Costco Ups SKU's

Increases shelf space for wine, spirits and beer – especially ‘upscale’ brands

There’s no denying Costco has made huge inroads into the alcohol beverage industry, particularly in wine, in the past decade. In fact, Costco’s beverage alcohol sales are expected to reach $2.3 billion this fiscal year, with 50% coming from wine. The average Costco store carries 180 alcohol SKUs, with some as few as 80 and some over 200. Wine averages a whopping 145 SKUs per store.

The retail chain has increased its alcohol sales tremendously by offering more upscale products and extending its SKU count. Most stores don’t even carry boxed wine anymore and have limited 1.5 liter selections. This is all according to an article in this month’s Market Watch entitled “Taking it to the Top.”

The company is allowing regional manager make their own selections based on local demand.

Strategies such as these have helped Costco become a leader in wine retail even though it’s one of the smaller departments in the store.

Sticking to more upscale brands that appeal to Costco’s affluent consumers has boosted the chain, which has so far resisted the $2 wine trend that is seen in other retailers. In fact, its cheapest wine is a Chateau St. Michelle at $5.99. On the high end, Costco sold 15 packs of six 750 ml bottles of 2001 first growth Bordeaux last year for $1,399.99.

Beer brings in 25% of Costco’s beverage alcohol sales, and the average store sells 15 SKUs.