The Commoditization of Tequila Courtesy of Costco

kirkland tequila, costco, tequila aficionado, tequilarackWill KIRKLAND prove to be the category killer for high-end Extra Anjeo like it has for ultra-premium Vodka? As you can see from the below insert from December’s Costco Connection magazine, Kirkland 3 year Anjeo hits the shelves in select US markets. In CA it is currently selling for $23.99 per bottle.

I’m sure to buy one to put on my ever expanding Tequila shelf, most likely next to “Black Death Tequila” and others of similar ilk. I’m also sure to do a proper tasting and write down my thoughts to share with you as a future commentary to this article.

But the thought I have for you to ponder today is simply this: Why didn’t Costco start with Blanco? Blanco is the largest volume category style of 100% Agave Tequila by far. It is also much less expensive to produce, and much easier to maintain product consistency and taste profile (due to the differences in barrel wood, especially amplified over three years).

My best guess is that Costco wants to accomplish two things: apply pricing pressure to the high end that will ultimately drive down all other Tequila pricing, and… Costco does not want to mess around with the volume and profit surrounding the massive amounts of 1.75L Patron Blanco that it sells through its stores.

Your thoughts?

UPDATE:

So, as an update to our most recent topic above, “How low can the price of Tequila go?” now that the new Costco 3yr Anjeo is out in stores @ a very low $23.99/L. Simple Economics say that this pricing pressure at the high-end will no doubt exert pricing pressures throughout the tequila markets where Costco sell Liquor.

Well, I believe the next shoe, Premium Mixto Pricing, has just dropped.

In the mail today, courtesy of this week’s Ralph’s grocery flyer, Sauza Gold Premium Mixto is featured for a mere $6.39 a bottle with a -$3.00 instant redeemable coupon (that arrived in the same flyer bundle), for a net price to consumer of only $3.39 / 750ml. Stater Brothers Holiday Ad features Sauza for only $2.99 net after both a Southern Wine & Spirits -$3.00 in ad coupon plus the manufacturers -$3.00 instant redeemable coupon. At these prices, which are very near the cost of production after taxes, bottle cost, shipping, its really time to stock up on every segment now through Q1 of 2010.

Perhaps this is the answer, at least the near term, regarding the low end of Premium Mixto Tequila pricing.

If it gets any cheaper, we may all find ourselves giving a whole new meaning to “Two Buck Chuck”(up?) Tequila. – Z

A picture of the article can be found here: http://tinyurl.com/y9ngesy

Link to the Costco Connection article can be found here: http://tinyurl.com/yzyrrc6

The Distillery site is here: http://www.fabricadetequilasfinos.com/

tequilarack

 

Originally posted November 29, 2009 by TequilaRack.

Please visit TequilaRack, a member of the Tequila Aficionado Flight of Sites.

Never miss and article or review again – Subscribe now!

* indicates required

Email Format

View previous newsletters.



Lisa Pietsch is the Chief Operations Officer of Tequila Aficionado Media, a USAF veteran, a multi-published novelist and freelance writer, a social media marketing consultant, and the mother of two boys. She has a passion for good tequila, foreign languages, and travel in all forms. Lisa currently makes her home in San Antonio, Texas.

Comments are closed.