Costco and Deschutes Are Calling It Quits — And It's the End of the Best Beer Deal in America
In the annals of unlikely craft beer success stories, few have been as surprising, as celebrated, or as short-lived as the partnership between Costco and Deschutes Brewery. After less than two years, Costco and Deschutes Brewery plan to discontinue their co-branded line of Kirkland Signature beers. It is a breakup that has left beer enthusiasts, industry watchers, and warehouse regulars scratching their heads — especially given the acclaim the beers earned while they lasted. The announcement, delivered not with fanfare but with a quiet memo, marks the end of what many consider the finest value proposition the craft beer industry has ever seen at the retail level.
Deschutes chief executive officer Peter Skrbek announced the change in a notice to distributors sent on July 1. Production is set to be scaled back as soon as this month. The collaboration included Kirkland Signature Helles Lager and Kirkland Signature Vintage Ale, which are expected to be gone from most Costco warehouse shelves by September or October. For anyone who has been stocking up on a case during every warehouse run, the clock is ticking.
A Beer Born From a Competition, Not a Spreadsheet
To understand why this split stings, you have to understand how unusual the whole arrangement was in the first place — and how the beer itself came to exist. This was not a product conceived in a marketing meeting with a brand brief and a target demographic. It started with a medal.
Before Deschutes became the brand behind this popular Kirkland product, the Oregon brewery made a lager named "Prinz Crispy." The recipe was masterminded by brewmaster Robin Johnson, and Deschutes thought so highly of it that it submitted it, along with two others, to the Great American Beer Festival in October 2023. It was never intended for wide-scale production, and was costly to produce, but the small batch turned heads at competition — against 172 others, the Prinz Crispy won gold in the Munich-style Helles category, ranking it among the best beers in the nation.
The initial beer was brewed at Deschutes' 10-barrel brewing system at its Bend brewpub. The goal was a limited-edition beer for competitions, not wide distribution. "There was never an intent of this beer being a commercial beer, in part because, ironically, the cost of making it, because of the raw ingredients, was extremely high," Skrbek said.
That might have been the end of the story — a trophy on a shelf in Bend, Oregon, and nothing more. But Costco had other ideas. Costco had carried Deschutes beer for years. In a meeting between the Deschutes team and Russ York, a Costco buyer, they began to discuss doing something for the Kirkland Signature brand. "I said that we would like to do something that was NOT an IPA," York explained. "I felt our members needed something more sessionable and refreshing. IPAs are everywhere, and everyone has their favorite." Skrbek had just the right beer in mind.
The scale-up required to bring a brewpub competition beer to Costco's national footprint was, by any measure, extraordinary. To brew the rebranded Kirkland Signature Helles-Style Lager, Deschutes moved production of Prinz Crispy from its 10-barrel system to its 150-barrel production brewery. Producing such large quantities of beer itself wasn't difficult, Skrbek said, but sourcing ingredients and handling the distribution logistics at the scale necessary wouldn't have been possible without Costco's help.
The ingredient sourcing challenge alone tells you everything about just how serious — and how seriously good — this beer was. Skrbek couldn't offer any sales numbers, but did say the beer impacted overall U.S. demand for Tettnang hops, which are a key part of its recipe. "We basically consumed the entire domestic Tettnang crop last year, which is an insane thought. And as a result, we have more farmers planting Tettnang," Skrbek said. A warehouse store lager reshaping American hop agriculture is not a sentence anyone expected to write. Yet here we are.
The Price-to-Quality Ratio That Made the Industry Jealous
The co-branded beers became an industry phenomenon for their high quality paired with Costco's low costs — $13.99 for a pack of 12. That's a little over a dollar a can for a beer that had just beaten out dozens of serious competitors at one of the world's most respected brewing competitions. For context, a comparable craft lager at a specialty bottle shop would run you three to four times that price per unit.
"It was the best lager for the price in the country, plain and simple," Chris McClellan, senior sales manager at Lawson's Finest Liquids, told Inc. That's a notable endorsement from someone in the trade — an industry professional publicly acknowledging that a big-box store label beat out the competition on quality per dollar. McClellan's candor reflects a sentiment that spread quietly but quickly through the craft beer world: Costco had somehow pulled off something the beer community had declared nearly impossible.
The sentiment echoed loudly on social media, too. "This is one of the best lagers on the market, especially at the price and I'm going to miss it," one Reddit user wrote after the news broke. Online beer communities, typically a tough crowd, had been unusually enthusiastic about what was, on paper, a private-label warehouse product.
And the accolades kept rolling in even after the beer went to full-scale production. Despite that scale, Skrbek is proud that the quality of the beer did not slip — a view that was validated when the beer took home silver at the World Beer Cup. "The cool thing there is that it is the production beer. It's not a different batch. It's right out of the same batch that went to members and into the warehouses at Costco." That detail matters. Competition entries that diverge from commercial batches are a well-known practice in the brewing industry. Deschutes submitted the same beer sitting on pallets in Costco's back rooms — and it still won.
Awards That Made the Discontinuation Sting Even More
The World Beer Cup, one of the most respected beer competitions in the world, awarded Kirkland Signature Helles Lager a silver medal in 2025 and a bronze medal in 2026. Two consecutive medals at the World Beer Cup, in the Munich-Style Helles category no less — a style where German tradition carries enormous weight and the competition is fierce. Winning once could be dismissed as a fluke. Winning back-to-back signals consistency, and consistency is everything in brewing.
The other product in the lineup, the Kirkland Signature Vintage Ale, was no slouch either. Deschutes signed an agreement in December 2024 with Costco to sell Kirkland Signature Helles-Style Lager beer and Kirkland Signature Vintage Ale, a bourbon barrel-aged imperial stout, at Costco warehouse stores across all 50 states. A bourbon barrel-aged imperial stout under a warehouse label — sold next to bulk toilet paper and rotisserie chickens — was exactly the kind of absurdist premium move that Costco has always done better than anyone expected. Both beers are now headed for the exit.
What the Partnership Meant for Deschutes
The timing of the original deal was not incidental. The Costco-Deschutes deal came on the heels of a difficult year for the brewery: in 2023, it posted an 11-percent slump in year-over-year volume sales. In 2024, the same year it launched the partnership with Costco, the brewery saw a nine-percent jump in volume. That swing — from a double-digit decline to a near-matching recovery — is directly tied to the Costco distribution footprint. The math isn't complicated.
The brewery was ranked as the 10th-largest craft brewery in the U.S. in 2025 by the Brewers Association. It also was within the top 25 vendors in grocery stores, with year-to-date dollar sales rising by 8.3% and volume increasing 9.3% through June 14, according to research firm Circana. Deschutes has always been a serious operation, but the Costco partnership turbocharged its national visibility in a way that its own distribution network could not have achieved in the same timeframe.
As Skrbek told The Wall Street Journal last year, describing the benefit of plugging into the wholesale club's national scale: "If we tried to tilt this up on our own, it would have taken us 20 years." That admission gets at a central truth of modern craft beer distribution: even a brewery with Deschutes' pedigree and size hits geographic and logistical ceilings that a retail giant simply does not. The Costco agreement was essentially a distribution cheat code — one that is now expiring.
Deschutes Brewery was established in 1988 by Gary Fish, who sold 310 barrels of beer in the brewery's first year. The brewer expanded its beers' distribution from Oregon to all 50 states in 2024 and produced more than 225,000 barrels a year. Going from 310 barrels to 225,000 over the course of a few decades is the kind of growth story that takes serious operational investment. The question now is whether the brewery can sustain that momentum without the Kirkland banner.
Whether or not the terminated partnership will cause a loss for the Bend, Ore.-based brewery remains a question, but recent postings point to steady growth. Craft beer competition in Oregon is fierce, as the state is home to 297 craft breweries, according to the Brewers Association. Losing a Costco contract in that environment is not a minor operational footnote. It is a significant piece of revenue and volume that will need to be replaced — whether through Deschutes' flagship brands like Fresh Squeezed IPA and Black Butte Porter, new retail partnerships, or some combination of the two.
A Bumpy History of Kirkland Beer Before Deschutes Came Along
It's worth putting this partnership — and its ending — in the context of Costco's long and uneven history with private-label beer. The Deschutes collaboration was far from Costco's first attempt at the beer aisle, and the road to it was paved with some notable stumbles.
In 2013, Costco offered a variety pack featuring pale ale, IPA, amber ale, and German lager, and subsequently introduced Kirkland Signature Light Beer. The latter was produced by Wisconsin's Regal Brau Brewing Company, a subsidiary of Minhas Craft Brewery. The Kirkland Light experiment became something of a cautionary tale in private-label retail — a product that prioritized price point over everything else and paid for it in reviews. Online beer communities were particularly unsparing, and the beer was pulled from shelves by 2018.
Some of the earlier Kirkland beers were little more than disappointing attempts to capture craft beer's magic that are best left forgotten. Then Deschutes Brewery came along and changed the conversation. The Oregon brewery proved that the warehouse store model and genuine craft quality were not mutually exclusive — that you could source a competition-winning recipe, scale it responsibly, and still sell it for a dollar a can. That lesson stands whether or not the partnership continues.
Costco, for its part, had notoriously struggled to match its fearsome wine and spirits offerings with something in the beer aisle. The Kirkland spirits lineup — its vodka, tequila, and bourbons — had long been the stuff of enthusiast legend. Beer, by contrast, was always the weak link in its private-label alcohol portfolio. The Deschutes partnership finally gave the warehouse giant a genuine answer to that problem. Losing it leaves a gap that will be hard to fill.
No Official Reason, Plenty of Theories
No official reason was given for the end of the two-year partnership. That silence has, predictably, fueled speculation. Beer industry observers have pointed to several possible explanations, none of them mutually exclusive.
Margin pressure is the most commonly cited culprit. Beer's relatively low margins compared to wine and spirits may have ultimately led Costco to conclude it wasn't worth the hassle. Costco's Kirkland spirits dominate their respective categories precisely because the margins on distilled products are significantly more favorable than on beer. For a retailer that runs on razor-thin overall margins and makes its money on membership fees, each product must justify its slot on the floor.
There's also the question of competitive intelligence. Did Costco's leadership clock Walmart's registration of private-label beer brands with the TTB last year and decide maybe it was time to ditch Deschutes and take another run at a pure private-label beer? It's the kind of strategic pivot that large retailers make quietly and explain rarely. The warehouse club world is intensely competitive, and private-label beer is increasingly seen as a battleground worth fighting on — just perhaps with a different partner or a different model.
Whatever the reason, the exit is being handled professionally. Skrbek tells distributors that Costco will continue to purchase the already-brewed beers, according to Brewbound, who reviewed the memo. There are no returned kegs, no pulled inventory, no acrimony — at least not publicly. Costco will sell through what Deschutes has already produced, and the shelves will gradually empty out over the coming months.
Will the Lager Ever Come Back?
The future of Kirkland Signature's beers is uncertain, Skrbek says, though he "wouldn't be too surprised if the lager makes a return at some point." While the private label offers a host of liquors, the two Deschutes-brewed products are the only beers within its portfolio. That hint from the CEO whose product is being discontinued is either genuine optimism or a face-saving exit line — probably a little of both. But it does suggest the door hasn't been bolted shut.
The partnership with Costco began as recently as 2024, but it doesn't seem to be ending on a sour note. Deschutes CEO Peter Skrbek said publicly that he wouldn't rule out the idea of renewing the partnership someday. For shoppers hoping to grab a few more cases before the lights go out, existing supplies are expected to run out as early as September, so stocking up ahead of any Oktoberfest celebrations would be wise.
The broader question of whether another brewery could step in to fill the Kirkland beer slot remains open. While we wait to see whether Zero Gravity and Rhinegeist find similar, sustaining success with their respective tie-ins with Market Basket and Kroger, it will be worth watching to see how Deschutes fares after getting off the Costco gravy train. The Costco-Deschutes model had served as something of a blueprint for other craft breweries looking to scale through retail partnerships. Its conclusion will be studied just as carefully as its launch.
What Shoppers Should Do Right Now
The practical advice is simple: if you've been meaning to try either beer, or if you've been a regular buyer, now is the time to act. Production is set to wind down as soon as this month and the beers are expected to be gone from shelves by early fall. Costco warehouses will not be receiving new inventory once existing stock is gone, and once the pallets are empty, that's it.
The Vintage Ale — the bourbon barrel-aged imperial stout — deserves special attention from anyone who appreciates that style. It was always the more limited offering of the two, and it will likely disappear from shelves before the Helles Lager does. If there's a Costco membership in your wallet, this is the weekend to use it in the beer aisle.
At just $13.99 for a 12-pack, the lager had become one of the best bargains in craft beer, winning over shoppers who might never have picked up a Deschutes six-pack at their local bottle shop. That last point matters more than it might seem. The Kirkland partnership introduced Deschutes to an enormous segment of American consumers who don't frequent specialty beer retailers. Some of those customers will now go looking for the brand on their own — and find a full lineup of beers from one of the best craft breweries in the country.
The Bigger Picture: Private Labels and Craft Beer's Complicated Future
The Costco-Deschutes story is, at its core, about the ongoing tension between the craft beer ethos and the realities of mass retail. Craft brewing built its identity on independence, local identity, and the rejection of big-box homogeneity. Deschutes' willingness to co-brand under Kirkland — and the enthusiasm with which the beer community received the results — suggested that identity was less fragile than its guardians feared.
What made the news of the partnership's launch notable was that these were not just inexpensive store-brand beers. They were genuinely respected craft beers brewed by one of America's most accomplished breweries. The Helles-Style Lager, in particular, proved that great beer and great value could coexist. That proof of concept does not expire with the partnership. The next brewery that signs a similar deal will point to what Deschutes accomplished as validation.
Kirkland Signature Helles Lager was — or at least appeared to be — a win-win for the related parties on either side of the deal, and a third win for other brewers that could reference the success of the brand when drawing up their own semi-white-label blueprints with ready retail partners. The template exists. The question is who picks it up next, and whether Costco's beer aisle — currently about to go dark — finds its next great collaboration before a competitor does.
For now, raise a can of the Kirkland Helles while you still can. It was, by any honest measure, one of the best things to ever come out of a warehouse store — and one of the better lagers brewed anywhere in this country, regardless of the label on the side.
