Bottoms Up for Bargains
Fred Franzia thinks wine costs too much. Make that way too much. "There's not a bottle of wine made worth more than $5. Ten dollars would be a stretch," insists Franzia, 62, the mastermind behind the super-low-priced Charles Shaw label--better known, when it first appeared for $1.99 at Trader Joe's stores three years ago, as "Two-Buck Chuck." There's a reason Napa Valley merlot goes for $40, says the brash Central Valley winemaker: "Everyone's too greedy. We should be trying to make wine accessible to the average person, to give them something they can drink every day."
The self-styled defender of oenological commoners everywhere is none too popular, not surprisingly, with the owners of Napa's tree-lined estates and cozy tasting rooms. For the past five years, he has been in a running legal battle with a group of Napa vintners over whether non-Napa growers can use the Napa label on their wines. But Franzia, the maverick owner of Bronco Wine Co., whose massive production facilities in Ceres, Calif., make it the fourth-largest winery in the United States, has even bigger concerns. Because of wine's expensive reputation, he says, "we've stupidly foreclosed major market share to ourselves." As the business goes global, allowing immensely popular low-cost imports to swallow huge chunks of the market, Franzia is convinced that the $22 billion American wine industry can't afford to imitate Napa's luxury-brand approach--and he is willing to use all of his marketing mojo and the muscle of his 35,000 acres of vineyards in California's Central Valley to prove it.
"Four-Buck Fred." This summer, Franzia put his money where his mouth is, making jaws drop all over the wine community when he started selling bottles of wine made in Napa Valley for $3.99 under a label called Napa Creek. Industry analysts still don't know quite how--or even whether--he's making money: Two-Buck Chuck comes mostly from Central Valley grapes, which cost around a tenth to a fifteenth as much as Napa fruit does. But Franzia says Napa Creek, which quickly earned the nickname "Four-Buck Fred," is made from more than 75 percent Napa grapes--in accordance with a new California law that requires Napa labels to be used only on Napa wines.
Franzia doesn't own vineyards in Napa, and he won't say where he got his juice--but he insists he's making a profit. Most experts think he must have purchased bulk wine from a local vintner in one of the county's less expensive outlying areas. Still, Franzia is claiming victory: In a matter of months, Four-Buck Fred sold through all 250,000 cases in stock--demonstrating, as far as he's concerned, just how out of whack Napa's pricing fundamentals are. "I wouldn't be able to look myself in the mirror if I charged Napa prices," he says. "Consumers are the smartest people in the world, and given legitimate choices, they'll find the right answer."
All the better for him, of course, if low prices send more customers his way. Franzia has been in the wine business all his life, starting Bronco at 30 after his family's decades-old winery was sold to Coca-Cola in 1973. (The well-known boxed wine called Franzia was created after the family sold the name and isn't affiliated with the family or Bronco today.) Two-Buck Chuck was his first big hit: With sales of more than 10 million cases in three years, the brand has been credited with creating a new supervalue wine category. It has even won several blind tastings, including one against a $67 bottle of chardonnay. And Franzia seems perfectly willing to expand his reach from the low end. "Always, someone controls the bottom three floors in pricing," he says. "We want to be the one; then we'll work our way up." Even the biggest names in Napa concede Franzia is a shrewd operator, particularly when it comes to picking up bulk wines at bargain prices: "I don't think there's anyone better in the business at counting money than Fred, except maybe Ernest Gallo," says Michael Mondavi, owner of Folio Wine Co. and cofounder with his father of Robert Mondavi Winery.
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