In creating his hot-selling $2 per bottle wine, Fred Franzia uses grapes that other winemakers won't, but comes up with a wine known as "Two Buck Chuck" that consumers say can hold its own on taste.
Five years ago, Franzia's nose for business told him California was growing more wine grapes than people could drink. And he was right. When the grape glut came, Franzia bought up tons of cheap grapes all over California to create his rock-bottom priced wine.
• Not From Napa?
Now, "super value wine" is a whole new industry category, with about a dozen labels selling for $3 or less.
"There are a lot wines that are coming down in price," said the economist Robert Smiley, a professor at the University of California at Davis and a leading consultant to the wine industry. "This is a great time to be a wine drinker."
"Everybody in the industry is talking about Two Buck Chuck," Smiley said. "There are few wineries in the very high end who think they're immune and they probably are if they're selling in three digits, over a hundred dollars a bottle. But virtually everybody else is affected one way or another."
And what has winemakers running scared is that Trader Joe's, which has exclusive rights to carry the label Charles Shaw, can't keep it on the shelf.
"You've got the people who buy one or two bottles," says Trader Joe's wine captain Alan McTaggart. "Then, you get the people who buy a case. Then you get the four or five cases."
Tastes Good, Too
Such sales may not be just a function of price, judging by a blind taste test ABCNEWS ran on 10 students at Manhattan's biggest culinary school, the Art Institute of New York City. The students compared five popular red and white wines — "Two Buck Chuck," Gallo and Sutter Home bottles costing $6 each, a Kendall Jackson bottle at $18, and one Chardonnay valued at $50.
After two hours of tasting, and scoring each wine for color, clarity, bouquet and finish, the results were in. When stacked up against the competition — red or white — "Two Buck Chuck" held its own, even inching ahead of the $50 Chardonnay.
"These wines don't taste bad," admitted Jess Jackson, the founder of the wine label Kendall Jackson, whose wine was part of the ABCNEWS taste test. "They're thinner. They have less character, less focus … and less heart in the bottle."
Ann Noble, a professor at the University of California at Davis, the country's top school for winemaking, said it's all about expectations, and that knowing the price can influence your taste buds.
"It's cheaper wine, that's the expectation for the Charles Shaw," Noble said. "You have an expectation the cheaper wine isn't going to be as good. I tell you it's a cheaper wine, what do you do? You look for flaws. I tell you this is a good wine, you don't look for flaws, you look for good things."