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Costco’s Beverage Alcohol Sales Top $4 Billion

June 11, 2019

With more than $4 billion in beverage alcohol sales last fiscal year, Costco has seen steady annual growth in wine, spirits, and beer, even from a huge base. New stores and new beverage alcohol departments have been added nationally and internationally on a yearly basis. Few retailers can match what Costco is doing, in both sales and scope.

In the U.S., Costco has licenses to sell beer in 458 stores and can sell wine in 448 stores. In addition, 317 stores are licensed to sell spirits. Overseas, the company has an additional 162 licenses for wine and beer retail and 141 licenses for spirits.

Beverage alcohol sales at Costco were $4.4 billion last fiscal year, marking a 6% increase over the year prior. The company is one of the largest wine retailers in the world, with wine making up roughly half of its total beverage sales—more than $2 billion last fiscal year. Spirits and beer split the remaining half relatively equally.

“We’re committed to the beverage alcohol category,” says Annette Alvarez-Peters, assistant vice president and general merchandise manager for beverage alcohol at Costco. “We show substantial increases and comps year over year. We’re disciplined in our approach to the business. We have new warehouses opening and, as laws have changed, we’ve been able to add beverage alcohol licenses to some existing warehouses.”

Alvarez-Peters says California, Florida, and Washington are some of the company’s largest-volume states for beverage alcohol sales and that those markets are still posting strong increases. Additionally, markets like Colorado, Alaska, South Carolina, Nevada, and Washington, D.C. are doing well. For this fiscal year, Costco expects to add an additional 23 locations in the United States and overseas. New units have recently debuted or will open soon in California, Maryland, Texas, Iowa, Nevada, Alaska, Florida, and New Jersey, and later this year the company will unveil its first store in China.

The company’s top-selling wine labels include Meiomi Pinot Noir ($15-$21 a 750-ml., depending on location), La Crema Chardonnay ($13-$20), Kirkland Signature Cabernet Sauvignon ($8 a 1.5-liter), Ménage à Trois red blend ($7-$11 a 750-ml.), and Kirkland Signature Asolo Prosecco ($7). In spirits, Alvarez-Peters says Bourbons and other whiskies remain hot, and she adds that Tequilas and cordials are also doing well. The company’s top-selling spirits include Tito’s Handmade vodka ($26-$30 a 1.75-ml., depending on the market), Kirkland Signature American vodka ($13), and Jack Daniel’s Tennessee whiskey ($29-$40).

Competition from other alcohol retailers is strong throughout the country, according to Alvarez-Peters, and she adds that internet competition is also a factor. While Costco doesn’t do online beverage alcohol sales in the United States, it does offer beverage alcohol e-commerce in Mexico and the United Kingdom. Alvarez-Peters says the company is currently looking at the possibilities for domestic online beverage sales, potentially opening up a new growth avenue. Market Watch has more.—Laura Pelner

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