow.  First he renamed the stores to Trader Joe’s, blatantly aping Vic’s name.  Then he copied the Polynesian concept.  Wild shirts, décor, unusual specialty products, the whole feel: you’re not in LA anymore, you’re out experiencing the world, and many of our products have special names too!

He stocked his stores with just a fraction of the products as larger grocers did, but they were higher end and had a feel of the exotic.  Shopping was an adventure. A simple layout, yes, but surprises and treats could be found anywhere. A customer could feel special without spending much.  Shopping became an experience.  Often heard: “Look what I found at Trader Joe’s!!” Many of the products were inexpensive: remember Two Buck Chuck?  Not bad either.

Cheap eggs, super cheap brie cheese and wines,  (mostly) healthy foods.  Stores in locations with upper middle- to upper-class customers.  It was genius.

Later in life Joe called it “Equal parts gourmet shop, discount warehouse and Tiki trading post.”

By the late 1970s Trader Joe’s was growing quickly, there were dozens of profitable stores in select markets. It was expanding and it had a bright future.  It became a target.

____________________________________________________________________________________________________

 

By 1960 Albrecht Discount operated some 300 stores across Germany, with total sales of DM90 million annually (about $375 million USD, or $4 billion USD in 2024). It was beginning to expand across Europe.

But then the brothers had a serious difference of opinion on a business matter.  Younger brother Theo thought they should start selling cigarettes; Karl strongly disagreed.  So, they split the business, each taking about one-half of West Germany, north and south; Theo would own and run cigarette selling stores in the north, Karl non-tobacco stores in the south.  They operated their stores with the same proven model but ran them separately.  One sold cigarettes, the other not.  The only noticeable difference.  [Karl was not anti-smoking; he thought cancer sticks would attract shop lifters].

In 1962 they changed the name of the entire enterprise to Aldi, short for Albrecht Diskont (discount).  Finally, in 1966, they separated legally.  Aldi Nord and Aldi Süd.  Another brotherly “divorce”.  Nonetheless, they remained on good terms, and each business continued to prosper.

________________________________________________________________

Trader Vic’s still exists, but it’s rather small after reaching a low ebb in 1960s.  The Tiki fad kind of faded and the locations became less desirable. It shrank to almost nothing and almost faded away completely, but it’s back up to 25 locations worldwide, only 3 in the US: the original in Oakland, Atlanta and Hollywood. [some say 18, whatever]  ^[4]

__________________________________________________________________________________________________

Trader Joe’s indeed became a juicy target.  In 1979 Theo Albrecht, of Aldi Nord, personally bought Joe Coulombe out for a nifty nickel.  As it was a private sale, the price was not disclosed.  Coulombe and his family lived very, very well on that sale. He participated in running the company until 1988.  He passed in 2020.  Trader Joe’s is now owned and operated by Aldi Nord, and no longer a separate possession of the Theo Albrecht family.

Both companies continue the business model of providing a unique shopping experience with both basic and specialty products.  I noticed once that they had their own beer line (actually several, and wines too) called Joe Handler.  I got a chuckle.  Händler is German for Trader.

Aldi in America (part of Germany’s Aldi Süd) is the fastest growing grocery merchant in America, now at over 2,100 stores.  In 2023 they bought Winn-Dixie and Harvey’s, southern grocers. The “A” is popping up more and more, it seems.

Worldwide Aldi Süd operates over 1,800 stores outside the US, with monopolies (within “Aldi world”) in Australia, Ireland and Italy. In the US Aldi Nord has over 550 stores (Trader Joe’s), plus the entire ALDI  markets in Poland, France and Spain.

Joe Girard © 2024

Thank you for reading. As always, you can add yourself to the notification list for newly published material by clicking here . Or emailing joe@girardmeister.com

 

 

[1] What is a tiki?]

Also: Tiki torches and the mid-century tiki culture mania

[2] Heavily industrial.  Essen was the home of Krupp Steel Works for centuries.  Merged/bought out by Thyssen, now going by Thyssen-Krupp.  The family business and history is deeply documented in William Manchester’s “The Arms of Krupp.”

[3] Rexall drug stores.  The name means King of All.  I remember seeing them all over and in many cities and towns as a kid.  As noted they eventually branched out into many areas, even owing Tupperware for a while.  I can’t remember the last time I saw one. Maybe that’s from overextending. It’s now owned by a Canadian company, McKesson Canaday, and most stores, apparently, are in Canada.

[4] For a cheesy faux jungle, water, central American or Mexican experience one can go to the recently reopened Casa Bonita, in Lakewood Colorado, just west of the Denver city line. Recently purchased, updated and restored by the creators of South Park.

Authors Notes:

A feature of German shopping Aldi brought to the US – a feature I quite like: one must insert a quarter to release a shopping cart from the cart area.  It remains in the cart while shopping and is returned when the cart’s returned to the coral.  I’ve thought for a long time that people who take the time to return their cart to a cart corral or even to the store are of a higher echelon of human beings. It’s 1 euro or 50 euro cents in Germany.  As carrying coins in the US is growing out of fashion, one can get a cart token from inside the store.  Someday we’ll get dollar coins that people actually use.  One can also purchase dummy quarters that attach to a key chain.

Most Aldi stores in Germany have a small central section with deeply discounted random stuff, from sweaters to toasters to blankets … I presume what they find at factory closeouts, or going-out-of-business sales. It’s commonly referred to as “the Aisle of Shame.”

These three stories, sort of connected, are segments within a very interesting book I’ve read, Benjamin Loor’s “The Secret Life of Groceries.”

Many many internet sources  A few here:

https://americangerman.institute/2020/12/the-albrecht-brothers-and-the-rise-of-a-global-retail-behemoth/

“Becoming Trader Joe: How I Did Business My Way & Still Beat the Big Guys,” Joe Coulombe

Short history of Trader Vic’s and Victor Bergeron.