This Kirkland Signature Hefeweizen is for you!

Already the leading seller of wine in the U.S., Costco (NASDAQ: COST) has applied to sell its own brand of beer. The beer, to be brewed by California crafter Gordon Biersch Brewing Company, will come in pale ale, hefeweizen, amber ale, and lager varieties.

With Trader Joe's-branded varieties of beer and wine already a staple at the parties I attend here in Portland, I wonder if this move will be a major market force in the premium beer market. (Gordon Biersch produces beer for Trader Joe's, already.) All of the big brewers have recently been making forays into premium brews as a reaction to the growing influence of smaller breweries like Sam Adams and Sierra Nevada, as well as the groundswell of regional microbreweries. Craft beer made up 3.6% of the U.S. market in 2006; but had grown by 31.5% over the 2003-2006 period, as opposed to low-single-digit growth in the beer market as a whole.

It is increasingly obvious to a substantial segment of the population that neither Bud nor Miller tastes great. The production of high volume, high quality Costco-branded beer will only magnify that realization and could be a serious challenge to the market dominance the large breweries have enjoyed for several decades. As for Costco? The company's obvious success in wine means it should find an easy time convincing its customers to become regular drinkers of Kirkland Ale and perhaps provide a good avenue for bottom line earnings growth.