Micromagnetic simulations of alnico show substantial deviations from Stoner-Wohlfarth behavior due to the unique size and spatial distribution of the rod-like Fe-Co phase formed during spinodal decomposition in an external magnetic field. The maximum coercivity is limited by single-rod effects, especially deviations from ellipsoidal shape, and by interactions between the rods. Both the exchange interaction between connected rods and magnetostatic interaction between rods are considered, and the results of our calculations show good agreement with recent experiments. Unlike systems dominated by magnetocrystalline anisotropy, coercivity in alnico is highly dependent on size, shape, and geometric distribution of the Fe-Co phase, all factors that can be tuned with appropriate chemistry and thermal-magnetic annealing.