We Finally Know Why Costco's Liquor Is So Cheap
From rolls of toilet paper to jars of animal crackers, Costco is well known for selling its items in bulk — and at great prices. So, for those seeking to get their hands on some decent liquor without breaking the bank, Costco's got you covered.
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00:00From rolls of toilet paper to jars of animal crackers, Costco is well known for selling
00:04its items in bulk and at great prices. So for those seeking to get their hands on some
00:09decent liquor without breaking the bank, Costco's got you covered.
00:13Shopping for liquor can be a daunting task. With so many stores, brands, and different
00:16types of alcohol to choose from, it can be hard to know where to start. Luckily, Costco
00:21makes it easy to find the perfect bottle and at an unbelievably low price. But how do they
00:25keep their prices so low and still make a profit?
00:28If you've ever been to a Costco, you'll know that their prices are almost always the lowest
00:32around. This is especially true when it comes to liquor, which is sold in 60 percent of
00:37Costco locations. Whether you're looking for beer, wine, spirits, or something else, you
00:41can almost always count on Costco to have the best prices in town.
00:44So what's the secret behind the low-cost sauce? It turns out that Costco's secret weapon to
00:49keeping their prices low is the much-beloved Kirkland brand. This private label is exclusive
00:54to Costco and is also owned by them. Hence, it allows Costco to offer lower prices on
00:58certain items, including liquor. The Kirkland brand is actually sourced from some of the
01:02best spirits producers in the world. The only difference between Kirkland Signature-branded
01:07products and some of the most popular global liquor brands is the label.
01:10You're getting the same or better quality than you would elsewhere with the Kirkland
01:15name.
01:16The Kirkland brand also allows Costco to cut out the middleman and buy liquor directly
01:20from the producers. This means that they can save money on overhead costs and pass the
01:24savings on to customers.
01:26Welcome to Costco. I love you."
01:28So what is a markup, and how does it affect the price of liquor? Well, if a seller wants
01:33to make a profit, they have to sell their products for more than it costs to make or
01:36buy from their supplier.
01:38The difference in price between what the seller paid to buy or make the product and what the
01:41consumer pays for it is called a markup. The standard markup in the retail alcohol industry
01:45is 25 to 45 percent. Yes, that means sometimes you pay almost 50 percent more than the company
01:51paid for the product.
01:52And a markup is applied at every stage of the journey, from distiller to distributor
01:56to purveyor. Markups are how businesses don't just break even, but expand.
02:00The money gained from markups can go toward overhead costs, such as employee compensation,
02:05office supplies, or utility bills. When money is left over after covering costs, it can
02:09be invested back into the company in order to expand. In this way, markups are a necessary
02:14evil for businesses.
02:16But Costco's business model is centered on decreasing markups. Costco's markup on Kirkland
02:20Signature Liquor is usually only 10 to 14 percent. With all these low markups, how does
02:25Costco make any money? From selling in bulk, of course. By cutting out distributors to
02:29buy goods directly from producers and offering lower markups while only selling in bulk,
02:35Costco ensures they still generate a net profit from most of their sales.
02:39Thanks to the Kirkland brand and their direct-from-producer model, Costco is able to keep their prices
02:43low without sacrificing quality. They also have a wide selection of beer, wine, and spirits,
02:48as well as hard-to-find seasonal and special releases, even some fairly expensive options
02:53for a taste of luxury.
02:54If you're looking to save even more money on liquor at Costco, there are a few things
02:58you can do. Take advantage of their bulk discounts, look out for special deals, and shop around
03:02to compare prices. After all, a sale is a sale no matter where.
03:06At the end of the day, it's no wonder that so many people are turning to Costco for their
03:10liquor purchases. With their low prices, wide selection, and excellent customer service,
03:14it's easy to see why. With these tips, you can be sure that you're getting the best deal
03:18on your favorite drinks.