N. America

Costco Switches Back to Italian for Private Label

After a one-year test with Greek oils, the world's second largest retailer has returned to Italy for its Kirkland Signature brand, saying it was "what members wanted."
Aug. 23, 2016
Wendy Logan

Recent News

In Costco’s August 2016 newslet­ter, the world’s sec­ond-largest retailer fea­tured a story about its Kirk­land Sig­na­ture brand of extra vir­gin olive oil. The olive oil cat­e­gory has moved front and cen­ter for the company’s food buy­ers in recent years, as inter­na­tional head­lines con­tinue to indi­cate an indus­try fraught with fraud and coun­ter­feit.

Large retail­ers like Costco who buy in bulk and may not have sys­tems in place to weed out phony oils are vul­ner­a­ble to sub­stan­dard prod­ucts. Costco’s Kirk­land, how­ever, con­sis­tently receives high marks in con­trolled taste tests.

The Greek oil did OK, I myself pre­ferred it in a blind tast­ing, but it was not quite as strong a seller.- Chad Sokol, Costco Buyer

As recently as 2013, the United States Food and Drug Admin­is­tra­tion detained, and sub­se­quently refused, a num­ber of ship­ments from a major Ital­ian olive oil pro­ducer, Cer­ti­fied Ori­gins Italia, that was one of the resources employed by Costco for its EVOO imports.

Since then, in an effort to ensure its cus­tomers are get­ting high-qual­ity olive oils, Costco cor­po­rate food buyer Shauna Lopez said in the newslet­ter that the com­pany is crack­ing down and recently took bet­ter mea­sures to ensure that only 100 per­cent authen­tic Ital­ian extra vir­gin oil is sold at the ware­house. Costco is fully aware of this ille­gal sit­u­a­tion and has worked dili­gently to ensure its Kirk­land Sig­na­ture EVOO is authen­tic and trace­able.”

Cit­ing the con­tin­u­ing prob­lem with olive oils being ped­dled by shady pro­duc­ers as extra vir­gin when test­ing has shown many are cut with cheaper stuff like palm oil, Lopez main­tained that the com­pany has estab­lished a strin­gent chain of qual­ity checks and bal­ances designed to deter­mine purity from grow­ers, millers, bot­tlers and importers.

Advertisement

Pre­sent­ing its cur­rent processes as top notch, Lopez said the com­pany now works with the Geneva-based Inter­na­tional Orga­ni­za­tion for Stan­dard­iza­tion (ISO), employ­ing its trace­abil­ity sys­tem to ensure the ori­gin, authen­tic­ity and safety of the Ital­ian oils and to con­firm integrity through the sup­ply chain.

The newslet­ter, how­ever, makes no men­tion of the fact that a lit­tle more than a year ago, Costco switched entirely from Ital­ian to Greek pro­duc­ers for its sig­na­ture EVOO blend.

In March of this year, an On Olive Oil pod­cast fea­tured an inter­view by Olive Oil Times pub­lisher Cur­tis Cord with Chad Sokol, the com­mod­ity and dry gro­cery buyer for the company’s North­ern Cal­i­for­nia and Nevada stores. Sokol noted that the Kirk­land Sig­na­ture brand of EVOO was pur­chased and coor­di­nated through the cor­po­rate office and he echoed Lopez’ state­ments about the impor­tance of the cat­e­gory and the need for qual­ity checks and assur­ances.






We inde­pen­dently test all prod­uct at every level and rely on third party audits for all the Kirk­land Sig­na­ture prod­ucts. We’re very hands-on at Costco. And what the bot­tle says, it bet­ter be that.” He went on to note that the com­pany had expanded the cat­e­gory by sourc­ing from Greece and, in Sokol’s region, from local grow­ers like Cal­i­for­nia Olive Ranch as well.

Reached for com­ment on the Costco newslet­ter story, Sokol con­firmed that in April 2015 Costco cor­po­rate dumped their Ital­ian exporters entirely in favor of resources in Greece, switch­ing back to Ital­ian oil just this month.

The Kirk­land two-litre, Ital­ian EVOO was the main sales dri­ver for the past few years,” said Sokol. But sup­ply prob­lems, likely par­tially due to the Xylella fas­tidiosa blight that rav­aged Ital­ian olive groves and trees by the mil­lions, and ris­ing prices for Ital­ian EVOO, were rea­son enough to try an alter­na­tive prod­uct.

Pric­ing was through the roof, so we decided to make the switch and change to 100 per­cent Greek oil for a year.” The label and cap were changed to dis­tin­guish the new blend, and the com­pany waited to see how con­sumers would respond to it ver­sus the Ital­ian.

Within 14 months, the cus­tomers had spo­ken and, with prices com­ing back down, Costco went back to Ital­ian. It was what mem­bers wanted. They’re used to what they’re used to and there’s a per­cep­tion that Ital­ian EVOO is top-of-the-line. The Greek oil did OK — I myself pre­ferred it in a blind tast­ing — but it was not quite as strong a seller. And pulling our buy out of Italy was sig­nif­i­cant. Their pric­ing came down as a reac­tion, and that was our hope as well.”

Accord­ing to Sokol, Costco’s goals include expand­ing the knowl­edge of its mem­ber base into EVOOs from Greece, Spain, even Tunisia going for­ward. And each region, like his, has the lat­i­tude to test and sell smaller-scale, local brands but, he added, We have to be care­ful with such a big sales dri­ver. You don’t want to mess with it.”

Related News