How Trader Joe’s $2 wine became a best-seller

The tale of one wine brand, two men, and the democratization of a highbrow industry.


September 15, 2018

Walk into almost any Trader Joe’s store and you’ll spot a behemoth display of Charles Shaw wine — or, as it’s more affectionately known, “Two Buck Chuck.”

Priced at a mere $1.99 to $3.79 per bottle, this magical ether is cheaper than most bottled water. It’s been knighted as the “darling of the discount wine world” by critics, and boasts a cult following among price-minded consumers.

For Trader Joe’s, the wine is also a gold mine.

The grocery chain has sold 1B+ bottles of Two Buck Chuck since debuting the beverage in 2002. Today, some locations sell as many as 6k bottles/day — or ~16% of the average store’s daily sales.

How is a supposedly decent wine sold at such a low price point? Where does it come from? And how did it rise to prominence?

This is the tale of one wine brand, two vintners, and the unlikely democratization of a historically snobby industry.

Will the real Charles Shaw please stand up?

Charles Shaw embodied the elite aura of the wine industry.

He obtained degrees from West Point and Stanford Business School. He worked as an investment banker in France and spent his summers wearing polo shirts in Nantucket. He could sniff a glass of Gamay Nouveau and pick out the notes of banana.

After a chance encounter with a famous sommelier in Paris, Shaw fell deeply in love with the craft of winemaking.

In 1974, the worldly young banker quit his lucrative job, bought 20 acres of land in Napa, California, with his wife’s inheritance, and launched Charles F. Shaw Winery.

Shaw’s wines were not for the plebes.

His flagship Beaujolais — which retailed for $13.50 ($57 today) — won international acclaim. “It had an amazing garnet color and was really quite striking,” he later told Thrillist. “I liked to drink it with a Tiffany’s all-purpose glass.”

TOP: Charles Shaw (left) samples a glass of his 1986 Gamay Nouveau (The Tennessean, April 23, 1987); BOTTOM: An advertisement for one of Shaw’s “fine boutique wines” (San Francisco Examiner, 1990)

Charles F. Shaw Winery soon expanded to 115 acres, 60 employees, and 50k cases per year. By 1984, the business was pulling in a respectable $800k in annual sales (~$2.1m today). 

But in the late ’80s, things began to fall apart.

Trouble began when a supplier error tainted 1.4k barrels of wine and a root louse infestation destroyed 50 acres of vines. The couple went through a nasty divorce that took a toll on management. Then, a recession hit. 

By 1992, Shaw was $3m in debt and entrenched in Chapter 11 bankruptcy proceedings.

He stashed what little he had left in his car, took a final glance over Napa’s trellised hills, and left town.

The box wine baron

Fred Franzia did not share Shaw’s air d’élégance.

He was unrefined and heavyset, with a body shape the New Yorker likened to a “gourmet marshmallow.” Reclusive and gruff, he shied away from public appearances. He referred to winemakers as “bozos” and didn’t care for France.

Nonetheless, Franzia came from a long lineage of winemakers: His great-grandfather, Giuseppe, had immigrated to California’s Central Valley in 1893 and set up Franzia Brothers Winery (later sold to Coca-Cola); his uncle, Ernest Gallo, had built the largest wine exporter in California.

In 1973, Franzia launched his own wine company, Bronco Wine Co.

In a rickety wood-paneled trailer held together with duct tape, he set out to produce extremely cheap, high-quality “super-value” wines — wines that rejected the pretentiousness of Napa Valley.

TOP: Fred Franzia (right) breaks ground on Bronco Wine Co. with his brothers (via Bronco); BOTTOM: Franzia takes a stroll through his vineyard in Lodi, Calif (Stephen Osman/Los Angeles Times via Getty Images)

Initially, Bronco operated as a wholesaler, buying bulk wine and selling it to larger wineries at a profit.

But soon, Franzia saw an opportunity to produce his own cheap wines — wines, as he later put it, that “yuppies would feel comfortable drinking.”

Through a legal loophole, he could say his wines were “Cellared and Bottled in Napa” if the brand was founded prior to 1986. So, he developed a strategy of buying out distressed wineries with distinguished-sounding names — Napa Ridge, Napa Creek, Domaine Napa — and using them to sell his stock of less-desirable Central Valley wines.

On a summer day in 1995, a few years after Charles F. Shaw Winery went bust, Franzia purchased the winery’s brand, label, and name for a mere $27k.

“We buy wineries from guys from Stanford who go bankrupt,” he later boasted. “Some real dumb-asses from there.”

Unbeknownst to the real Charles Shaw, Franzia was about to transform the once-fancy wine brand into an impossibly cheap everyman’s juice.

And in the process, he’d change the wine industry forever.

How Franzia ‘shorted’ the wine business

In the late 1990s, California saw a wine bubble. Vineyard acreage grew by 24% and people with no knowledge of cultivation — car mechanics, plumbers, engineers — were putting up vines on spare land.

Though there were rumblings that the industry was overproducing grapes and could face a crash, most dismissed the warning.

Franzia hedged a bet on it.

He quietly constructed a 92k-square-foot bottling plant with high-speed lines that were capable of producing 18m cases per year — 2x the amount of wine in the entire Napa Valley. He also stopped producing wine altogether, and his 452 stainless steel storage tanks sat empty, waiting for the market to go belly up.

A small portion of the vineyards at Bronco’s San Joaquin Valley vineyard in Central California (Bronco)

Franzia’s intuition paid off.

The industry soon faced a massive glut. While vintners suffered surpluses, he bought up as much cheap wine as he could get his hands on.

Wineries were forced to purge massive quantities of their high-quality wine, or risk oversaturating their own market. Franzia was able to suck it up for as little as $0.50/gallon — far below the going rate of $10/gallon just a few years earlier.

Franzia had let the Charles F. Shaw Winery brand sit dormant since purchasing it years before. Now, he was ready to bring it back to life.

Using the exact same name and label (which pictured Shaw’s old tennis court pagoda), Franzia launched a large-scale production effort. His facilities ran 24 hours a day, 7 days per week — and in a short time, he churned out a two-story-tall stack of Charles Shaw cases ready for distribution.

The inglorious rise of Two Buck Chuck

Trader Joe’s already carried several other wine brands operated by Franzia, and they were willing to give Charles Shaw a whirl.

In the spring of 2002, the label made its retail debut at the shockingly low price of $1.99 per bottle. Early on, in an internet chat room, a Trader Joe’s employee dubbed it “Two Buck Chuck” — a moniker that caught the eyes of budget-conscious shoppers.

In the wake of the dot-com bubble, there was a demand for cheap wine. But nobody — not even Franzia — could’ve anticipated the brand’s success.

Buoyed by surprisingly good reviews, Two Buck Chuck was a smash hit.

People would come to Trader Joe’s and fill up their SUVs with dozens of cases; some days, customers would line up outside the stores before they opened and an entire supply would sell out in minutes.

Charles Shaw wines were met with surprisingly good reviews (via assorted newspapers 2003-4)

“People went apeshit,” Keith Wallace, a wine expert, told Thrillist. “It was the ‘Macarena’ of wine… And it was this blue-collar pride thing. People thought, ‘This bottle is just as good as one that’s $20. Screw those snobs.’”

By early 2003, Charles Shaw had already sold 60m bottles. It was, by wine experts’ estimation, the fastest-growing wine in US history.

For a $2 bottle, it performed astonishingly well in competitions: The Chardonnay won a double-gold at the 2007 California State Fair, and Wines & Vines magazine rated it higher than a $67 bottle in a blind tasting.

Two Buck Chuck, declared one New York Times critic, had “revolutionized wine drinking” forever.

Years later, in 2009, when Franzia sold his 400-millionth bottle of Charles Shaw, he had only one thing to say about his success: “Take that and shove it, Napa.”

How to make money on a $2 bottle on wine

Today, it has been estimated that Bronco — a privately-owned company — pulls in as much as $500m per year in revenue from its inexpensive wines, which include Charles Shaw and some150 other labels.

How does Franzia manage to make money on bargain wines?

Industry experts The Hustle spoke to estimate a bottle of Charles Shaw costs ~$1.50 to produce, accounting for processing, packaging, labor, and shipping.

The wine itself only makes up ~30-40% of this cost.

Though the Charles Shaw label claims to be “Cellared and Bottled in Napa,” most of the grapes in the wine are grown in the Central Valley — an area with dramatically cheaper land and operation costs — or bulk-purchased from other growers at a steep discount.

Franzia also has a hand in nearly every part of the supply chain, including:

  • A bottling plant that produces 250 bottles per minute
  • A 62m-gallon storage facility
  • A suite of 700k-gallon tanks (most small wineries have 700-gallon tanks)
  • A distribution network that includes a fleet of steel tanker trucks

Enlisting economies of scale, he pumps out 90m gallons of wine every year.

Franzia’s enormous holdings have allowed him to produce Charles Shaw wines at an extremely low price point (The Hustle)

Franzia also has a reputation for minimizing every cost possible:

  • He uses oak chips to ferment wine rather than barrels
  • He substitutes real corks for composites
  • He uses lighter glass bottles, allowing him to ship more cases per truck (1,440 vs. 1,200) and save on shipping

Franzia has stated that his tactics would make the average farmer “shit in his pants.”

Critics have claimed that these “tactics” include intentionally mislabeling grape varieties and fermenting all kinds of nasty stuff into his wines along with grapes as a result of rapid machine harvesting.

But his robust empire, volume, and ruthless bulk-buying tactics have allowed him to keep prices low for years while turning a profit.

And what of the real Charles Shaw?

Shaw now lives in Chicago and runs a database company. Now 77, he has mostly moved on from wine — though he’s dabbled a bit with a small upstart vineyard in Michigan.

He has never seen a penny from Two Buck Chuck.

“It’s not a Napa wine, and not of the quality of the Charles Shaw brand [that was] estate grown with layers of complexity,” he told the Napa Valley Register, during the height of the Two Buck Chuck boom in 2003.

“To take [my name] and come out and have a lesser wine from another appellation, that isn’t what I started out to do, was it?”

Charles Shaw and Fred Franzia today (The Hustle)

Franzia, on the other hand, continues to rake in big bucks from Shaw’s old label.

On his compound in the sparse agricultural town of Ceres, California, he purportedly works 100-hour weeks. As his friend, Michael Mondavi, once said: “He sleeps, drinks, eats the wine business… He doesn’t worry about yachting or golf. Just business.”

His role in changing the wine industry has earned him near-universal disdain among “true wine people” — mainly vintners who claim he’s “cheapened” the good Napa name.

But this doesn’t seem to bother him much.

“You tell me why someone’s bottle is worth $80 and mine’s worth $2,” he told a reporter in 2009. “Do you get 40 times the pleasure from it?”

NOTE: This story was updated in March of 2021 to reflect recent changes.

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