Wednesday, June 20, 2012
Is Two-Buck Chuck bad for California wine?
I'm not here to knock Charles Shaw wines. As I say in the column, they're the best wines you can buy for $2. Fred Franzia allows schoolteachers and social workers and other people with low incomes to have a bottle of wine on the dinner table, which is nice.
I admire Franzia's mastery of the supply chain that allows him to deliver competent wines with a $2 retail price and still turn a profit. We're so accustomed to it now that we don't think much about what an achievement it is: thinner glass, cheaper corks, cheaper paper, a single dedicated merchant -- anything to save a nickel.
But last week on my blog I ran excerpts from an industry report that says Australian wine is dead in the US market and blames Yellow Tail -- another wildly successful, competent, cheap wine -- as a major reason.
So I have to wonder: Is Two-Buck Chuck hurting American wine the same way Yellow Tail ultimately hurt other Australian producers?
The market for California wines is still robust. But for a certain segment of the market, there is now no reason to spend more than $2. If you write about wine for any newspaper, people make that comment on almost every story. You see it on Facebook, Twitter, all over the Internet: Why waste $40 on that single-vineyard Pinot Noir when you can have 20 bottles of 2-Buck Chuck?
Whole Foods recently introduced its own $2 wine, and I think it's a major mistake. Whole Foods wants to take customers back from Trader Joe's. But I talked to a distributor last year who said Trader Joe's can barely sell any wine BUT 2-Buck Chuck now; it has cannibalized the market for everything else. Like many retailers, Whole Foods has made surprisingly big profits from private-label wines -- sometimes half the cost of a $10 wine. You have to sell a whole lot of bottles of $2 wine to make that kind of money.
Is that a microcosm for the whole US wine market? Look at the comments on the Palate Press piece: in 10 years Bronco has sold 600 million bottles of Two-Buck Chuck. Whatever good the brand has done in introducing wine to people, it's hard to look at that figure and not think that a few million bottles of other wines would have been sold if Two-Buck Chuck wasn't around.
Is it possible that one day we'll look back on the introduction of 2-Buck Chuck as the beginning of the end for fine winemaking in California?
Read the Palate Press column here.
Posted by W. Blake Gray at 6:00 AM