Know three things about this interview with Annette Alvarez-Peters, who runs the Costco wine program:
First, any interview with Peters is worth reading, no matter how technical (and this one is technical), because she doesn’t do many and she is one of the two or three most important wine people in the world. So when Alvarez-Peters says Costco isn’t going to sell wine over the Internet in the U.S., then it’s not likely any other big retailer will, and retail direct shipping will continue to languish in the netherworld it currently inhabits.
Second, it shows Costco’s domination of U.S. wine retailing. It’s not so much that it’s the biggest wine retailer in the country or that it sold $1.69 billion of wine last year, but that it may account for as much as four percent of all the wine sold in the U.S. by dollar volume. In addition, the chain may do as much as $3 million in wine for each store, a gigantic number given that wine isn’t Costco’s reason for being. Kroger, whose wine sales could be close to Costco (parsing these numbers isn’t easy, since not all retailers break out wine revenue), has six times as many stores in the U.S. All of which means Costco has leverage with producers and distributors, even the biggest, that no one else has.
Third, a wine trend at Costco is a wine trend that producers pay attention to because the chain sells so much wine — and that means it’s a trend in the rest of the country that everyone else will be copying. So we are going to see Big Wine brands heavily discounted, lots more sweet red, premiumization, and rose. And Costco is dabbling with wine delivery; it it figures out how to make delivery profitable but affordable for consumers, delivery will become a trend.
We can argue whether any of this is good or bad, but that almost doesn’t matter. What matters is that what happens at Costco changes the way everyone buys wine, even those of us who don’t shop there. Unfortunately, the interview doesn’t do a good job getting that across.
More about Costco wine:
• Costco and its role in the wine business