Costco enters the beer business

Here are some interesting articles released this week. With the increased popularity of Craft beer and the contract beer industry expanding, Costco has announced that they will be offering their own beer under the Kirkland brand.

The plan was approved to brew an amber ale, pale ale and hefeweizen made in partnership with Gordon Biersch Brewing in San Jose, Calif.

Through acquisition and growth, Gordon Biersch operates restaurants located in 16 states across the United States. Other brands operated by the Gordon Biersch Brewery Restaurant Group include Big River Grille and Brewery, Rock Bottom Restaurant Brewery, Seven Bridges Grille and Brewery, A1A Ale Works and Ragtime Tavern and Seafood Grill, and Bluewater Grille

The market soon will determine the quality of this beer. If Cosco's is able to create a low cost quality offering, it may do well. If not, then you know what will happen. Time will only tell. :)

Sean
2Beerguys.com

Drink Craft Beer, You've Earned It!!



Costco gets into the beer business
By Elizabeth Lee | Friday, February 1, 2008, 11:28 AM
The Atlanta Journal-Constitution

A couple of years ago, Sam’s Club and Costco commissioned private label wines. I’ve tried a few of the Kirkland Signature wines from Costco, and before Christmas, picked up a bottle of the warehouse club’s French Champagne. (Good Champagne, but there’s something about the words “warehouse club Champagne” that doesn’t jell.)

Now Costco’s striking a deal for private label craft beers — you can read about it on BrewBlog, from the Miller Brewing Co.. They’re looking at a hefeweizen, a pale ale and an amber ale. According to the blog, the company is also looking at a private label single-malt Scotch. Trader Joe’s is another retailer that’s moved heavily into private label wines and beers.

Link to the article.

Costco beers soon could sell in warehouses
By Amy Martinez
Seattle Times business reporter

Costco shoppers could soon see a new name in the beer aisle.

The Issaquah company has received federal permission to begin selling its own brand of beers bearing the Kirkland Signature logo.

The Treasury Department's Alcohol and Tobacco Tax and Trade Bureau approved label applications for amber ale, pale ale and hefeweizen made in partnership with Gordon Biersch Brewing in San Jose, Calif.

But Chief Executive Jim Sinegal said during an interview Friday "there's a lot of work to do," noting that Costco is "months away" from introducing the craft-style brews. BrewBlog, an industry newsletter by Miller Brewing, reported the label-application approvals earlier this week.

Costco already sells Kirkland Signature wine, including two bottles of a 2005 Washington syrah from the Columbia Valley for $39.99, as well as a single bottle of a 2006 Pinot Noir from New Zealand for $16.89. Costco also sells private-label vodka and scotch, though not in such states as Washington, where the government controls packaged liquor sales.

"In the past, private-label beer hasn't worked," said Eric Shepard, executive editor of Beer Marketer's Insights, a trade newsletter in Nanuet, N.Y. "Beer, in particular, has been known to be a very brand-driven business, even more so than wine."

Store-branded beer accounts for less than 1 percent of the U.S. market, while Anheuser-Busch, maker of Budweiser, captures about half of the beer sold annually, Shepard said.

Retailers covet the higher profit margins of private-label products, but consumers historically have regarded them as downscale. Because Gordon Biersch makes craft-style brews, downscale is "not where Costco is going," Shepard said. "Craft brewers are something different ... with a premium, import-type image."

Trader Joe's for years has sold private-label beers in partnership with Gordon Biersch, including a Bavarian-style hefeweizen and Bohemian lager.

For now, though, Sinegal said it's too soon to talk about a Kirkland Signature brand of beers. Costco is still negotiating with Gordon Biersch, and prices are yet to be determined.

"To begin the process, we have to seek permission to sell the product. We've done that, and now we need to develop it," Sinegal said.

"We have hundreds of products that go through this process, and some never show up," he said. "Chances are, this will, but we're not there yet."

Link to the article.