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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.

May 03, 2003|Melinda Fulmer | Times Staff Writer

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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