With the pandemic largely shifting alcohol sales from restaurants and bars to grocery and liquor stores, the world’s leading alcohol retailer, Costco, proved to be well-positioned for the situation. Consumers across the globe flocked in to stock up on their favorite beverages, boosting last year’s alcohol revenues more than 25 percent to $5.5 billion.
Based on sales figures, wine remains a perennial best-seller at the big box store, accounting for between 40 – 50 percent of alcohol sales, as reported by MarketWatch. Spirits (30 percent) and beer (20) split the remaining total, with hard seltzers and RTDs performing exceedingly well.
Vodka was the most popular spirit, with Kirkland Signature American Vodka and Tito’s Handmade Vodka topping the sales chart.
Costco has boosted sales by staking a claim in the price to value category with its Kirkland branded vodka, whiskey, gin, rum, and tequila. The brand’s French Vodka is likened to Grey Goose, and it is rumored that more than a few ties exist between the $20, 1.75 liter Costco version and the Bacardi-made premium vodka priced at $60.
Costco’s relative dominance in the sector derives from economies of scale that allow the firm to negotiate favorably with distillers and distributors, and lower than average markups (14 percent instead of an industry norm of 50 percent) provide a price point that is attractive to consumers.
While the house-branded items and the blue-chip labels are generally always available, other offerings rotate regularly, and the treasure hunt style approach that Costco utilizes means that rare beer, wine, and spirits can be found while perusing the aisles.
This combination of adventure and value helped Costco surpass the 100 million member mark in 2020, and if the past is any indication of the future, the company will likely continue to put pressure on the competition with its use of savvy retail strategies and commitment to quality.