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mixed case: opinion and advice

Costco Cuts It

Kirkland Signature is not just any house brand—your favorite vineyard may be in that $20 bottle
Annette Alvarez-Peters, who leads Costco's wine-buying team, has partnered with the likes of Domaine de Nalys, Kunde Estate and Laura Catena on the store's super-value house brand.

Posted: Jan 8, 2015 10:20am ET

By Ben O'Donnell

Costco's head wine, beer and spirits buyer, Annette Alvarez-Peters, oversees what is almost certainly the biggest alcohol-beverage retail operation in the United States. The store keeps prices low by famously imposing a 15 percent margin cap on all products. Wine gets no special exemption. When the products are name brands, the price tags look enticing. When Costco has a guiding hand in the creation and sourcing of the item, they are often borderline unbelievable. Enter its house brand: Kirkland Signature wines.

Châteauneuf-du-Pape, for example, is one of those wines you really can't find in the U.S. market for $20—unless you shop at Costco. That's the price at which the Kirkland Signature Châteauneuf-du-Pape Cuvée de Nalys hovers. Sourced from the respected Domaine de Nalys, the wine usually scores in the high 80s or, in bingo vintages, even low 90s. Little surprise then that the KS brand for wine and spirits, launched in 2003, has been growing by double digits every year—now up to 4 million cases, Alvarez-Peters told me.

There are some who would turn up their noses at a generic label. Not among them: The many esteemed wineries and winemakers who actually produce the stuff. At first, Costco largely had to settle for bulk wine. "However, we found a lot of inconsistencies in the juice from year to year," said Alvarez-Peters. "Today, the majority of the wine is sourced from name-brand wineries, and now we have developed long-term relationships."

You may have heard of a few of them. Kunde Estate for Sonoma County Old Vine Zinfandel (87 points, $10 for the 2011). Girard Winery makes the Napa Cabernets and blends ($11 to $20, depending on appellation). David Guimaraens, head winemaker of Taylor Fladgate, is behind the KS 10 Year Old Tawny Port ($17). The owners of eponymous Champagne Janisson & Fils and Champagne de Bruyne make Kirkland's brut ($20) and brut rosé ($25), much of it sourced from their own vineyards in Verzenay—a grand cru—and Sézanne.

The Costco team is active in the fields and cellars, inspecting blocks and working with the house winemakers to assemble blends that yield the magic price-to-quality potion for KS. A few recent successes include a $9 Médoc red from "a well-known cru classé producer" at 86 points, a $7 Mendoza Malbec sourced and made by Laura Catena at 87 points, and a very good Côtes-du-Rhône Villages at $7. A Prosecco from the tiny Asolo DOCG dropped last month at $7.

What motivates producers to sign over fruit they could sell under their own label for much more? Big-money contracts and a guaranteed, say, 20,000 cases off their hands certainly entice. Plus, aligning with Kirkland is a nifty way to make a brand "pop" on the shelf over its competitors: "The Costco consumer is very loyal to the KS brand. They will always give the item a shot," explained Alvarez-Peters. (While most partner wineries are not named on the front label, many get a nod on the back label or in Costco's copious promo materials.)

Finally, shrewd vintners realize they do both their own house and their whole appellation a favor by getting them in front of American drinkers who'd otherwise pass. "One of my suppliers tells me the reason they sell us some of the quality appellations at an incredible price is in the hopes we can bring more consumers into the higher-priced category. Some consumers wouldn't purchase a $40 bottle of wine without knowing what the appellation has to offer," said Alvarez-Peters.

Woo the West Village with 3-ounce pours and pairing dinners. Kirkland Signature is how you sell West Fargo on Châteauneuf.

You can follow Ben O'Donnell on Twitter at twitter.com/BenODonn.

Troy Peterson
Burbank, CA —  January 8, 2015 11:36am ET
Wow, this is a really helpful article. I had tried various KS offerings in 2004-2005 but was consistently disappointed. I distinctly remember one that was supposed to be a CdP/Rhone and it was just an awful mess of olive brine and charcoal. That's when I swore off the KS wines. I will have to give them another try.
Warren Porter
Toronto, ON, Canada —  January 8, 2015 2:12pm ET
Dear Costco,

Please come to Ontario, Canada. The LCBO can be beat.

Signed,
Anyone Into Wine
Ted Keyser
Austin, Tx —  January 8, 2015 7:48pm ET
Insightful - cool! Would not have known they were no longer bulk wines. Have to confess; I'm guilty of label bias. Have passed right by those for 10 years. If they would simply invest in some creative artwork and design by downplaying the Kirkland Signature tag, I would reach for a btl and not feel like I'm buying KS laundry detergent. Irrational but the psyche of a wine buyer (this one anyway).
Austin Beeman
Maumee, Ohio —  January 9, 2015 4:37pm ET
Is this "Sponsored Content" - paid for by Costco?
Sure seems like it.
Ben Odonnell
New York —  January 9, 2015 5:08pm ET
Thanks for reading, all.

Austin: No. I thought the fairly unusual and intricate process behind what is thought by many as "merely" a generic wine made for an interesting story. And as you can see from the links in the article, our tasters have frequently rated these wines favorably, especially for the price.

Ben O'Donnell
Wine Spectator
Brian Burkhard
Ohio —  January 9, 2015 5:47pm ET
KS wines are great "everyday" wines...some much better than that. ...and yet they're a classic case of label bias. Just buy some for your "wine friends"...pour it in a decanter and tell them it's some new boutique winery you read about that gets solid scores...chances are they'll like it!
Dan Merry
Suffolk, England —  January 10, 2015 10:04am ET
Thank you Ben... great overview. As the economies in Europe and abroad keep taking hits, the relationships established during better times pay off for both parties. those "20,000 cases" may make all the difference in just one season. I anticipate more will be on board real soon.
Anne And Al Larson
San Carlos, Ca —  January 10, 2015 5:27pm ET
Like Troy I have tried the CdP de Nalys and found it marginal at best but have not tried the Girad offering and will have to give it a try.
Kasey A Carpenter
Fort Worth, Texas —  January 14, 2015 5:08am ET
You hit on the two that really seemed legit to me: the CdP and the Champers - both drank well beyond their price range.
Robert Lapolla
san diego —  January 14, 2015 1:14pm ET
I think Costco has slipped just a bit. I am not seeing the spectacular deals on 2-5 growth Bordeaux I once did. The emphasis now seems to be on cru bourgeois, Bordeaux superieur and Bordeaux AOC. Same with Spanish, Italian and US wine. On napa and Sonoma I can do as well or better elsewhere here in san diego (that's probably not true on east coast. European wine normally more expensive here on west coast). I don't see wine specials at Costco very often any more either. Come on Costco. Get back to where you once belonged!
Michael Hixson
Orange County, CA —  January 14, 2015 3:09pm ET
Thanks for the commentary on COSTCO, and the source references. Pick a great vintage for the varietal/source, and you should be able to get some nice juice. Pick a lower-rated vintage, and you'll get marginal generic wine usually. I've found a few home runs over the years (2009 Oakville Merlot, for example), but also lots of disappointments among them.

Solution: If only COSTCO would have the stones to have ALL KS labels tasted by Wine Spectator or other legit rating sources.
David Williams
Carlsbad CA —  January 14, 2015 3:15pm ET
Who was that Costco wine buyer shown recently saying that buying wine for sale was just like purchasing toilet paper to sell? I know it wasn't the good looking one in the picture.
Jason Martin
Los Angeles, California —  January 14, 2015 3:24pm ET
Great to hear Costco continues to up the quality game across all their products. Will definitely head over to scoop up a few of these reco's.
Hugh L Sutherland Jr-m
owens cross road,al 35763 —  January 15, 2015 11:27am ET
For those of us who do not like paying $50+++ for a good bottle of wine, Costco cab is a good choice.
Russell Quong
Sunnyvale, CA, USA —  January 15, 2015 5:46pm ET
I buy a lot of wine from Costco, but essentially none of it is their own Kirkland label. Why?
- the Kirkland WS scores and QPR are not compelling, especially given the formidable competition in the wine world, much of it just down the aisle, as
- Costco (in N Cal) does a great job of finding excellent wines in the same price range as the Kirkland offerings.
- their best value, the Nalys CdP, is not my style,
- another recent QPR bargain, the 2010 CdR Villages getting a WS 89 was disappointing.
- in the WS listings, the Costco prices are not discounted, unlike most prices, so the Kirkland QPR is overly optimistic.

Examples: Kirkland 2012 Carneros Pinot $10 WS 83 versus A to Z 2011 or Acrobat 2012 Pinot from Oregon $16 WS 90 (and Top 100).

Example: Kirkland 2011 Columbia Merlot $9 WS 87 versus Columbia Crest 2011 Grand Estates or H3 WS 89 $7 and $11 retail where I live.
Eugene Karl
Carlsbad, CA —  January 21, 2015 7:28pm ET
Several times per month I accompany my wife to Costco where she shops while I peruse the red wine. From the few KS wines I was enticed by, my conclusion is that there isn't much bang for my buck. For my taste I've had more luck with Cameron-Hughes. Besides, there are quite a few name-brand selections with WS ratings in the 90's that are priced in the $10-$25 range.

So, kudos to Costco for their prices, selection, and posting each wine's ratings, but I doubt I'll revisit the KS brand from anything in this article.
Tom Keller
Vancouver, WA USA —  January 22, 2015 11:40pm ET
I tried the Medoc. Horrible. Disappointing since I have enjoyed their branded wines to this point. Still intend to give them a shot, however.
Demetrius Carmichael
Winchester VA —  January 25, 2015 9:57am ET
I'm in a small market and wished my local Costco could have a better selection. I have to drive an hour just to have a better selection. All the prices were lower than any wine searcher prices but not anymore.
Demetrius Carmichael
Winchester VA —  January 25, 2015 1:56pm ET
I'm in a small market and wished my local Costco could have a better selection. I have to drive an hour just to have a better selection. All the prices were lower than any wine searcher prices but not anymore.
Paul Thomson
Edmond Oklahoma  —  January 25, 2015 6:52pm ET
I have been a costco member for many years and have enjoyed the wine selections and the pricing. I now live in Oklahoma and am subject to higher prices for wine because of archaic state laws. For example I paid $23 for a bottle at Costco that sells in Oklahoma for $46. Also, wine club shipments from out state producers are not permitted. So we have what the distributors want to sell us and at the prices they want to charge.
We have heard that Costco will be opening a store near us. That is good, but unless they can break to hold on the system they will not be selling wine in the new store.
KEVIN WHITE
KildeerIllinois  —  February 3, 2015 12:16pm ET
Costco continues to find great wines, source great grapes/wines etc. we have a place in Mexico and the selection there is tops if you stay away from the CA product. France is tops. The duty for the CA product drives up the cost to a level that does not make sense

We often take 3-4 bottles of Kirkland down with us for drinking while there. That is a real deal!!
Mark Lyon
Sonoma, California —  January 1, 2016 12:52pm ET
Hats off to Costco for creating a supply chain model that is both quality and price driven. Buying bulk wine is cheaper and more profitable, but consumers have less consistency and variable quality. Kirkland is not a glamorous name, but it's a growing brand because it's reliable and a great value!
Ed Wolfarth
Boca Raton Fla —  January 9, 2016 6:08pm ET
Generic wines are a tough sale but once tried, the average consumer is hooked. Us 'snobs' tend to drink what's 'not in the bottle' if you get my drift and knowing its a Costco wine may turn some of my colleagues off.

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