'Value' Wine Holds Its Own in Taste Test

Jan. 10 -- 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.

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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."