NAD Reviews Pricing Claims Made by Aldi in Print, YouTube Advertising; Aldi Agrees to Modify Claims at Issue, Appeals NAD Jurisdiction to NARB

New York, NY – June 21,  2017 – The National Advertising Division has recommended that Aldi, Inc., discontinue pricing claims made in print and YouTube advertising, including claims that compared prices of the grocer’s private label products to name-brand products sold at competing stores.

The company agreed to discontinue the challenged claims, but said it would appeal NAD’s jurisdiction over advertising that Aldi argued was local – not national – in scope, as well as NAD’s review of certain YouTube advertising.

NAD is an investigative unit of the advertising industry’s system of self-regulation. It is administered by the Council of Better Business Bureaus.

NAD’s jurisdiction extends over “national advertising” which is defined as “[a]ny paid commercial message, in any medium (including labeling), if it has the purpose of inducing a sale or other commercial transaction or persuading the audience of the value or usefulness of a company, product or service; if it is disseminated nationally or to a substantial portion of the United States, or is test market advertising prepared for national campaigns; and if the content is controlled by the advertiser.”

In this case, challenger HEB Grocery Company, LP, identified in its initial communication to NAD print advertising claims made in Texas and, in a separate communication, similar claims made in print advertising outside Texas and in YouTube and Facebook advertising.

Aldi argued that print advertising outside Texas and the YouTube and Facebook advertisements were not identified in HEB’s initial challenge and should not have been reviewed by NAD. Further, ALDI argued that the challenged comparative price claims were limited to the Houston, TX, area and were not national in scope. NAD determined otherwise and reviewed the challenged claims on their merits.

Challenged claims included:

  • “Receipts don’t lie.  Save up to 51%* shopping at ALDI.”
    • “* The ‘H-E-B,’ ‘Kroger’ and ‘Walmart’ price is based upon a regional average of prices for comparable brand-name products sold at leading national competitors in the area where ALDI has stores during the period X/X/16 to X/X/16.  Savings at individual stores may vary.”
  • “We are lowest on price.  Save up to 50%* shopping at ALDI.”
  • “The H-E-B, Kroger and Walmart receipt beatdown goes on and on and on…Save up to 50%* shopping at ALDI.”
  • “Move over H-E-B, Kroger, and Walmart.  We’re the low price leader in this town.  Save up to 50%* shopping at ALDI.”

The challenge in this case centered on whether the claims at issue adequately informed the consumer of the basis of comparison and whether the advertiser’s broad savings claims were supported.

The advertiser based its pricing claims on a market basket of 72-87 ALDI products, compared with a market basket of name-brand products. It then compared the prices of the ALDI-brand product versus the brand-name product at three H-E-B locations on a weekly basis for four months.  According to ALDI, throughout the four months, 16-26 percent of the items had a price differential of 50% or more and the average price differential of the comparable items was 37-39%.

Following its review, NAD determined that where the percentage savings claims disclosed the basis of comparison – private-label vs. brand-name – the disclosures were vague and non-specific. NAD determined that the evidence in the record failed to support the reasonable takeaway of the advertising, namely that consumers who shop at ALDI will always save up to 50 percent or more (or a significant dollar savings) by purchasing ALDI-brand products versus brand name products at H-E-B and competing grocers.

Further, NAD found that in advertisements that didn’t link the saving claims to a “switch” from a brand-name product to an Aldi store brand, the advertising conveyed the unsupported message that the competing grocers do not make a private-label product of their own and that consumers will always save up to 50 percent or more (or a significant dollar savings) versus the listed grocers or all grocers across the board.

NAD recommended in part that the advertiser:

  • Discontinue the challenged YouTube advertisements and avoid featuring unqualified savings claims in future advertisements
  • Discontinue all of the challenged qualified savings claims
  • Ensure that future price comparisons clearly define the basis of comparison

ALDI, in its advertiser’s statement, said that it would “comply with NAD’s recommendations in future comparative advertising.”

However, the company said, it will appeal “NAD’s decision to the NARB on jurisdictional grounds,” as well as NAD’s decision as it relates to advertising materials that were not directly challenged by HEB, including YouTube videos.

“ALDI’s challenged advertising campaign was directed at and distributed to consumers through print and email to a small geographic area around Houston, Texas comprising approximately 1% of the US population. The videos were not mentioned in H-E-B’s complaint or the NAD’s letter transmitting the complaint and were mentioned for the first time in H-E-B’s reply,” the challenger noted.

Note: A recommendation by NAD to modify or discontinue a claim is not a finding of wrongdoing and an advertiser’s voluntary discontinuance or modification of claims should not be construed as an admission of impropriety. It is the policy of NAD not to endorse any company, product, or service. Decisions finding that advertising claims have been substantiated should not be construed as endorsements.