Costco’s Bottom Line Gets A Boon From Store-Brand Booze

When times are tough, it’s generally a very bad idea to seek out hope in a bottle, but don’t tell that to Costco. Brisk sales of the warehouse club’s store-brand liquor and wine are helping make up for Costco’s lower-than-expected retail receipts.

This is according to Bloomberg, which notes that the affordable price tags and devoted fans of Costco’s Kirkland Signature booze has played a big part in the 46% growth in alcohol sales over the last five years.

Just like most retailers that sell generic or house-brand products, Costco acquires many of its Kirkland Signature products from third-party producers who usually also manufacturer similar items for others. The Kirkland Signature Vodka is produced in the same region of France as the much more expensive Grey Goose, leading some to speculate (without evidence) that the Costco vodka is the same as the fancier brand. They aren’t, but some taste-testers say the Kirkland vodka is superior.

In fact, one Bon Appétit writer recently declared that Costco “makes incredible vodka.”

Likewise, a number of Kirkland Signature whiskeys and wines have received high and above-average marks, and the store-brand products sell for about half the price of the name-brand competition.

“They use very high-end producers — premium all the way up to super-premium and beyond,” one retail analyst tells Bloomberg, explaining that this fits into the overall scheme of Costco: To give people a reason to keep shopping there. “They’re looking for maximum quality and minimum markup to drive value for the member.”

Though Costco now makes around $3.8 billion a year from alcohol sales, local restrictions on the sale of beer, wine, and spirits limit its ability to offer these products. According to Bloomberg, only about 80% of locations can sell beer and wine, and even fewer (60%) are allowed to sell liquor.