Thursday, January 27, 2011

Costco: the world's largest wine retailer - Part I of II

MadisonWineScene (MWS) recently interviewed Merrell Tomlin, wine steward at Costco in Middleton (2150 Deming Way) about their local wine business. 

More details about Costco's worldwide wine, beer and spirits operations can be found at Chain-wide, Costco's alcohol business is 50% wine, 25% spirits and 25% beer. 

MWS: How was 2010 for Costco Madison?
Merrell: 2010 was a fantastic year; we were up 40% over 2009.  As more people in Madison realize that we sell wine (we have not been open that long), we are on pace to do that again this year.

MWS:  What is the balance of white wines vs. red wines at Costco Madison?
Merrell:  In the summer we sell more whites - lighter whites like Pinot Grigio and Chenin Blanc, and in fall we switch over more to reds, and for the holidays we bring in more expensive wines.  Our biggest selling varietal is undoubtedly Chardonnay, and overall we are probably 55%/45% in favor of whites.

MWS:  How many wine labels does Costco Madison carry?
Merrell:  At any given time I will have between 150 and 175.  We are much smaller than Woodman's because we have a smaller space.  What we carry we have to move.  I don't carry anything less than an 85 rating among our rated wines.

MWS:  What is the range of wine prices at Costco Madison?
Merrell:  $5 to $200, with the average around $20.  Most of the wines we sell are below that, and we are quite successful with wines up to $60.  When it gets over $60 it slows down very quickly - people buy those for special events.  That might be more of a Madison phenomenon than a Costco phenomenon: most Costco stores just knock it down in the $40 - $100 range, especially in cities like Chicago.

MWS:  How does the Madison Costco store compare in wine sales to other Costco stores?
Merrell:  Midway out of the 500-odd Costco stores in the country; we are probably in the top 20 of the 50-plus Midwest stores.  However, the Madison wine scene is always changing with more wine store openings, wine tastings, charity wine events, wine pairing dinners at restaurants which all help to make more people interested in wine.

MWS:  What are your most popular wines at Costco Madison?
Merrell:  In reds, without a doubt it is Menage a Trois ( at $7.99.  In whites it is Wollersheim Prairie Fume ( also at $7.99.

MWS:  How many bottles on average does a wine customer buy in a trip to Costco Madison?
Merrell:  We sell a lot of mixed cases, but on average it is usually 4 - 6 bottles at a time.

MWS:  Any disappointments in any wines not selling at Costco Madison?
Merrell:  Not really.  We have gotten better at understanding the Madison wine consumer and seasonal patterns.  For example, for Christmas we brought in three extra Champagnes that we would not normally carry during the year and we hit different price points.

MWS:  What is your biggest constraint in selling wines at Costco Madison?
Merrell:  Space.

MWS:  How do you get new wine labels into the Costco Madison store?
Merrell:  We have thousands of approved wines on the Costco list and I try to tailor our selection to the Madison wine clientele.  For example, we just brought in three outstanding Willamette Pinots - I had thought that was a big gap in our offerings and we now have them from $15 to $40.

MWS:  What wines would you like to have more of at Costco Madison?
Merrell:  Australian Syrahs, as well as Malbec and Carmenere - wines from Argentina and Chile.  I think they would sell well in Madison because they are relatively inexpensive.

MWS:  Any hidden gems in the Costco Madison store?
Merrell:  Right now it would be the Willamette Valley Pinot Noir ( at around $20 and the Drouhin Pinot Noir ( at around $40.

MWS:  Costco Madison does very little conventional advertising.  How do Madison wine buyers find out about these deals?
Merrell:  People need to come into the store at least once a week -- not just with wine -- we try to turn everything in the store very quickly.

MWS:  What is your personal wine choice in the Costco Madison store?
Merrell:  Sequoia Grove - a Napa Cab (  A well-kept secret.

MWS:  What is the most common question that you get asked?
Merrell:  I do not know anything about wine, and I am having this dinner party.  What wine should I serve?

MWS:  And the answer is?
Merrell:  What are you serving?

The next post will discuss Costco's Kirkland label.


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