Winning the Wine Lottery

At the 28th Annual International Eastern Wine Competition, judges smelled and tasted well over 2,000 different wines, hoping to determine the best of the bunch. As NPR reported, one of the winners of a top prize — a double gold medal — was a 2002 Charles Shaw Shiraz.

It retailed for $1.99.

If you’re in the United States and near a specialty grocer named Trader Joe’s, you know the product as “Two Buck Chuck,” a reference to its price at the time ($1.99, but it’s gone up a bit since) and its winery (“Chuck” is often a nickname for “Charles”). The product has been a huge winner for Trader Joe’s; in 2012, they sold five million cases of Charles Shaw-branded wines — a bargain price for a product that often easily sells for five times as much. Quality at a low price — for most retailers, that’s the goal, sure, but not one they expect to accomplish with a line of wines. So, how did Trader Joe’s pull it off?

Charles Shaw is produced by the Bronco Wine Company at a winery in Ceres, California. The company’s modus operandi is to find ways to save costs wherever possible and pass on those savings to consumers. According to a KALW (San Francisco Public Radio) report, they use lighter bottles, saving on both materials and importantly, distribution costs (as it takes fewer trucks to transport the product) and lower quality corks. But the real cost savings come from the grapes themselves.

If you somehow visit the winery — they don’t give tours — you’d see huge vats, much larger than most other wineries. Bronco Wine grows grapes wherever it can, so long as they can grow them cheap. The land in California’s Napa Valley — where many of the grapes for high-end wine comes from — is expensive, so while Bronco Wine produces some of its wine there (in those big vats), it grows its grapes elsewhere. Bronco Wine owns a huge amount of land totaling in the tens of thousands of acres in California, but the vast majority of which are a two-hour drive southeast from the hub of the California’s notable wine industry. The net result is a lot of grapes, produced at a price lower than the competition — but with a much lower average quality.

So, Bronco evens it all out. It throws all these grapes together, regardless of origin, and whatever comes out is good enough. Repeat this process for the next batch, and the next, and so on. Each batch of wine is sold under the same brand and vintage and all the others that Charles Shaw makes that year, even though wine from one batch can be dramatically different than wine from another — it really depends a lot on the grapes. When you buy a bottle of Two Buck Chuck, you could be getting just about anything, but odds are, you’ll get some wine which is pretty much average.

However, when you have a lot of variance and a high volume of product — and this is true in almost any context — you end up with some outliers. Some outliers are just terrible, and not worth the $1.99 (but will probably still get you drunk, if that’s your goal). Others are wonderful, and the bottle offered up to the judges of the International Eastern Wine Competition almost certainly came from one of these batches.

For the occasional wine drinker, this was a good-enough gamble; even somewhat below-average wine is fine, especially at the two-dollar price. But for wine connoisseurs, the risk may not be worth it, right? Well, maybe. Many have figured out a trick — go into the store, buy a bottle, and taste it before driving off. (Open container laws may be a bit of a problem, so you may not want try this if your area doesn’t allow for it.) If the bottle is good, go back inside and buy the rest of the case. For $24 plus tax, you get a eleven bottles of wine (twelve minus the opened one) worth much more than that.


Bonus Fact: Want some Trader Joe’s stuff but are outside the U.S.? That’s going to be a problem, as Trader Joe’s is a U.S.-only brand. But if you’re in Canada, you may have a solution. There’s a company named Pirate Joe’s which stocks Trader Joe’s goods. The store’s employees drive over the border, buy product at retail, and legally import the goods for resale into Canada. Trader Joe’s sued Pirate Joe’s in hopes of stopping this, but according to Pirate Joe’s website, lost the suit.

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