Two-Buck Chuck helps drain wine tanks' overflow

At the rarified United Wine and Grape Symposium, a stable of irreverent, varietal “Napa” wines nicknamed “Two-Buck Chuck” marketed by one of the industry's largest, yet more insolent wineries was the talk of halls and meeting rooms.

That was before noted and respected wine market analyst Jon Fredrikson announced “Two-Buck Chuck's” creator, Bronco Wine Co. of Ceres, Calif., as his choice as winery of the year. The din over the $1.99 wine became even louder after Fredrikson's shocking pronouncement before a crowd of more than 1,000 at the state of the industry session during the 9th annual symposium in Sacramento, Calif.

The ballroom literally erupted in disbelief and contempt at Fredrikson's audacity in naming a San Joaquin Valley winery over such names as Kendall-Jackson; J. Lohr; Mondavi and even Redwood Creek from Gallo.

While the symposium has grown to be the largest wine symposium in the nation, it attracts mostly producers and wineries from the more premium wine producing areas of California's North Coast, Central Coast and Northern Interior areas.

Ceres, Calif., a suburb of Modesto, Calif., is not in any of those areas. However, it is in the heart of the true California wine country, the southern and Central San Joaquin Valley. This area produces more than 50 percent of the state's wine grapes. However, the value of those grapes is only about 15 percent of the state's total wine industry. It's lovingly referred to as “jug wine” country.

Twirling in disbelief

Yet, Two-Buck Chuck, a wine made from San Joaquin grapes but bottled in Napa Valley, has set all the floundering California wine industry twirling in disbelief like a bottle at a spin-the-bottle slumber party. The label also has funneled an enormous supply of grape price-suppressing surplus wine from vineyards and winery tanks to consumers.

Introduced last February, Charles F. Shaw Cabernet Sauvignon, Chardonnay, Merlot and Sauvignon Blanc wines sell for less than $2 per bottle through exclusive retailer, Trader Joe's. It is botique, specialty grocery store with more than 100 locations in California. Trader Joe's has more than 200 stores in the West, but only the California locations are selling the Shaw wines from Bronco for $2 per bottle.

The label took on a cult-like following last fall for no logical reason, and flew out of Trader Joe's by the cases. Although Bronco and Trader Joe's will not confirm sales, more than a million cases were reportedly sold in December alone enroute to what many believe could be an unprecedented three-million case sales level in less time than it takes to uncork a bottle of wine.

“Two-Buck Chuck has become the fastest growing brand in the history of the wine industry,” said Fredrikson. “People are buying it 10 and 12 cases at a time and loading their cars until the springs break.”

Helps with surplus

“From grower's perspective, Two-Buck Chuck has helped clean out the Chardonnay surplus. It has probably cannibalized other brands. However, it has led to incremental increases in wine consumption,” said Fredrikson. “Two-Buck Chuck has people saying they can drink wine every night. It is definitely helping the wine business.”

Three million cases of wine equate to more than seven million gallons of wine or about 44,000 tons of grapes. To give you an idea of the significance of that, that is equivalent to about 10 percent of the entire statewide Cabernet Sauvignon crush for one season. It is like single sale taking 10 percent of a commodity produced in California. It is almost beyond belief.

There are more than 6,000 wine labels sold in the U.S., but fewer than two dozen sold more than two million cases in 2001.

Just like Bronco Wine Co., Charles F. Shaw is real. He is a former investment banker who now lives in Chicago and works for a software company. He is not in the wine business, but he once was.

A Stanford business school graduate who became enamored with Gamay Beaujolais wine while living in Europe, he moved to Napa in 1974 with a dream of producing award-winning Gamay Beaujolais. It did not work, and he tried bottling other wines. However, in 1991 Shaw and his wife divorced and sold out. The Shaw label had a good reputation. It is one of more than 30 Bronco has purchased over the past decade. Many are more prominent than Charles F. Shaw. Forest Glenn, Napa Ridge, Rutherford Vintners, Domaine Napa are a few of Bronco's more recognizable name.

Rapid growth labels

While Fredrikson cited Two-Buck Chuck as the primary reason he selected Bronco, he said many of Bronco's others labels also recorded rapid growth during the past 12 months.

However, it is Charles F. Shaw alias “Two-Buck Chuck” that is making Bronco famous or infamous, depending on your wine tastes.

The wine carries a Napa Valley label because that is where it's bottled in a new Bronco-built bottling plant. The wine is made from grapes from the warm weather central and southern San Joaquin Valley.

Bronco is not only the fifth or eighth largest winery in the state (depending on who you talk to), it is one of the largest vineyard owners as well, reportedly with more than 30,000 acres, again mostly all in the San Joaquin Valley.

Bronco's president Fred Franzia is not saying where Shaw the wine/wine grapes are from. Some in the industry believe they are almost all from Bronco's own vineyards, diverted from what would be bulk domestic or distressed export wine sales. Others say Bronco is also buying surplus bulk wine from other, cash-strapped wineries for $1 per gallon.

Regardless of where it is coming from, people are buying it; drinking it and coming back for more. As one wine expert note, people don't keep buying bad wine at any price.

Bronco is one of only four wineries in California that owns its own distributing company. This allows Bronco to deliver Two-Buck Chuck to Trader Joe's for a reportedly meager $19 per case. The store sells it for about $24 per case. Outside of California, distribution costs run the retail cost to $4 to $5 per bottle at the same grocery chain.

Started in 1973 by brothers Fred and John Franzia and cousin Joe Franzia, Bronco has grown to be one of the highest volume wineries in the state. It has a wine storage capacity of 62 million gallons and can crush up to 60,000 tons per day.

Fred and John's father was a winemaker, and they are nephews of Ernest and Julio Gallo.

Winemaker John Franzia is currently on the board of the Wine Institute. Fred is a former institute chairman.

Fred is the most controversial of the three. In the mid-90s Bronco and Fred Franzia pleaded guilty to fraud charges stemming from mislabeling nearly $5 million worth of wine, falsifying the varietal composition of wines such as White Zinfandel, according to the U.S. Justice Department.

Bronco paid a $2.5 million fine, and Fred Franzia was forced to resign as Bronco president and board member for five years. He was barred from doing business in the wine industry.

After completing terms of the settlement with the federal government, Fred Franzia once again took the reins of Bronco and began buying wine labels, wineries and vineyards, often at distressed sale prices.

Many of the labels were from the North Coast, arguably the most exclusive wine producing region in California.

He also has become one of the most hated men in the priciest country in California, Napa Valley, because he bottles valley wine in Napa and labels it bottled and cellared in Napa. It cannot an official BATF Napa appellation, but the label legally carries a Napa Valley winery address and that irritates the Napa Valley Vintners Association.

The association was successful in getting a California law which would forbid Franzia or anyone else from using the word Napa on wines without a hint of Napa wine.

However, Franzia challenged the law and won when a California appeals court struck down the law.

While the court victory was a huge one, the success of “Two-Buck Chuck” has taken on a life of its own that the audacious Franzia could not have anticipated.

It has become the most successful wine brand ever without promotion. It forced Franzia to bottle round-the-clock to meet demand over the holidays.

Its fame has spread by word of mouth and a few well-publicized rumors like the tale that it beat out a $68 bottle of Chardonnay wine in a blind tasting.

Mystic has surrounded it. It was rumored that it was a premium wine dumped by American Airlines because of a ban on cork screws on airlines. Of course, anyone who has ordered wine on a flight knows most of wine served on airlines is in a screw top, small bottle. The only wine served with corks on airlines is in first class.

And, it was rumored that “Two-Buck Chuck” was a financial bailout of a premium wine from United Airlines trying to avoid bankruptcy.

Neither one of those is true nor is it a fire sale Napa wine from a nasty divorce of Charles Shaw and his wife.

‘Good house wine’

However, no one has called it bad wine. Like any wine, objectivity is in the pallet of the drinker. Most reviews have called it a good house wine. While it is from grapes produced in the warmer San Joaquin Valley, the grapes were grown with more improved viticulture techniques and therefore quality is much better than it would have been a decade ago.

Regardless of how you analyze the “Two-Buck Chuck” craze, it is unquestionably the biggest thing to happen in the wine industry since the California Cooler phenomenon of the 1980s. That crested in '87 when 122 million gallons of the citrus/surplus white wine concoction were sold in the U.S. It evaporated to only slightly more than 18 million gallons by 1995.

The success of coolers helped unburden the wine industry from an oversupply then, and there is hope “Two-Buck Chuck” can do the same thing $2 at a time after time after time after time.

If the Shaw wine dies as did the cooler, everyone in the wine industry hopes it is when the tanks are drained. Then everyone will toast with Bronco and Fred Franzia with a glass of “Two-Buck Chuck.”

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