Costco Wine: Shall I Be Offended?

Posted by Tom Wark on Apr 30, 2012

CostwineOver at The Eater, Talia Baiocchi is a bit offended, or at least disheartened, that America's most powerful wine buyer doesn't believe that wine is much more special than toilet paper or tin foil. Talia, a keen observer of the wine world and a very good marketer, has reason to be offended by this.

Talia's moment of virtual head-shaking comes in response to a CNBC video featuring Annette Alvarez-Peters, Costco's head wine buyer, who responds to an interviewer's query about wine perhaps being more special thant toilet paper or tin foil with: "I don't think so".  Alverez-Peter's conclusion is, "People can look at it that way. But at the end of the day, it's a beverage." I suspect that more than a few other lovers of the grape were equally offended upon learning of this view of wine held by the wine buyer at Costco.

Here is a woman responsible for the selection from which vast numbers of Americans will choose their wine. Costco is the leading retailer of wine in America. And she doesn't think wine is that special…or at least not much more special than toilet paper.

Now, I'm not much of a connoisseur of toilet paper, but, like with wine, I can tell the difference between ordinary toilet paper and superb toilet paper. And I suspect that Ms. Alvarez-Peters is no different than me.

So all this begs a somewhat important question: Does one need to hold a feeling of reverence for wine in order to successfully choose a selection for the buying public? Given what we know about the success of the Costco wine program and about Ms. Alvarez-Peter's disposition, the answer is certainly "no".

Though it's fairly clear from the CNBC video that despite her view of wine being not any more special than toilet paper or tin foil, Ms. Alvarez-Peters does know a little something about wine. But more importantly, she knows a good deal about what her customer base wants from the wine selection in her hundreds of Costco stores around the country and that this knowledge is far more important than possessing a reverence for wine.

So, all this begs an important question: What are the paramount requirements for a professional wine buyer? I think we can break them down to this:

1. Knowledge of your customers' desires
2. Knowledge of the product
3. Knowledge of buying and market trends

I honestly don't think that if there is a 4th on that list, that it is likely to be a reverence for wine or the view that wine is any more special than most other consumer products. No matter where I shop for my wine, I don't need the person putting the wine on the shelf to have any special love for wine. What I need is for them to put the wines on the shelves that I want and understand why I want them. Beyond that, they need to be able to answer my questions and understand why I ask them. I won't be be clasping my hand in theirs, bowing my head with them, and praising the magnificence of the bottles.

Posted In: Wine Business, Wine Consumers, Wine Marketing Rules, Wine Places

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38 Responses

  1. Tom Riley - April 30, 2012

    I worked the aisles of Costco for several months last year as a rep for the Tudal Wine Group pitching their Cerruti Cellars line. if I wasn’t there, there was often nobody for customers to ask about wine. In addition to pimping my employers bottles, I learned the Costco inventory and did what I could to help shoppers find what they were looking for, even if it meant losing a sale. Some Costco locations have great wine stewards, some have nobody worth their salt. In addition to improving my hand-selling techniques and learning much about customers’ desires, i got three or four funny blog posts out of the experience. A fair trade, I think. But, more importantly, I learned that the industry puts too much emphasis on marketing and not enough on education. Shifting their efforts more towards education, I believe, will help their ledgers and will, in the long run, cost them far less money. Costco moves units of goods. Wine is just another item on their shelves. I learned that first hand. Reverence? Sure, Costco reveres their bottom line. That’s about it.

  2. JasonSWS - April 30, 2012

    We need to calm down here, guys. I have a lot of experience with Costco and their buying teams. Their national and regional buying offices are incredibly sharp and care about their fine wine selection. Many stores have a wine steward dedicated to the success of their fine wines program at the store level, they are very knowledgeable and have tremendous respect for the grape. They are the countries largest wine retailer for a reason. I don’t think a company that hardly cares about wine would go out of their way to stock Gruner Velt, Pra Soave, $500 Sauternes, $1,000 1900 Port, well aged Barolo/Brunello and $500 first growth Bords? One particular store has a very limited production $25,000 bottle of scotch that I would sell my soul for.
    I respect your knowledge and the credibility of this great blog, and I am not offended by the advertisement at the top for cheap gift baskets filled with Ravenswood and stale crackers. It’s just business…
    J

  3. Tom Wark - April 30, 2012

    Tom,
    When you write, “Costco reveres their bottom line. That’s about it”, it sounds like a statement of derision. But I’m not sure I see the problem with a commercial venture taking this attitude. At the very least, it doesn’t seem to have hurt Costco’s efforts too appreciably.

  4. Tom Wark - April 30, 2012

    Jason:
    I doubt the crackers are stale. And the baskets aren’t necessarily cheap. That said, regarding Costco….I tend to agree.

  5. Tina - April 30, 2012

    I have had their Kirkland wine on a few occasions, and it is pretty decent. Costco knows their customer base – the people who shop at Costco always talk about how CHEAP everything is – they don’t go for the customer service or the experience, they go because they can get bulk items dirt cheap. I went with a family member a while back and you could get a trio of wine for $6.99. Pretty cheap! It doesn’t mean the quality is any less, in my book, but always makes me wonder what the price of this discount really is. While we agree with the comment above about wine education, we find most americans are blissfully ignorant when it comes to wine – if the price point is right, and the label pretty enough, the bottle is sold.
    As a former PR person, I can attest to being able to sell a product that I’m not 100% behind. It’s business. So I don’t hold it against costco that they found a buyer who knows more about sales than about wine.

  6. Steve Heimoff - April 30, 2012

    I wouldn’t read too much into Ms. Alvarez-Peters’s remark. As Tina noted, above, she’s a sales person, not a connoisseur. You could make the same complaint against wine distributors (and I’m sure you have!). They don’t care whether they’re selling wine or widgits, as long as they get the commission.

  7. scott - April 30, 2012

    Stop being a pussy. Take care.

  8. John Kelly - April 30, 2012

    Well there IS a difference between wine and toilet paper, regardless of what Ms. Alvarez-Peters says: you can’t wipe with a wine bottle.

  • Mike J - October 28, 2014

    This is the silliest thing I have ever heard. Of course you can wipe with a wine bottle. It may not be practical, and it may in fact be quite messy and unpleasant, but who are you to say I can’t wipe with a wine bottle?!

  • Fredric Koeppel - April 30, 2012

    Wine IS a beverage, and Costco is not a white-glove, carriage trade wine store. It’s a company that knows its customer-base very well. And who says that Alvarez-Peters is not a connoisseur? she may work for Costco but she might have a great cellar at home.

  • Dan H - April 30, 2012

    When I was a mens pants buyer at a department store, we always bought what our customers liked. Every time we experimented and bought something we liked, sales usually tanked. It’s hard telling the customer what you think they should buy.

  • David Topper - April 30, 2012

    Tom – Regardless of your readers viewpoint on the subject of wine, proper reporting would be to say what’s said rather than creating what’s not said.
    The buyer never related to wine as toilet paper but related to wine as a beverage.
    To manufacture news is not what I would expect from a professional and subtracts from the credibility of the “good point” that you could have made with the facts vs drama.

  • El Jefe - April 30, 2012

    I think the fact that Costco has decent wine at an affordable price can help create new regular wine drinkers for us at the higher end to appeal to. And besides, there IS a lot that wine has in common with TP: you want them to be clean, smooth, multi-layered, and not too woody for a truly satisfying experience…

  • Rick Kushman - April 30, 2012

    Not that Mr. Wark needs anyone to defend him, but I hate to see a good, smart, professional blog entry beaten up. His reporting and reading of the conversation are dead on. Here’s a transcript, courtesy of the Wine Biz blog:
    Alvarez-Peters: “Is it more special than clothing, is it more special than televisions? I don’t think so.”
    
CNBC’s Carl Quintanilla: “Certainly it’s different than toilet paper? Or different that tin foil?”
    Alvarez-Peters: “Why?”
    Quintanilla: “Because it’s personal.”
    Alvarez-Peters: “People can look at it that way. But at the end of the day, it’s a beverage.”
    She is precisely saying it’s just a product, like anything else, including TP. Also to be fair to Mr. Wark, he does a pretty good job of not trying to create drama by giving us a larger perspective.

  • Whino - April 30, 2012

    She can’t possibly be a connoisseur of fine wine, have you seen the amount of Caymus Special Selection Costco is carrying now. Anyone who would sell/drink that for that price has no taste.

  • Tom Wark - April 30, 2012

    Rick:
    I appreciate your defense, but David does, as usual, have a point. What I don’t want to be doing is manufacturing news. And I don’t think there is any news here. Rather, I thought Talia’s post at The Eater was interesting enough to warrant a response.
    Talia has what appears to be a greater reverence for wine than does Ms. Alvarez-Peters. And you can make a forceful case for revering wine. However, I don’t think a case can be made for revering toilet paper. But I could be wrong about this too. After all, were I asked to give up wine or toilet paper, I’d let the wine go first every day of the week.

  • Thomas Pellechia - April 30, 2012

    Hmm. The last time I checked with reality, wine was still a commodity like any other commodity. Someone has to make a profit or wine–or any other commodity–would not be on the shelves.
    Having said that, some commodities are worth a hell of a lot more than others, and some give much more pleasure than others. I don’t read any problem inside the wine buyer’s comments, unless you think she is supposed to buy wine that only she likes or that only geeks like, which is a sure way to start losing money.

  • Christian Miller - April 30, 2012

    Setting aside the esthetics of wine entirely, it’s a peculiar comment from a marketing and sales point of view. Wine IS very different from toilet paper. It is an extremely fragmented market requiring many different SKUs, with a wide range of suppliers of various sizes and cost structures, varying segments of consumers who buy and use wine in differing ways, different retail competitors, and highly regulated distribution. None of which is true for toilet paper. In fact, in the realm of consumer package goods that would be retailed at Costco, it’s hard to imagine a more different product from toilet paper. Saying it’s a product like toilet paper is as insightful as saying a unicycle is a vehicle, like a motorboat.

  • Carol - April 30, 2012

    Nice comment, Christian.
    Don’t believe for a second that Alvarez-Peters thinks that TP and wine are the same. She wouldn’t be embarking upon advanced TP studies, touring TP facilities, running 1000s of TP demos, or selling TP futures if she did!

  • Tom Wark - May 1, 2012

    Hi Christian:
    It’s pretty clear that the folks at Costco get the differences between wine and other products. And I know Talia understands that they get the difference. What’s interesting to me is that Talia appeared to be looking for some indication from Ms. Alvarez-Peters that she revers wine in in a more heightened way than she appears to. This is clearly not necessary.

  • Thomas Pellechia - May 1, 2012

    Can’t some of you read or understand?
    Christian, I am surprised at you.
    The only person in the interview to mention toilet paper was the interviewer.
    Alvarez said: “People can look at it that way. But at the end of the day, it’s a beverage.”
    The fact is, Alvarez is a buyer. In that capacity, it doesn’t matter how many vendors there are for any one product. Whether wine or toilet paper, the products on the shelves need to be in perpetual motion; to do that, consideration goes to the majority of customers…don’t tell me hat you don’t know the percentage of “Vinted and bottled by” is sold as opposed to “Estate Bottled.”

  • Peter Price - May 1, 2012

    Having known Annette for two decades I can safely say she has a great palate as well as a sharp business acumen. She was instrumental in getting Costco’s in wine areas to be able to carry local products and not just a one size fits all set. She is a joy to deal with, her regional buyers are sharp as tacks, Costco has some screaming deals on wine and knows what their customers are looking for. As far as toilet paper is concerned it is their number one selling item, gotta keep the lights on.

  • The Original El Jefe - May 1, 2012

    Agreed El Jefe. Any organization that helps further wine culture in the US is on the right track.

  • Christian Miller - May 1, 2012

    Good point Thomas, one always has to read interview snippets carefully, and be mindful of the editing as well. (Are you a lawyer in your spare time?) I’ve been on the wrong side of that one before. However, it does matter a lot how many vendors and SKUs there are within a category. This has implications for everything from in-store shopping behavior to price negotiations to channel distribution strategy. It is also an expression of the industry’s economics and consumer segmentation.
    Carol and El Jefe – thanks for the colorful (gag) imagery.

  • David Vergari - May 1, 2012

    Oh, for cripe’s sakes, relax already! I rather like the fact that Costco is offering a variety of wines at decent prices to its clientele who could just as easily purchase a case of beer or a 1.75l bottle of spirits instead.

  • Ed Masciana - May 1, 2012

    I find this all quite silly. If we were talking about windshield wipers, we wouldn’t be talking at all!!!
    It gets out of hand with some people if we “lower” wine’s status to a beverage, which is really what it is and should be considered so. It has no deific proportions. Only 5% of the wine made in the world is truly great. The rest are beverages but somehow we’re supposed to think otherwise?

  • Angelo Tavernaro - May 1, 2012

    An open letter to Ms Alvarez -Peters,
    It is quite interesting to see all the comments about the interview that was aired on Tv.
    I would like to put my two cents in too. I am a Master Sommelier and I make my living by training people to sell wine in restaurants and wine stores and have had this position for more than 40 years.I do respect Ms Alvarez point to make a bottom line , and it here that i differ in the opinion with her.Having to train wine stewards in all types of restaurants and wines from all over the world,my training has always been to sell more wines in a restaurant or wine store.It is my personal opinion that a trained sommelier or wine person in a Costco store will sell up to 30%more wines than not having one.So if you are looking for a better bottom line and a knowledgeable salesperson I strongly suggest You train or hire a sommelier .Your selection of world wines is excellent and you can find incredible bargains too,I buy my wines there ,because when you figure out the cost per ounce from a bottle it is a great find.For your information I drink wine with my main meal and have done so all my life.So take or leave it ,and I train wine stewards here in Tri-city in Washington.
    Angelo Tavernaro, Master Sommelier and Certified Wine Educator

  • Emilio Saez van Eerd - May 1, 2012

    El Jefe, next time I use TP I will think of the corresponding meaning.

  • Thomas Pellechia - May 1, 2012

    Christian,
    Un avvocato? Io? Non sulla vostra vita!
    Oh sure, it matters how many SKUs, et al, from the standpoint of what the market will bear, but that has no bearing on whether or not wine is a beverage, a high-falutin’ luxury, or a commodity.
    Incidentally, it is all three, and a store the size of Costco seems to do a pretty good job generally at recognizing it. Not that we have one of those places in the great state of New York, where wine is definitely never to be considered a food.

  • Mary-Colleen Tinney - May 1, 2012

    A small bit of research into Annette Alvarez-Peters reveals that she is extremely well educated about wines. She is an MW candidate, a Certified Wine Educator and has a Diploma certificate from the Institute Wine and Spirits Education Trust. That’s a lot of education, study and research for someone who is being portrayed as being dismissive or disinterested in the category.
    I don’t know how anybody can watch the CNBC report and come to the conclusion that this is a woman who doesn’t care about wine, wine education and bringing quality wines to the masses. The rest of the quote is important. “It’s a beverage… You either like it or you don’t.” My take is that she’s not dismissive, she’s inclusive. It seems to me she’s trying to take an incredibly fragmented, complicated segment and make it easy, approachable and fun for the average American Costco buyer. If anything, she should be applauded for her efforts, not criticized.
    And, full disclosure, I have no association with Costco or Ms. Alvarez-Peters, who I met once, briefly, maybe 10 years ago.

  • Donn - May 1, 2012

    You don’t find product specialists in most other departments in the store. You certainly don’t find cotton growers or weaving specialists in the clothing piles. Nor do you find woodworkers in the gummy furniture turnings. You might find someone who knows about diamonds, and a good baker (like my brother), but, as an above writer said, you can boost sales by 30% or more if you have a good skilled salesman in the store. I could show you the numbers from another retail org. if I could legally share them, but can’t. Same principle. Good sales people in wine & spirits drives way higher sales. Look at wine sales in neighborhood liquor stores vs. wine shops. Big diff.

  • Tracy Cervellone CWE - May 2, 2012

    Some good comments, but…Not one person here seems to know her personally. I do. I called on her,for years, and joined her in the MW program. Here’s the condensed version I got into a lot of SN drama with:
    She’s a WSET grad, MW student, and one tough buyer. She’s making business decisions worth a billion dollars in a global wine merchant setting. She saw the CNBC hack coming, with his boffo opening salvo: “20 years ago you were buying Auto parts, correct?” As if somehow that was relevant. What was he doing 20 years ago? A paper route?
    And the Eater.com writer’s handwringing critique…again without any research into her constant quest for wine knowledge. I don’t blame Annette for giving him the tough, but true answer: It IS a beverage, and at Costco especially, has to be sold like one. She’s done more to get the average joe consumer into wine than a thousand self righteous wine snobs. And she sent me a thank you note for fielding an amazing, profanity laced series of “responses” from anonymous “guests” on FB and the Eater site. Frankly, an astonishing look at wine snobbery: no problem with slinging the Fbomb and insults at a total stranger who disagrees with your profound opinions, but God forbid you buy wine at Costco or know what it takes to actually get wine into the market.
    I came away from the process even more convinced: We as wine professionals need to stay off the high horse, we will be bucked off. By a consumer that is sick of being told how, what, with whom and how much they have to pay for a glass of…wine. BTW, I can do without wine, as unpleasant a prospect as that is, but If you decide to go without TP, don’t hand me a glass of anything.

  • Angelica - May 3, 2012

    There is another way to view this interview that no one has yet touched on. The interview was not about Ms. Alvarez-Peters, it was about Costco. Anybody who has ever worked for a corporation knows that when you give an interview you speak for your entire company and not for yourself. And to Costco, yes, wine is another commodity for which it reserves shelf space. As a wine buyer I know that there is a time to wax poetic about the grape and there is a time to speak business and bottom lines. For some of us, it is the success of the bottom line that affords us the ability to enjoy the poetry.

  • alex - May 3, 2012

    I hear you with the cosco thing. I’m a wine making and I have been watching on thursday nights and seen how they are the biggest seller of wine of retail stores. They sell quality wine but cosco making there own wine is a different story. They are brand new with this and don’t have the expericne yet. As anyone knows with wine you don’t have to spend a lot of money to get a good bottle of wine. If anyone one has any other questions come check me out at http://www.winebasic101.com.

  • Dan - May 3, 2012

    I actually think people are misinterpreting what she was saying, because of the way the video was edited. At first I was a little put off by the comment, but when viewed in context, it seems that the question is about the Kirkland brand, and whether people would be willing to buy a Costco brand wine (as compared to Costco brand clothes, tin foil, toilet paper, etc.). So she is saying that if people are willing to trust the Costco house brand on those other items, why not on wine too. No one loves good controversy more than me, but this doesn’t seem like one to me.

  • Wineguy999 - May 4, 2012

    As a wine broker, I once worked for a guy who said to me, “You know what your problem is? You see wine as this mystical, romantic thing.” My reply: “Your problem is that you don’t.”
    The REAL problem is, we were both right. Wine is a very different product, but it is, at the end of the day, a product to market. Most large distributors would rather hire novices with a fresh degree and a modicum of wine savvy rather than a wine geek who would focus on the cool aspects of their book and ignore the cash cows such as Beringer, Gallo, Mondavi, and their ilk.
    I too was appalled at the way Ms Alvarez-Peters shrugged wine off as little more than bags of peanuts, but at her level of buying, it is a necessary evil. I have never tasted with her, so don’t know how she sees it when at the dinner table. Maybe as mystical and romantic!

  • Gregg - May 4, 2012

    I am not offended by her comments because I take it from where it comes. Meaning before wine she was a purchasing agent for electronics. It is all widgets to her, and that is her job. Just because they sell a lot of wine does not make them a quality wine shop. They have no passion for the product. Why should they? Let them sell the mass market brands, because the companies who own them just want boxes moved. Ms. Peters is not a bad person, and she is apparently very good at what she does, let’s all cut her some slack.

  • David Greene - May 7, 2012

    Get a life…wine is not a cure for cancer. It is a commodity! Until we demystify it to the public so that they think of it as a commodity (let’s see, I need toilet paper and wine) we will not have a wine drinking culture.