How Costco tailored Washington liquor to enhance its bottom line

In 2011, Costco spent more than $22 million to change the liquor laws in its home state of Washington by waging the most expensive initiative fight in the state's history. And, in doing so, it made out like a bandit. Costco convinced Washington voters that they would be better off by taking the sale of liquor out of the hands of the state and turning it over to private companies, like . . . Costco. Seven years late, Washington liquor consumers are still paying the price with some of the highest liquor prices in the nation, except for certain brands sold by Costco.

Kirkland Canadian Whisky

What Costco paid was a pittance compared to the profits it has reaped ever since. Meanwhile, consumers pay higher prices and generally get an inferior selection of liquor despite the fact that the availability has increased dramatically.

Washington has long had the nation's highest liquor taxes — about 35% of the total retail price of a bottle. Oregon is a relatively close second, but Idaho's liquor takes are nearly two thirds less than Washington's. Both Oregon and Idaho are controlled states where the state runs the liquor business. Both Oregon and Idaho saw a dramatic impact when the new Washington law took effect in 2012. Oregon's sales boomed 35% at liquor stores along the Washington border vs. 12% overall for the rest of the state.

Suffice to say, Washington liquor prices are a ripoff. If you live close to the Oregon border, you'd be nuts not to buy all your booze in Oregon, where prices can run 30% cheaper on the same item. After privatization, one study showed that taxes in Washington shot up 15.5 percent for 750 ml packages and 4.7 percent for 1.75-liter bottles. 

Meanwhile, Costco is killing it. It's the only place I'll consider buying liquor in Washington. Grocery store prices are beyond absurd. Though Costco does carry some high-end items in 750 ml, it primarily deal is 1.75-liter bottles. Because of its purchasing power, Costco is able to capitalize with very low prices for the booze (before all the taxes). Costco's shelf prices also include the taxes, something grocery stores try to bury in tiny print. Point in case, some of Costco's fully loaded prices are about the same as Oregon despite the sharply lower taxes in Oregon. And I recently found the 1.75-liter white Bacardi Rum cheaper than Oregon in my local Costco.

But, the border wars also continue. A new state-owned liquor store just opened near the Portland Airport in a shopping center that Washington residents just miles away across the Columbia River refer to as the "duty free zone." Oregon BTW, is one of the few states without a sales tax as well — another major point of friction between the two states.

While Costco does fine with name brands, the reason it wanted liquor privatized in Washington had more to do with its private label Kirkland brand. Costco now makes an entire line of Kirkland branded spirits and like all the Kirkland brands, they are excellent quality — and equally great deals. For instance, Costco sells Kirkland vodka in a domestic and French version. Ditto tequila, small batch bourbon, Canadian whisky, London gin, spiced rum and Scotch whisky. Just saw a Kirkland Irish whisky on the shelves the other day.

I'm sipping the Canadian whisky right now. It's priced at $20 before taxes for a 1.75-liter bottle. It's excellent and speculation is that it's made for Costco by Crown Royal. The French vodka is reputed to be made for it by Grey Goose. After taxes, both the French Vodka and the Canadian whisky sell for around $33 for 1.75 liters. All of these spirits don't break the bank, so they defy the rule of thumb about the Washington liquor market, they are excellent buys and they are exclusive to Costco. 

Clearly, Costco didn't become the second largest retailer in the world by standing around. 

Good and bad of booking through Costco Travel

We booked a trip to Maui. The service and ease of booking was excellent. I think a lot of people expect it to be a big bargain, which it is not. Pretty much what I would have paid had I coordinated it myself. But considering it was our first trip there, it saved me a ton of time and had the usual Costco quality.

https://www.marketwatch.com/story/the-good-and-bad-on-booking-a-vacation-through-costco-travel-2018-07-06

Is Food Court about to undergo big changes?

Costco said to be considering big changes in its Food Court offerings. More healthy offerings, cheeseburgers? Bye bye Polish hot dog?

https://www.seattletimes.com/business/retail/costco-changes-up-food-court-menu-but-the-1-50-hot-dog-deal-remains/

Costco adding vegan-friendly item to food courts

Costco rarely changes the items it offers in its in-store food courts, so it’s worth note that Live Kindly is reporting today that Costco is adding açaí bowls beginning in July. The new offering has been tested in select stores in Oregon, California and Hawaii.

‪https://www.livekindly.co/costco-adds-a-vegan-acai-bowl-to-its-food-court-menu‬

We can all afford to shave again

After years of flirting with poking the bear, Costco has finally  decided to punch Gillette in the nose by introducing its own 3-blade razor. Costco joints Harry's, Dollar Shave Club and others who dared to go up against the Proctor & Gamble behemoth. And, they're winning and have Gillette running scared.

Costco is selling a package of 14 cartridge blades and a handle for $20. This compares to Gillette's 3-blade Mach3 package of 14 blades and handle for $30, which is a sale price over its regular price of $35. And, Costco also has the 16-blade pack of Fusion5 blades on sale for $35, a $10 savings. No handle included in this offer. They may have to make those sale prices permanent after the Kirkland shaving entry.

After years of getting beaten up by upstarts like Harry's, Gillette has suffered major share losses. Recently, the Proctor & Gamble unit has been fighting back with "Made in America" TV ads and major price cuts. Gillette also seems to have abandoned its furious rush to constantly add new innovations to its products, all the while, raising prices to astronomical highs. I can remember on a couple of years ago, the 5-blade Fusion5 16-blade pack at Costco was pushing $60. But, compare that to what consumers are paying in drug stores where Gillette just "cut" the price of a 5-blad cartridge from $5 to $3.74. That's still a whopping $60 for 16 blades, compared to $35 at Costco.

Remember, Gillette sold at its all-time high in 2005 when P&G paid $57 billion for the brand. Its market share has declined from 70% to 50% since 2010. One can't help but wonder if consumers haven't been licking their lips at getting revenge on Gillette's outrageous price hikes.

So, it may be that Costco can just smell blood in the water (no pun intended). With Gillette being attacked on all fronts and feeling the pain, maybe Costco just feels it's time to get in on this.

I recently purchased the Kirkland offering. The handle is plain looking, but has a nice heft. it's rubberized, so comfortable to hold and hold onto. Besides, you get a new handle every time you buy new blades, assuming Costco doesn't plan to sell only the blades.

The blades work well. No nicks, no cuts and a very close shave. I only used it once, so no idea how long the blades will last. This has been one of Gillette's selling points — that it's blades last a long time. And, I can attest to that. They also don't have a trimmer blade, same as the Gillette 3-blade cartridge. But, at these prices, that's a minor issue.

Pricewise, the Kirkland blades are pretty much the cheapest. They are priced at about $1.43 per blade vs. Harry's $1.88 per blade. Costco has a long reputation for working with top-line suppliers to produce its Kirkland branded products, so one would expect these blades to be of excellent quality. No clue who actually makes them, but think of somebody like Harry's.

These are well worth a try. For the price, you won't be disappointed.

Update 7/6: I’ve been using this razor a couple of weeks. I continue to be impressed. I get a great, close shave that is comfortable. I have noticed that it’s not as great for several days growth. I usually shave every other day. When I push that to three days, it’s not as effective and requires more passes than normal. Otherwise happy and the price is amazing.