Aldi has grabbed about 10 per cent of the Australian grocery market, leaving the big two chains Woolworths and Coles with a smaller combined stake of 70 per cent, the competition tsar says. 
Australian Competition and Consumer Commission chairman Rod Sims said the "biggest change" in Australian grocery in recent years was the growth of Aldi.
"Aldi is probably getting close to north of 10 per cent of the market now," Mr Sims told Fairfax Media.
Of Woolworths and Coles, he said: "A few years ago it was probably 75 [per cent], it's low 70s now and I think Aldi is making a difference, clearly. That's the biggest change."
The privately held German discounter launched in South Australia and Western Australia this year and is now spending more on advertising than Coles on occasion.
The woes for the two grocery giants may be compounded if Germany's other discount grocer, Lidl, also commits to entering the Australian market. It has a larger share than Aldi in Britain, and has already engaged with the Victorian government. It's also believed to have been in contact with suppliers, despite denying plans to launch in Australia.
Aldi already has more than 400 stores and over 9000 employees in Australia, according to its website. Its local chief executive Tom Daunt has said it could reach a 15 per cent market share as more stores open in the east and in SA and WA. Mr Daunt was contacted for comment.
Aldi does not file its accounts with the corporate regulator due to its controversial decision to structure its Australian operation as a limited partnership. But it was forced to reveal last year that sales had grown from $3.14 billion in the 2010 calendar year through to fractionally under $5 billion in the 2013 calendar year.
Aldi entered a market with eye-popping margins. Woolworths supermarkets have the highest margins in the world, according to Bank of America Merrill Lynch analyst David Errington.
US retail giant Costco, which posted $1.32 billion in Australian revenue in the 2015 calendar year, has much lower margins than the big two. But competition is heating up among supermarkets, as chains sacrifice margin for market share and battle deflation in dry groceries and some fresh food such as bananas.
The No.1 chain Woolworths is seeking to regain momentum after posting falls in same-store food and liquor sales for four consecutive quarters.
Coles has announced price cuts for 145 private-label grocery lines by as much as 25 per cent following analyst comments it was raising prices on lower-profile grocery items.
Wholesaler Metcash, which supplies independent supermarkets, last month said the aggressive discounting of groceries would ease from "unsustainable" levels.