German retailer Kaufland pours $43m into local arm

Germany’s retail giant Kaufland has bolstered its burgeoning Australian arm.

Kaufland has capitalised its local arm

Germany’s retail giant Kaufland has bolstered its burgeoning Australian arm with more than $43 million in fresh capital to feed its ambitious growth plans, in a move set to intensify the already hot competition in the $90 billion grocery sector.

In a slew of documents lodged with the Australian Securities & Investments Commission, Kaufland — owned by The Schwarz Group, which also owns discount supermarket chain Lidl — issued new shares and capital to its Australian subsidiary.

It has also secured trademarks for the Kaufland image, retail goods and services.

The ASIC documents show paid-up shares to the value of $43.38m, a healthy kickstart to Kaufland’s expected launch in Australia. Last week the German retailer paid $25m to buy the Le Cornu site on Anzac Highway in Forestville, an iconic property on the Adelaide CBD’s fringe.

Kaufland Australia Pty Ltd has also been established, with directors, including Melbourne lawyer John Cascone of Kahns Lawyers and Gregor Thomas and Torsten Ohle from Germany.

Mr Cascone declined to talk to The Australian.

Australia’s supermarket sector has become a magnet for overseas players, with Aldi and Costco establishing strong local networks of stores and reaping in billions of dollars of sales. They have intensified the price wars between leading chains Woolworths and Coles, and are winning over shoppers to their novel formats — Aldi’s discounted private label-dominated stores and Costco’s membership-driven warehouse shops.

The overseas rush has seen billions of dollars worth of investment pour into Australia. In May Aldi revealed a $500m refurbishment plan that would see every Aldi store in the country upgraded to a new format as it races to 500 stores in Australia. Costco has recently opened its ninth warehouse store and has plans for more outlets.

This has served to ratchet up competition in the $90bn grocery sector, with Woolworths spending more than $1bn to lower its shelf prices to remain competitive and Coles also investing hundreds of millions of dollars on bringing down prices.

It is expected the maiden Kaufland store will be in Adelaide.