The Popular Coffee Brand Behind Costco's K-Cups
According to Forbes, private labels are having a moment. With inflation on the fritz, discount grocery chains are leaning into private, in-house labels that they sell at a discount against big brand competitors in their stores. That said, how much do we know about the name brands hiding behind private labels?
Forbes cites Costco's Kirkland Signature brand, valued at $75 billion, as a shiny example of a discount store winning at the private label game. What may surprise most consumers, though, is the brands behind the Kirkland Signature brand. For instance, over a decade has passed since Costco struck a deal with Green Mountain Coffee Roasters to produce its very popular Kirkland Signature brand K-Cups. Green Mountain saw a 9% boost in shares after the deal was inked, according to Today, which also reported Starbucks nipped at the heels of the Keurig coffee giant by developing its own version of the K-Cup.
Ten years into its deal with Green Mountain, Costco continues to deepen that relationship for all its Kirkland Signature brand K-Cup needs. Interestingly, NASDAQ recently reported that although some of Costco's other Kirkland Signature brand manufacturers are kept under wraps, it is widely speculated that the brand behind its Kirkland Signature House Blend Coffee is none other than Starbucks.
What other brands are behind the Kirkland Signature brand at Costco?
Partnering with Starbucks and Green Mountain Coffee for its private-label coffee and K-Cups shows Costco's dedication to offering a quality product at an affordable price and extends beyond its coffee offerings.
According to NASDAQ, the massive bag of Kirkland Signature pet food you purchased is actually manufactured by family-owned Diamond Pet Foods. Do you love Ocean Spray fruit juices? Kirkland Signature Organic Cranberry Juice Cocktail is manufactured by Ocean Spray's parent company. Likewise, the Kirkland Signature suite of baby diapers is manufactured by Kimberly-Clark, Huggies' parent company and Duracell makes the Kirkland Signature Alkaline suite of battery products. Some brands are more overt about marketing partnership labels, like the Kirkland Signature Gourmet Jelly Belly candies. Others have more transparent co-branding deals, as shown by Kirkland Signature aluminum foil featuring a Reynolds Wrap logo upfront.
No matter if parent companies decide to handle manufacturing private labels overtly or if they opt for a more opaque strategy instead, there is money to be made. Harvard Business Review anticipated a shift in mindset around private labels almost 20 years ago, asserting that big brand retailers willing to get behind in-house brands at a slightly lower price would be a strong strategy economically. According to Forbes, branded products gave up 17% of grocery sales to private label products last year. That might hurt a little less when a company's private-label products are manufactured under the same roof.