Two Buck Chuck refers to the $1.99 bottle of Charles Shaw Wine, meant for quick and easy consumption, offering pleasant diversion but not enological epiphanies.

A famous titbit about Two-Buck Chuck is that the chardonnay beat a $45 competitor at a tasting at Wines And Vines magazine. 'That's true,' said managing editor Tina Caputo.

Bottled by Fred Franzia, Bronco Wine, has captured 20% of the California market. Franzia is the World's leading grower of varietal grapes. 
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FOR TWO BUCK CHUCK, IT WAS A GOOD YEAR

Demand for the $1.99 Charles Shaw wine has soared, but some wonder how long the taste for bargains will last.

Los Angeles Times
By Melinda Fulmer, Times Staff Writer
May 3, 2003

Most California winemakers were hoping it was a passing fad, one whose popularity would fade as quickly as the pet rock's.

Their thinking was that either people would get tired of drinking $1.99-a-bottle Charles Shaw wines or manufacturer Bronco Wine Co. would run out of the low-cost grapes used to make it.

One year after it showed up on the shelves at Trader Joe's grocery stores, neither has happened.

In fact, demand for the wine, affectionately known as Two-Buck Chuck, is gushing. More than 2 million cases of Charles Shaw's wines were shipped to Trader Joe's in the first four months of this year — the same number of cases sold in the nine months it was on the market in 2002, according to the Wine Market Report.

In just the first two months of this year, Chuck took a 19% gulp out of total sales by volume of all the wine purchased in California. Consulting firm Gomberg-Fredrikson & Associates said that's the biggest share of the state market any single brand has owned in recent history.

Its success has made other wine retailers nervous. So much so that supermarkets such as Safeway, Vons, Albertsons and Raley's have begun stocking their own $1.99 labels.

Chuck "is really shaking things up," industry consultant John Fredrikson said.

Experts say Charles Shaw is helping to attract new wine drinkers, something the rest of the wine industry has been unable to do in recent decades, and is poaching sales from many makers of more expensive wines.

Based in Ceres, Calif., Bronco Wine — headed by Fred Franzia, one of the world's leading growers of varietal grapes — has taken advantage of the California grape glut. Buying excess grapes from vineyards around the state, it bottles its product at a plant in Napa.

It has sold its four Charles Shaw varietals exclusively at Trader Joe's since April 2002.

What the vintner "has been able to do is start the process of eliminating the grape glut," said Chris Lynch, senior vice president of marketing for Allied Domecq Wines USA, the maker of Callaway Coastal and Clos du Bois.

But now, as prices for some types of wine grapes are rising, he said the question for Bronco Wine is, "Will they be able to sell $3 or $4 Chuck?"

Bronco Wine executives declined to comment.

Many in the industry are optimistic about the prospects for $1.99 brands.

Rich Cartiere, publisher of the Wine Market Report, said the glut of Chardonnay and other white wine grapes was easing. But there still is an oversupply of many types of red wine grapes, giving winemakers plenty of options.

"If they are running out of Merlot, they'll just switch to Syrah," which is in large supply, he said. "They could go another two years on that."

Moreover, he said, if Bronco Wine can't find affordable domestic sources, it could import bulk wine from Chile, Spain or other low-cost producing areas around the world.

But just how long will it be before Californians start to lose their taste for cut-rate vino?

The industry's long-held theory is that over time, novice imbibers develop palates that crave something more complex and, frankly, more expensive.

If that theory is true, Trader Joe's shoppers are taking baby steps to the next level.

A wine that recently started selling faster than Two-Buck Chuck was made by Seven Peaks, a defunct label whose stock Trader Joe's purchased.

And a bottle goes for $2.99.
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MAVERICK FRANZIA THREATENS ELITE NAPA VINTNERS

Los Angeles Times
By Corie Brown
Posted on Wed, Mar. 05, 2003

Just south of the town of Napa sits a simple stucco building with quaint Italian touches -- red tile roofline, distressed oak doors, trellised patios. It appears to be a winery like any other in California's premier wine region.

Napa vintners, however, describe this place as far more threatening than it appears because its owner, Fred Franzia, isn't one of their own. Franzia and his Bronco Wine Co. are Central Valley outsiders who send shivers of anxiety down the spines of many among Napa Valley's elite.

Franzia is one of the wine industry's wealthiest men, building his fortune by pushing the rules to the limit -- and, at times, beyond. ``He sees what he wants and does it,'' says Michael Mondavi, scion of the storied Mondavi clan.

And what Franzia wants these days, his competitors say, is to stake his claim on the Napa Valley name while exploiting the hard times of others to expand his empire.

At his Napa facility, Franzia does not crush grapes or ferment juice. Instead, he has built a high-speed bottling plant licensed to process 18 million cases of wine a year, roughly twice the annual production of the entire Napa Valley. Most of it comes from Bronco's massive plant outside Ceres in the Central Valley. Franzia doesn't own a square foot of Napa vineyard land.

``There is only one reason he built it in Napa,'' says Tom Shelton, chief executive of Joseph Phelps Winery. ``He wanted a Napa address for his labels. Consumers don't want to buy wine'' from the Central Valley.

$2 bottles hit it big

A sudden folk hero to those lining up at Trader Joe's to buy cases of his $1.99 Charles Shaw wine, Franzia is the rare vintner capitalizing on the current glut of grapes, outsmarting and outselling his competitors. Charles Shaw is the fastest-growing brand in the history of American wine, according to the Wine Market Report.

At the Napa facility, Franzia can process Charles Shaw, and any other wine from any other place in California, with labels that proclaim: ``Cellared and bottled in Napa.

''In an industry fueled by elitism, the specter of a mass marketer expanding his empire in wine's high-rent neighborhood makes for sour grapes.

The 59-year-old Franzia, who is from one of California's oldest wine families and is a nephew of Ernest Gallo, doesn't talk about what he's doing. A native of the San Joaquin Valley, he has no connection to the Franzia wine brand. He has never given an in-depth interview and declined to be interviewed for this story, although he did allow a tour of his Napa plant.

Bronco Wine Co. is the fourth-largest U.S. wine company, according to the Wine Institute. It has a 62-million-gallon storage capacity and is estimated to own 35,000 acres of vineyard land. But the Franzia family controls thousands more acres through partnerships and lease arrangements, more than anyone else in the country, according to Franzia's spokesman. Bronco keeps the Franzia family's exact holdings a secret.

``Wine people detest Fred,'' says Richard Peterson, a veteran winemaker who now works for Franzia.It's mostly envy, says Mondavi, one of the rare Napa vintners willing to break ranks and call Franzia a friend. ``Every time the industry has a down cycle, Fred comes out stronger, with more vineyards and less debt,'' he says.

More worrisome to the vintners than his Napa bottling plant are three of the wine brands Franzia now owns, labels bearing Napa appellations: Napa Ridge, Napa Creek and Rutherford Vintners.

Because these labels were in use before July 1986, when federal law dictated that wine brand names not conflict with the regional origin of the wine in the bottle, they are exempt from the law. Franzia can and does use the labels on wine from grapes grown anywhere in California. It's a loophole that no one else in the industry has used, according to the Napa Valley Vintners Association.

The Napa vintners are particularly sensitive to the value of their regional name. ``We've paid dearly for this appellation,'' Phelps' Shelton says, noting that the price of being a vintner in Napa is among the highest in the world.

In 2000, the state Legislature passed a law prohibiting the use of ``Napa'' or Napa regional appellations on wine that wasn't at least 75 percent grown and produced in the Napa Valley. It was an effort by the Napa vintners to prohibit Franzia, or anyone else, from using these grandfathered labels, according to the vintners association.

After two years of wrangling over the constitutionality of the law, an appeals court in December ruled in Franzia's favor. The vintners association has appealed to the California Supreme Court, but in the meantime, Franzia is free to use his labels
pretty much as he wishes....

Two years ago, when people first started to talk about the possibility that California was producing too many wine grapes, Franzia began allowing more of Bronco's land to lie fallow, says winemaker Richard Peterson, who works for Franzia. ``He anticipated the glut.

''Then, with his storage tanks nearly empty, he bought all the cheap grapes on the market to create a higher-quality, rock-bottom-priced wine. ``Charles Shaw was all his idea,'' Peterson says.

Franzia expects to sell as many as 6 million cases of Charles Shaw in 2003, Peterson says, estimating that Franzia makes at least $2 a case on the wine.

Franzia makes wine to sell in grocery stores. More often than not, his wine is shunned by high-toned wine shops. Of his 32 labels, Forest Glen, retailing at $8 to $10 a bottle, is his flagship, as well as one of his more expensive. Last year, he set wine sales records with several of his labels, says industry analyst Jon Fredrikson. Bronco doesn't release sales figures.

The Wine Institute's president, John De Luca, who is trying to mediate between Franzia and the Napa vintners, says, ``Fred sees the industry, and he's been outspoken about it, that we're removing ourselves from consumers. We are out-pricing ourselves, creating nothing more than a high-priced cottage industry.

''Focus on business

When he visits Napa, Franzia usually stays in Mondavi's guest house. But he doesn't socialize with the rest of the valley residents, according to Mondavi.

``Fred has one life -- he sleeps, drinks, eats the wine business,'' says Mondavi, who went to Santa Clara University with Franzia. ``He doesn't worry about yachting or golf, 'cause he doesn't do those things. Just business.'

'Franzia hangs out with bankers. When a grower or vintner gets in trouble, ``Fred is the first person the banks go to. If it fills a niche for him, he'll buy it,'' Mondavi says.

At some point, most of the wine industry has had to come calling on Franzia for help, Phelps' Shelton says. ``A lot of guys in the industry are joined at the hip with Fred. He can supply you with the juice you need when you need it.

''Franzia produces wine for most of the big companies in California -- Robert Mondavi, Beringer Vineyards, E. & J. Gallo and Glen Ellen Winery, among others, Fredrikson says, and he has for decades.
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Winery Count by CountryCountry Count
USA 3322
France 2483
Australia 1889
Italy 771
Austria 629
Germany 578
South Africa 498
Spain 479
New Zealand 413
Canada 200
Switzerland 186
Argentina 111
United Kingdom 90
Chile 87
Slovenia 62
Portugal 58
Israel 36
Uruguay 32
Brazil 29
Greece 24