Monday, August 11, 2014

Why are Trader Joe's wines so cheap?

Short answer: For the same reason that everything else at Trader Joe's is cheap. They're industrial agricultural products that are efficiently made and distributed.

The Internet got excited last week with the "news" from the Huffington Post that there are dead birds in Trader Joe's wines. The Huffington Post, which doesn't pay writers for most of its stories, exists mostly to prove that liberals are as gullible as conservatives. It got smacked down for running potentially libelous material and took the story off its site.

(Just to clarify: There are most likely no dead birds in Trader Joe's wine. There are, however, thousands of dead insects. More on that below.)

The question of Why are Trader Joe's wines so cheap? is still out there, so I'm going to answer it.

Wine is an agricultural product, like cheese or muffins. You can buy expensive individually baked muffins from a fancy bakery or you can buy them cheaply by the 12-pack at the supermarket. Wine is the same.

Let me point out that Trader Joe's wine, even Charles Shaw, isn't really that cheap. Charles Shaw sells for $2.50 for a 750 ml bottle. Alcoholic grandmas would never pay that much for wine. You can get a 5-liter box of wine for $10 in most supermarkets; that's $1.50 for 750 ml. In fact, this is more than much of the wine-producing world pays for its cheapest wines, because labor, transportation costs and alcohol taxes are higher in the US than in other places.

The wines at Trader Joe's are made in large quantities by wineries as cheaply as they can. There is nothing bad about this, any more than there is something bad about making muffins by the dozen. They get the cheapest grapes they can, either growing them themselves or buying them on the bulk market. They ferment them in big tanks. It's very hygienic. I've been to a lot of big industrial wineries and they are much cleaner than factories that make other kinds of food.

I wasn't kidding about the insects, though: some of them fall with the grapes into bins when they are harvested and cannot escape before the grapes are crushed. (There's a technical term: MOG, or "material other than grapes.") This shouldn't be surprising, because insects are in all of your supermarket food. Lots of insects.

Wine is less gross because those grapes are blasted with SO2, fermented and turned into alcohol after the insects get in. Any insect residue is a chemical memory, and there aren't any solids because these wines are filtered. This is not the case with insects in peanut butter. But we're talking about wine.

Trader Joe's works with large wine companies like Bronco, which makes Charles Shaw, to make wines specifically for its stores. That's why you won't find most of its wines in other stores. This reduces distribution and marketing costs, which add several dollars to the price of every bottle in most wine shops.

In short, Trader Joe's wines are cheap because they're made and distributed efficiently. Like their other agricultural products.

Are they as good as other wines? That's a subjective question. Is supermarket brand cheddar as good as bandage-wrapped cheddar from organic milk from free range cows? Many people would say either "yes," or "the difference doesn't matter to me."

I have more thoughts on this issue, which is at the heart of basically every argument about wine. You can read them here.

Follow me on Twitter: @wblakegray and like The Gray Report on Facebook.


811bb778-2177-11e4-843e-d350af9c362f said...

Good summation

Isaac James Baker said...

That article was such crap, painful to read. Good takedown, sir.

W. Blake Gray said...

Got this great comment by email, as follows:

Two other huge factors should not be forgotten: cost of land and yield of grapes. Napa vineyard land has been as high as $300,000 per acre over the years, averaging maybe $100,000. The grapes Franzia uses (along with many other low end producers) come from Central Valley vineyards whose price ranges from $10,000 to $20,000 per acre.

Average Napa yields are more in the 4 to 5 tons per acre area while those in the Central Valley are twice that and more.

PS: I worked the harvest in Burgundy in 1971. I innocently asked my older co-worker why we weren't trying to avoid getting the bugs into the wine. He told me they gave the wine more body, this as he flicked his Gauloise' ash into the grape vat.


Patrick W Fegan
Chicago Wine School,

Unknown said...

Why is it so cheap. 15+ ton an acre yields from cheap (though exceedingly hot and fertile) land and whatever manipulations are necessary in the winery to get it palatable and consistent. The critic of Charles Shaw was 90% correct but let his passion get away from him and cross over into hyperbole.

As for birds, I highly doubt any find their way into the crusher. That being said, during my time in Napa working for a small boutique wine that hand-picked into half ton macro-bins, I had more than a few lizards shoot out of the crusher with the stems.

W. Blake Gray said...

Most supermarket food comes from hot, fertile land and has whatever additives are needed to make it shelf-stable.

Andrew Walter said...

I make wine (about 100-130cases per year for a home wine co-op) and I can attest to the bugs -- spiders and ear wigs being the most common insect component. One time, I even had a 10 inch long skink run into the auger during crush. No way I was going to reach my hand in there to get it out so we fermented 1 crushed skink with our 1 ton of syrah (it was a damn fine syrah, for whatever thats worth). I was told that the insects and other animals add protein to the wine which help prevent haze and hold the sulfites into solution but that probably just an "old winemakers" tale. In regards to TJ wines -- most of their house wines are pretty bad but they are cheap enough (typically less than $12.99) that it is worth searching for the diamonds in the rough (a 2009 Spanish grenache and a 2012 Paso Viogner come to my wine as good wines with a great QPR)

Unknown said...

I had an interesting Twitter exchange with Ken Waggoner about that article. He retweeted it, and I think an ad hominem attack like that piece was shouldn't be given additional distribution. It was later pulled by HP, and glad to see you link to the Gothamist piece.

W. Blake Gray said...

The problem is, The Gothamist and The Gray Report most likely won't add up to the same number of readers as the original Huffington Post piece. That's why I used the search-engine-friendly headline.

But you're right, I agree completely, wrong stuff like that shouldn't be retweeted.

Richard Pawlowski said...

'm one if those long-time admirers of Franzia and 2 Buck Chuck to the degree I bought two domains - and about 8 years ago, while considering franchising a bistro with the name 2 Buck Chucks. I planned featuring and serving only 2 Buck Chuck with all meals. To me personally, it was always good stuff and the $30 or $50 a bottle wines weren't actually better. No matter what others say about it, you cannot deny the amount of people who buy it everyday. It's a shame that it got this bad rap. Franzia is probably one of America's wisest marketers.

Bob Henry (Los Angeles wine industry professional) said...


For those who savor Oxacan cuisine, you can willfully get insects in your food.

We call them grasshoppers, they call them chapulines.


As for peanut butter, that protein redefines “extra crunchy.”

One more “knock” against “natural” wines: they aren’t filtered. And neither are the insects filtered out before bottling.

(Take some comfort that the alcohol that eventually kills off the yeast cells will also kill off the insects that fall in – if they don’t drown first.)

Over the years, there has been an informal rule-of-thumb on projecting retail wine pricing.

For example, take the purchase price or production cost of wine grapes per ton (say, $700) and divide by 100.

Arithmetic result: $7.00 projected retail price.

Sure can buy some better grapes at $700 a ton versus $250 a ton.

CPA-turned-Napa winery founder Dennis Groth revealed these numbers in a Los Angeles Times article more than 25 years ago.

~~ Bob

Excerpt from Los Angeles Times “Business” Section
(June 15, 1988, Page C3ff):

“Profit a Key Ingredient of Fine Wines”


By Bruce Keppel
Times Staff Writer

[Certified Public Accountant] Dennis Groth prices his Napa Valley Cabernet Sauvignon to sell for $13 retail. That price, he said, will net his family's young winery here just 34 cents a bottle in profit.

Groth is far from complaining, mind you. After all, he points out, 34 cents represents a 5.2% return on the $6.50 he collects from distributors. "That's about midway among the Fortune 500 companies and a fair return on my investment." . . .

According to Groth, the $13 retail price of his Cabernet Sauvignon provides for a 34-cent profit and 34 cents in federal and state taxes. Payments on the loans taken out to acquire the 165 acres of vineyards take $1.46, and he figures another $1.43 to cover the cost of growing and harvesting the grapes. Producing the wine itself costs $1.19, and marketing it adds $1.74. That, at any rate, is the way Groth allocates the $6.50 wholesale price he receives from his distributor.

The distributor, in turn, will typically take $2.17 for bringing the wine to market, where the wine merchant will add $4.33 to promote and sell the bottles to the public, producing an undiscounted retail price of $13.

"To survive," Groth said, "I have to be successful at that price. Nobody in the Napa Valley will survive on producing the low-end wines. I want to be in the top third of the marketplace." . .

Richard Pawlowski said...

From what I read and understand about wine prices, many growers have a tough time staying in business and often dump their grapes even though they may be high quality. Moreover, in countries such as Australia, Argentina and South Africa, the growers there have to export in a saturated world and this also holds the prices down here. Again, and personally speaking, 2 Buck Chuck started being affectionately called that BY THE PUBLIC - from smart marketing and more efficient processes. I only wished my domain could be used in a new and special way. I've owned it a long time. Any suggestions?

roscooler said...

ssssshhhhhh!! (a 2009 Spanish grenache and a 2012 Paso Viogner come to my wine as good wines with a great QPR) don't tell everybody!