Tag Archives: Annette Albarez-Peters

Costco wine: Let’s drink local

costco wineCostco, perhaps the most influential wine retailer in the world, wants to sell regional wine

How does Costco – perhaps the most influential wine retailer in the world – decide what to carry? It wants to drink local.

Annette Alvarez-Peters, who oversees the chain’s wine buying, said half of the its wine labels change regularly and that its 12 regional buyers look for local wine to help fill in those blanks. Or, as she told a California trade seminar: “It really has to be, ‘Why is your item so compelling, and why does your item fit in our section?’ ”

This is one of the few times that Costco and Alvarez-Peters have defined publicly what the chain is looking for; Costco has traditionally been reluctant to discuss its wine buying practices. This matters because it sells so much wine, almost $2 billion worth in 2015, equal to about four percent of the U.S. total – and in just 412 stores.

And that Costco wants to drink local is another reason to declare victory in the battle for regional wine recognition. The retailer can carry any wine it wants, and even the biggest producers make tremendous price concessions to get on its shelves. Which means that Costco is saving space for bottles not from Big Wine, but from small, local producers.

I learned about this recently when the Costco buyer for Texas approached one of the state’s wineries. The winery, its sales person told me, was flabbergasted. Why would Costco want to sell its wine? If nothing else, it didn’t make enough to fill one of Costco’s huge displays. But quantity doesn’t matter as much as quality, part of what the chain’s founder/guru Jim Sinegal told me years ago when I was lucky enough to interview him for an airline in-flight magazine. The retailer wants shopping to be like a treasure hunt, where its customers run across something they didn’t expect to find. In this case, quality local wine.

So pay attention, all those retailers and restaurants that don’t want to drink local. If Costco can do it, why can’t you?

More on Costco wine:
• Costco wine and its retail domination
• Costco and its role in the wine business

Costco wine and its retail domination

costco wine
Annette Alvarez-Peters

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