Costco adds a bargain upscale product that members will love

Costco has built much of its business around its Kirkland brand. 

The warehouse club has built up equity in its house brand, making it more than a traditional generic white-label offering. 

In many ways, you can argue that Costco changed expectations for house brands in general, since rivals Walmart and Target have both invested heavily in theirs.

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Target (TGT) – Get Free Report arguably has actually built its business around a version of house brands. The company owns dozens of brands that it has created to be able to offer high-quality goods at lower cost. Those efforts include thousands of household and grocery products, along with multiple clothing lines.

Costco took the stigma off company-owned-and-operated brands by continuously ensuring that its Kirkland house brand met high standards. That’s true in all areas of the chain’s stores, but it’s especially true in the retailer’s warehouses that have liquor stores.

In those departments Costco offers scotch, bourbon, vodka, tequila, and other spirits under its Kirkland brand. It’s widely known that these liquors are being produced by big-name distilleries, giving the warehouse club’s members access to premium bottles at much lower prices.

The retailer does not disclose which distilleries it partners with, but some of its Kirkland-branded liquor has gained a following on its own. And Costco now has partnered with a popular tequila brand to sell a high-end product in its warehouses under the company’s name.

Costco has become a go-to location for people looking for low-priced premium liquor.

Image source: Shutterstock

Costco adds a premium tequila    

Costco’s liquor stores do offer name brands. You’ll find all the usual suspects alongside its Kirkland-branded products. In some cases, the retailer also sells premium products at discount prices.

That could simply be the warehouse club getting a deal on a bottle that a big-name distillery struggled to sell. Or just as it does with the rest of its merchandise, the warehouse club might leverage its buying power to get a big-name premium product at a bargain price.   

In this case, Costco is working with Código 1530 Añejo, a premium tequila brand. The tequila maker has partnered with the warehouse club for an exclusive custom bottle of its barrel strength añejo, Tasting Table first reported. 

“Código 1530 Tequila continues its traditions with its popular single-barrel program offering a unique barrel-aged product that allows for customization of the bottle,” Código 1530 Añejo said on the Tasting Table website. 

“When purchased through a licensed liquor entity, our program is available for private customers, restaurants, and retail stores. We were thrilled to partner on the Costco Wholesale Collection, a custom-selected bottling of our Añejo Barrel Strength expression.” 

Costco sees a key improvement

Costo is selling the Codigo 1530 Añejo for $125.88. That’s an expensive bottle for most people, but it’s also an affordable luxury.

People may hold off on taking vacations or buying new cars, but they tend to find ways to treat themselves with affordable indulgences. For some, that might mean a morning latte at Starbucks, while others may opt for dinner at a pricey restaurant.

In other cases, an expensive bottle of liquor counts as an affordable indulgence. That’s in line with spending trends that Costco Chief Financial Officer Richard Galanti discussed during his company’s fiscal-first-quarter-earnings call.

“One of my colleagues here just mentioned that discretionary merchandise trends are getting a little better, and that’s not only on big-ticket but in general nonfood kind of stuff,” the executive said. “I think [that] corresponds with my comment earlier that we feel good about … the seasonal — how we’ve done seasonally.” 

As Costco’s members get a little looser with their discretionary spending, a high-end tequila from a major brand should be a big seller. It’s a decadent purchase but one some members will justify. 

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