I was recently watching a special on CNBC about Costco. I have no business watching CNBC as my money is not tied to the stock market and the only thing of value that I own is a car, but I’m really interested in business for some reason. CNBC does a great job of finding successful businesses and showing the story of how they became successful. I eat this stuff up as someone who wants to open their own brewpub one day. Usually I like seeing how a unique, but good idea can become a great success story, but still have major hurtles to overcome. Call it the American Spirit, but I dig it.
While watching the Costco special they had a 10-15 minute section about wine sold at Costco. Apparently Costco offers around 200 different types of wine at their stores while local liquor stores generally stock 2-3 times that amount. Wine is a big part of their profit margin and makes up about a tenth of their business. The reasoning behind carrying a smaller selection is to not overwhelm the consumer and help them find a solution quickly. It also helps the consumer discover new brands and styles more easily. It’s an interesting take on business that Costco also applies to all of their departments.
It really made me think about the local beer store that I visit. They have an outstanding selection of beer with 400 or so “normal” beers and a rotating seasonal selection of about 50. Some would call me lucky (and believe me I’m lucky), but when I think about it through the Costco lens it doesn’t make sense. How many IPAs does a beer store need to offer to keep people happy? IPAs are particularly bothersome because with more selection comes an increased chance of beer sitting for longer. IPAs lose a lot if they sit unrefrigerated for too long.
As a craft beer nerd I love going into my store and finding new beers to try, but someone new into craft beer may actually be turned off by the intense selection. Now my store is really good about asking if you need help, but I don’t know if that applies everywhere. Surprisingly the demographics of Costco and craft beer drinkers is interchangeable. So that leads to the question is less selection of craft beer a good or bad thing?
Personally, I want more selection as I love having more choice. I think that most craft beer people would agree with me as well. Would you rather have a smaller selection, say 200 different beers, with the promise that they are fresher and better rotated?