Costco brews up an innovative new brand

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A substantial brand shock is about to hit the frothy world of Anheuser-Busch, MillerCoors and other US  beer makers whose business is driven largely by media campaigns. They’re about to receive a hard lesson in hops and malt from a new line of high-quality and extremely affordable craft beers, a line that will require virtually no advertising itself.

These new microbrews will come from a national retailer precisely geared for high volume sales. And did we mention that this retailer already has enormous brand loyalty–built from the ground up over decades of direct brand experience?

Raise a glass to Kirkland Signature craft beers

Yep, it’s a line of craft beers from one of the today’s best brand innovators:  Costco. Costco’s  brand strategy is to push the price/quality envelope beyond the reach of conventional marketing approaches. Those approaches  typically view brands as stylized sales stimulants, as commodity wraps to help boost sales. They rarely innovate to deliver new value–and that’s where Costco shines.

Tastes great, less billing

Costco will initially be offering Kirkland Signature pale ale, amber ale, hefeweizen and lager beers. A 24-pack will set you back $17.99. The SF Chronicle says that’s about what you’d pay for 12 bottles of a premium microbrew at Safeway. The Costco beers are said to be brewed by Gordon Biersch, a well-known maker of craft beers.

Bud and Miller: reaping what they’ve sown

Truth is, while Bud and Miller were focused on brewing ad campaigns, American beer drinkers developed a taste for beers with character–in the beer itself, not on the tube. The result was a flourishing microbrew revolution, and–ultimately–a barrel-sized opening for Costco in the fast-growing microbrew segment.

From one observer:

It is increasingly obvious to a substantial segment of the population that neither Bud nor Miller tastes great. The production of high volume, high quality Costco-branded beer will only magnify that realization and could be a serious challenge to the market dominance the large breweries have enjoyed for several decades.

And another:

The big brewers have fretted that decades of copycat, chucklehead advertising has reduced their biggest-selling brands to indistinguishable commodities in the eyes of many consumers. Now they may be reaping what they’ve sown.

Costco’s next step: some design innovation

At some point, Costco will have to come up with a more refined Kirkland Signature mark for premium lifestyle products such as Kirkland Signature wines and craft beer. The current blocky mark is fine for utilitarian goods, but when you pour or drink an outstanding wine or beer the label is part of the experience. Design-wise, it should captivate the eyes,  stimulate the palate, and go down smoothly.

Image: Costco
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2 Responses to “Costco brews up an innovative new brand”

  1. Todd Says:

    I can’t wait to serve Costco Beer to my in laws. The perfect way to insult someone without looking like you’re trying to do it. ( I really like you, but not enough to buy a name brand beer).

    I love it!!!

    Of course, if anyone ever serves me a Costco beer I am going to have to kill them to maintain my self esteem.

  2. Brian Phipps Says:

    I don’t think Kirkland Signature beer would ever be considered an insult. The quality is too high. Coming from Gordon Biersch, it’s equal to or better than many “name brand” premium beers. The recipient of such a gift would probably consider the giver on the front edge of brand innovation.

    One could also give a bottle of Kirkland Signature Vodka. Stories abound that it’s made by Grey Goose. It comes from the same place in France, using the same 5X distillation process. For what you save per bottle ($20) you could buy a case of Kirkland Signature craft beer.

    The point you raise, though, is a good one: are Costco products underserved by the plebeian connotations of the Costco brand? Well, that’s why Costco uses the Kirkland Signature brand for its products. The Kirkland Signature brand, however, is low profile and emotionally constrained. And it’s clunky. So Costco has some more work to do in this department.

    I wouldn’t be surprised if Kirkland Signature beer, vodka, et. al. become the beverages of choice for “recession chic.”