Costco's new energy drink delights fans, rattles competition

Costco isn’t the sort of business to stay complacent. A big reason members are so willing to pay a fee to walk in the door isn’t just to save money on bulk purchases. It’s also a matter of getting access to quality products.

To that end, Costco’s Kirkland Signature line truly shines.

Though a lot of people associate the Kirkland Signature name with food and beverage items, the label can be found all over Costco, and on a variety of products.

“Quality. Reliability. Focus. Costco has strategically approached Kirkland Signature in a way most other retailers have not (or cannot),” retail expert Michael La Kier told Retail Wire.

Another thing Costco does very well with its Kirkland brand is use it to capitalize on consumer trends. And the company’s latest Kirkland offering does exactly that.

Costco’s new energy drink is a big hit with members

Costco isn’t a company to shy away from new products. In fact, the company’s executive team purposely tries to uphold the treasure hunt-style shopping experience for members by frequently bringing new items into the fold.

In fact, during Costco’s most recent quarter, the company launched about 30 new Kirkland Signature items, as CFO Gary Millerchip confirmed on an earnings call.

Related: Costco brings back a beloved staple item

Meanwhile, Costco’s latest offering is none other than Kirkland Signature Sparkling Energy Drinks.

The new line of beverages comes in a 24-count pack featuring three flavors:

TropicalOrange Peach

Each 24-pack costs $16.99, dropping the price of each individual can to well under $1. 

When you compare that to the popular Celsius brand, which typically prices 12-packs at around $20, Costco’s Kirkland offering looks like a clear winner, Sporked pointed out. This is especially true at a time when so many consumers are feeling squeezed financially and doing what they can to save money.

Of course, Kirkland Signature Sparkling Energy Drinks, like Celsius, aren’t for the faint of heart. Each can contains a whopping 200 milligrams of caffeine. But so far, Costco members seem happy with the store’s latest addition.

As one Reddit user wrote, “70 cents a can is amazing compared to buying Celsius or Red Bull at the gas station.”

“I’ll definitely be buying these as soon as I see them in my area,” another said.

Costco hops on a trend with its new Kirkland Signature Sparkling Energy Drinks.

Shutterstock

Celsius shares tumble on the heels of Costco’s decision

The reason the Kirkland brand is such a threat to competitors is that it’s not just typically much cheaper — it’s also considered high-quality. 

Not shockingly, shares of Celsius stock fell almost 7% yesterday after Costco’s new Kirkland Signature Sparkling Energy Drinks hit the shelves.

Of course, no company wants extra competition. But Celsius execs don’t necessarily need to panic.

“It’s not going to crush the Celsius energy drink empire,” wrote Brian Sozzi, executive editor at Yahoo Finance. “And it borders on silly to have seen Celsius stock drop nearly 7% on Tuesday as pics of these Kirkland drinks flooded X and Instagram feeds.”

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As Sozzi pointed out, you have to be a Costco member to even get access to the new Kirkland drinks. That already limits customer exposure to the product. 

Secondly, Celsius has many options for scaling up. It can introduce new flavors or change its formula to cater to different dietary needs (for example, add a protein-heavy option to its lineup).

Still, it just goes to show the power of Costco’s Kirkland Signature line, and why it’s such a strong contributor to the company’s bottom line.

And as long as the brand maintains its reputation for quality, it has the potential to take sales from competitors, especially when consumers are being financially cautious.

Maurie Backman owns shares of Costco.

Related: Costco makes a key investment to help members

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