By Joshua M. Bernstein / Photography by Elizabeth Coetzee

During a recent Costco run, I filled an oversize shopping cart with my family's favorite bulk buys. Pirate's Booty for my daughter. Protein powder for my wife.

For me? I wheeled to the beer aisle and grabbed a 12-pack of Kirkland Signature Helles-Style Lager, a Costco-only release by Deschutes Brewery of Bend, Ore.

The approachable German-style lager debuted in November, and its combo of rich flavor, high refreshment and low cost -- $13.99 for that 12-pack -- quickly earned it a standing spot on my grocery list.

"It's incredible," said Taylor Vavra, a creative producer in Katonah, N.Y., and a fellow fan. He's bought four Kirkland Helles-Style 12-packs and counting, toting them to BBQs and even hitting an out-of-his-way Costco to buy more: "The cost-to-value is insane on this beer."

Costco's wallet-friendly Kirkland Signature wines and spirits are much applauded (and widely bought), but in the past its beers never "quite hit the mark" in balancing cost and quality, said Russ York, the chain's corporate buyer for wine, beer and spirits. A notable misfire: the 48-pack Kirkland Signature Light, discontinued in 2018.

Last year, the retailer revamped its beer program, partnering with Deschutes, an award-winning brewery founded in 1988. "We wanted to show everybody that Kirkland can do beer just as well as wine and spirits," York said. Earning customer trust required a rethink in the Costco-brewery relationship.

The Power of Place

Craft brewing rose in the U.S., in part, by marketing the idea of geography. Sense of place became key to enjoying locally brewed IPAs. "With beer, there's a more personal connection to brands," said Dave Williams, the president of Bump Williams Consulting, a beverage-alcohol consultancy.

Private-label beers typically play down provenance, Williams said, apart from listing the brewery's location on the label. Costco never shared top billing with a brewery until September's limited release of Kirkland Signature Vintage Ale, a barrel-aged imperial stout bearing the Deschutes logo. The Oregon brewery runs a celebrated barrel-aging program, and "we thought that the recognition of where it came from would help validate [the beer]," said Peter Skrbek, CEO of Deschutes. The bet paid off. A new version will be released annually.

The imperial stout's success led Costco and Deschutes to collaborate on the Helles-Style Lager, based on a recipe that won a gold medal at 2023's Great American Beer Festival. Originally called Prinz Crispy, the lager used expensive German malt. From Deschutes' perspective, it would be cost-prohibitive to release at scale.

A Win-Win

The Costco partnership eliminated sales and marketing expenditures for Deschutes. Thanks to Costco's built-in marketing muscle and brand loyalty, the brewery could retain its winning lager recipe. Sold in every state but Texas, the beer instantly became the most widely available in Deschutes's history. "If we tried to tilt this up on our own, it would have taken us 20 years," Skrbek said.

Expect to see more private-label beers at your favorite retailers. The partnerships help breweries that are grappling for growth land shelf placements. Retailers can offer flavorful beers, "providing an affordable option for consumers that may be feeling some economic squeeze," Williams said.

In February, convenience chain Stewart's Shops rolled out its revamped Mountain Brew lager at $2.19 per 19.2-ounce can. And the Aldi beer portfolio saw double-digit growth in revenue and volume last year. "I'm launching six to nine new items every three months," said Arlin Zajmi, Aldi's director of national buying for adult beverages. "That's how much more popular the category has become."

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Prop Styling by Emma Ringness

(END) Dow Jones Newswires

April 16, 2025 19:00 ET (23:00 GMT)

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