$2 Buck Chuck, is really about Fred

It’s also about the power of branding and understanding your market. In the late 90’s, Fred Franzia shorted the wine market and in doing so turned on millions of people to wine at $1.99 a bottle. Charles Shaw was a high-end, well regarded winery in the 80’s that got wiped out by a rot. Sometime later Fred bought the name and label (both critical in the image driven wine business) for a mere $27K. Then, taking advantage of the early 90’s wine bubble, he bought as much cheap juice from all over the valley (not just Napa), then struck a deal with Trader Joe’s and an empire was born. I love this insight into the market:

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.

I’m a massive wine person (not a snob, but a devoted amateur), but I’ve never had this wine. This story is so good that I will go buy a bottle today. I don’t know if it was the fact that I live in Seattle and we were late to get the store, but I can’t remember if I heard about this wine or Trader Joe’s first. But to me, this wine is the perfect explanation for the Chuck/Trader Joe’s phenomenon of managed expectations (easier to exceed) based on strategy pricing and quality.

The story behind the brand needs to be a Netflix series or at least HBR case study. In my opinion, the wine industry should be thankful for Fred. While the wine may not be top-tier (subjective), it does an amazing job of being a gateway into the category. My tasting notes to follow. I’m kidding.