Missing the Point with Costco
In case you haven’t noticed it spreading like wildfire on your favorite wine blogs, last week bloggers (myself included) tweeted and posted that the wine buyer for Costco, Annette Alvarez-Peters, asserted in an interview with CNBC, that wine isn’t more special than clothing, televisions or toilet paper and, “….at the end of the day, it’s a beverage.” At first, I was annoyed by Alvarez-Peters’ comments. However, while waiting for an appointment yesterday afternoon, I realized that the backlash against Alvarez-Peters, though deserved, is a little misguided. And frankly, for wine professionals to be shocked that a major wine buyer feels this way is a little disconcerting because I think many of us sometimes miss the point of what’s going on in the wider consumer wine world.
Most Americans shop at Costco, Walmart, Target, Marshalls, Best Buy, so on and so forth. And as is the case with just about anything in the marketplace, a large number of wine consumers choose their wine based on two criteria – familiarity and price. And the Costco model provides their customers with wines that match these two requirements – they often have the best prices and there isn’t much wine from unknown appellations stacked near the frozen fish aisle. With this perspective (which almost none of the wine writers who have protested the comments of Ms. Alvarez-Peters share) in mind, it’s quite easy to understand how someone who runs one of the most cut-throat discount big-box warehouse chains in the world can compare wine to other commodities within the store.
Though sometimes we don’t remember, we wine geeks live in a bit of an insulated bubble as most heady wine shops are located in New York, Philadelphia, Chicago, Los Angeles and other major metropolitan areas. Through the tireless efforts of boutique wine shops owners in these locales, there has never been a great influx of California Zinfandel, old vines Muscadet, semi-oxidized Rioja and countless other wines that capture their sense of place with such accurate vibrancy that one of these great bottles can give me the chills. I care deeply about these wines, as do many of you. But we are in the minority when it comes to filling our glasses with one of these delights. Most people just want a glass of red or white – or as Alavarez-Peters terms it – a simple beverage. Don’t waste your time being offended, taken aback, shocked or dismayed about her comments. Instead, take what she says as a lesson learned that we have a lot more wood to chop in communicating our message to the masses that many of the wines at outlets like Costo aren’t worth the glass they’re bottled in, while turning them onto to something more exciting and fulfilling. Now that would be time well spent.
You and other wine enthusiasts are missing the point entirely about Annette’s comments. They must be taken in the context of the Costco culture. It’s about that culture as much as it is about the wine. Costco is a no nonsense, practical company bringing limited but quality items to its members. There are 4000 items in an entire Costco. Each of those items must sell high volumes – pay for their real estate on the shelf. Now here’s the other part of the culture…Jim Sinegal. He was the CEO for almost 30 years and is the most practical, down to earth retailing genius the US will ever experience. Knowing and connecting with the member is tantamount. If you know Costco at all, then you and your colleagues would have complimented Annette on connecting with her member and espousing the Costco philosophy in a few well spoken words.
Sara – thank you for your comment. I used to have a membership at Costco. I used to go once a week, pick up what I needed for the house and then go about my business. After awhile, I realized that the products they have are no better than what you can get in your local, neighborhood grocer. In fact, the only products that are “limited” are those which are exclusive to the Costco chain, otherwise their products can be found in any grocery store. The only advantage that Costco offers their members is price. Of course you must buy in higher quantities to get your products at those deeper prices, but who doesn’t need a 10# box of salt or 36 pack of tuna fish?
I do not belittle their ability to bring these items to the public in a more cost efficient manner. Their business model clearly works and saves money for the public, while also keeping profits for the company sky high. What I am vehemently opposed to is that idea that a store like Costco is necessary for consumers. Though their products are cheaper, they certainly aren’t of higher quality than what you can get a local farmer’s market, neighborhood co-op or even at a store like Whole Foods. Most of the food on the shelf is processed and frankly, represents the lowest common denominator of the food supply – easy, prepackaged and generally lacking in quality nutrition. This is especially true for their finger foods that they hand out to customers while shopping.
As for the wine, Annette does a good job bringing value to the customer. And if you actually read what I wrote above, I do not necessarily blame her for making those comments. In fact, I ask most of the wine writers who have never stepped foot into a Costo to relax – she is simply providing many consumers with what they want – value driven wine. What I take exception to is, like other departments at Costco, Annette has managed to convince some of her customers that they must buy their wine at Costo because their pricing might be the most aggressive. And frankly, just because a store, no matter the size, provides wine at the best price, it doesn’t necessarily mean that there is a correlation in quality. And if consumers want to learn anything about wine, buying it at Costco certainly isn’t the place to start as there aren’t many people on the floor of any of their locations that knows anything about their products except where they are located. Is this is a bad thing for consumers? Not if they are simply buying on price and volume. And frankly, my company and many others in the industry, are not necessarily aimed at this segment of the wine buying public.