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April 2017 WINES&VINES 21 WINE INDUSTRY NEWS S anta Rosa, Calif.—How does one get their wine sold at Costco? That was the question on the minds of attend- ees at the recent Wine Conversations event in Santa Rosa, and one the general merchan- dise manager of Costco's beverage alcohol division, Annette Alvarez-Peters, diplomati- cally answered. Alvarez-Peters prefaced her remarks by say- ing that the typical Costco location only carries about 235 alcoholic beverage SKUs, which also include beer and spir- its in places where regulations allow all three to be sold in the same location. C o s t c o h a s 1 2 buyers spread over all key regions of the United States, and Alvarez-Peters said they need to select brands that will deliver the quality and low prices on which Costco has built its reputation and successful business. Alvarez-Peters said a winery may make a great Cabernet Sauvignon, but a typical Costco loca- tion has room for just 30 Cabs—and those have to deliver that consistent quality and value for the chain's members. "We have to say no more than yes," she said. Alvarez-Peters said the regional buyers try to stock their stores with brands that are pro- duced locally and also reflect the preferences of members in those regions. And while Costco may have to keep some of the same brands in its rotation, Alvarez-Peters said half of their wine SKUs change regularly. "It really has to be, 'Why is your item so compelling, and why does your item fit in our section?'" She mentioned one winery that had sur- veyed several Costco stores in its area and then successfully pitched the buying team on a par- ticular wine that it said could fill a gap in what those stores were selling. Costco also has a general strategy of adding new items as part of a "treasure hunt" to get its members to wander around the store and buy items that weren't on their shopping lists. "The 'wow' items are the ones that get members to come back," she said. Spirits producers have done a good job tapping into that "wow" category Alvarez- Peters said Costco consumers enjoy. Costco worked with some spirits companies on spe- cial packages of small sampler bottles and also did quite well with boxed sets of wines from Bordeaux that sold for $29 to more than $100. Alvarez-Peters and the rest of her buying team write regular columns about wine and the wine regions of the world in the Costco member newsletter, and brands featured in that publication do typically enjoy a sales bump. Positive reviews and feature articles in consumer wine magazines also tend to reso- nate well with Costco shoppers, although she said it's definitely not true that the retailer only stocks its shelves with wines that have earned scores of 90 points or more. The chain's private-brand program, Kirkland Signature, is also doing well and now totals $29 billion in sales, part of which is wine. The Kirkland wine program began in 2003. Alvarez- Peters said the goal is always to deliver equal or greater quality to comparable products with savings of around 20%. Costco uses the Kirkland program to fill gaps in its lineup and also pro- vide consistency for certain products. The Wine Conversations symposium is or- ganized by French closure supplier Diam and its U.S. distributor, G3. —Andrew Adams Nadalié "Cooperage is Our Craft" Ad - 4.5" x 7.5" Proof 3 Costco Wine Buyer Talks Shelf Strategy Annette Alvarez-Peters