Monday, May 16, 2011

Costco: On track to continue as the world’s largest retailer in 2011

An earlier post (MadisonWineScene: Costco: the world’s largest wine retailer – Parts I and II http://bit.ly/j8gPqJ) discussed Costco’s wine sales in Madison, Costco's wine operations and the Kirkland label.  

The Shanken News Daily, Monday, May 16, 2011, had an interesting interview with Annette Alvarez-Peters, Costco’s assistant general merchandise manager -- wine, spirits and beer at http://bit.ly/lWqPLS.

Some highlights:
  • In fiscal 2010, global sales of wine, spirits and beer were $2.345 billion and projected sales through August 31 2011 are $2.495 billion.
  • The average Costco is about 145,000 square feet. The average alcohol beverage department is approximately 5,000 square feet.
  • The average inventory is less than 200 wine, spirits and beer items
  • Chain wide the breakdown of sales is 50% wine, 25% spirits and 25% beer.
  • For wine, the sweet spot is in the $7 to $15 price point.
  • Wine prices range from $6.99 to $50 and above.
  • Costco is seeing double-digit growth in California Cabernets, red blends and Italian reds, Rhône wines like Châteauneuf-du-Pape and Côtes du Rhône Villages. Also performing well are Spanish Albariño, Malbec from Argentina and Chilean whites.
  • The sweet wine category is seeing a surge in sales, from sweet reds to Moscato to chocolate wine. 
  • Top-end Bordeauxs are struggling, as are Australian wines and Chilean reds.
  • Kirkland Signature products represent around 20% of total sales and approximately 5% of wine, spirits and beer sales.
  • Costco is very pleased with the Kirkland Signature growth year after year, and they continue to find new partners to source their products. They just finished their rotation of Argentine Malbec, which performed phenomenally. A Côtes du Rhône Villages and a Friuli Pinot Grigio have followed that. Both are off to a great start. 
  • In the U.S., it’s Annette and 10 buyers in charge of the wine, spirits and beer category.

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