How does Costco offer butter so cheap?

The arrival of another butter delivery at Costco this week was described as organised chaos. While other supermarkets sell 500g slabs for up to $10, Costco offers a kilogram at $9.99. This significant price difference has consumers flocking to store, with some traveling long distances to take advantage of the deal.

"I have to say most people were pretty polite about it," said Jody Middleton, who stocks up for her bakery. Butter prices have surged by 65.3% over the past year, according to Stats NZ, making Costco's offer particularly appealing.

Kaleb Halverson, known locally as the "Costco cowboy," makes regular trips from New Plymouth to Auckland to buy and deliver Costco butter at the attractive price. Initially fulfilling just a few orders, his business rapidly grew as demand soared.

Halverson's next trip is planned for May 29, and he admits to spending a full day off securing products for customers in the Taranaki region. To cope with high demand, he has increased his fees to cover van hire and fuel, but still provides an economic option for consumers.

Rob Hamlin from Otago University suggests that Costco obtains its New Zealand butter from Westland Milk Products, possibly as a strategic loss leader to undercut competitors. Retail consultant Chris Wilkinson notes that Costco's global purchasing power and unique product sizing contribute to its pricing strategy, highlighting its need for a pricing advantage to lure customers.

Despite rising butter costs elsewhere, Costco remains a beacon of value, creating fervor among consumers eager to save amidst New Zealand's growing grocery prices.