How Costco Chooses Which New Kirkland Products To Make

Few store brands have achieved the respect and cult status of Costco's, as indicated by Kirkland Signature's staggering annual sales. Starting with just shampoo and multivitamins in 1995, Kirkland is now an $80 billion brand with over 500 products, outpacing traditional consumer brands, like Kellogg's and ConAgra. Much of its success has to do with careful selection. As for how Costco decides which new products to add to its Kirkland lineup, the retail giant is constantly analyzing the economy and looking for new opportunities.

In a 2025 interview with The Wall Street Journal, Costco CEO Ron Vachris explained how it works. It all starts with the company's buyers, the internal product team, keeping close tabs on various commodity inputs (the raw materials used in the merchandise stores carry, like olives for olive oil) in addition to fluctuating industry conditions. If the buying team spots an opportunity for Costco to offer a popular product at a lower price point than national brands, they work to develop their own version. Vachris used coffee as an example. He said if Costco's team notices that the commodity market for coffee (aka, the demand for coffee beans vs. its supply) is declining while national coffee brands are increasing in price, that may be an opening for the Kirkland brand. 

From there, Costco looks for partners to work with the low profit margins of its Kirkland Signature brand. After all, the market analysis is meaningless if you can't line up manufacturers to make them. A big reason Kirkland products are known for their quality is because these manufacturers are often the same ones making well-recognized national brands. For example, the famous brand behind Kirkland Signature cranberry juice is longtime juice giant OceanSpray. However, the key factor that determines if a company can become a Kirkland Signature partner (a manufacturer of Kirkland products) is being able to accept lower profits on individual items in exchange for making its money via high volume, meaning they also have to meet demanding output numbers.

That's how Costco makes money too. For general products, price margins are limited to 14%, while for the Kirkland brand, margins are allowed to be slightly higher at 15%. According to Vachris, this drives Costco's product buying team to focus on finding products that will sell quickly, even in high quantities, rather than relying on high prices.

Even once a supplier is lined up, the new product journey is still far from over. Costco wants its Kirkland merchandise to be distinct from the competition, not a carbon copy, so each proposed product must pass multiple reviews up the management chain before ever reaching shoppers. Naturally, as CEO, Vachris is the last person to sign off, and he will send something back to the drawing board. In his interview, Vachris recalled declining a proposed breakfast sandwich because of close similarities to a national brand. In response, the buyer worked with the partner company to add more protein and upped its quality, nabbing that final approval. Not every product gets its shot at Kirkland Signature glory, though. For example, categories like electric razors and other electronics remain largely untapped. Vachris said this is due to the advanced technology involved not meeting the brand's low price margins.

Nevertheless, Costco CFO Gary Millerchip said in a 2025 earnings call that the Kirkland brand "continues to grow at a faster pace than our business as a whole," and highlighted multiple new products. Customers have taken notice and continue to boost the brand's popularity. Consumer-focused websites routinely feature articles about new and exciting Costco finds. There are also popular YouTubers, like The Grocery Lady and The Deal Guy, who call out new Costco and Kirkland products on an almost-weekly basis. So, it seems plenty of new proposed products are getting approved after all.