How Trader Joe's 'Two Buck Chuck' Discount Wine Can Be Cheaper Than Bottled Water

It's not hard to sell a cheap product if your customers don't care too much about quality. JL

Natalie O'Neill reports in The Thrillist:

"It was this blue-collar pride thing. People thought, "This bottle is just as good as one that's $20. Screw those snobs." It's not hard to make cheap wine. You can make anything cheaply by cutting corners. It is the complete industrialization of wine, making it a commodity like grain. A lot of it is automated with little concern for quality. "Charles Shaw wine used to be great -- and nobody drank it. Now, it's terrible and it's selling like gangbusters."

It might sound insane, but there's a decent bottle of wine out there that costs less than some bottles of water.

That's been the gimmick of Charles Shaw, aka "Two Buck Chuck," which hit the shelves at Trader Joe's in January 2002. The wine's $1.99 price tag, simple off-white label, and saccharine flavor, closer to grape juice than wine, sparked a collective freakout among American bargain hunters. It flew in the face of the wine world's snobbery; it was an everyperson's bottle of wine.

For years, there's been more legend than truth in the story of how it remains so inexpensive. Word on the street was that Shaw had slashed the price to spite his ex-wife, who owned half of his Napa Valley winery. Others claimed branches, dead birds, and insects were fermented as filler along with the grapes to keep costs down. Chuck Shaw himself -- who went broke, sold the brand, and disappeared from the limelight decades ago -- never quite set the record straight.

To get to the bottom of it, we tracked down a half-dozen insiders from the early days of the winery, including the reclusive man behind the label, who now lives alone in a Chicago high-rise and says he's poised for a comeback with a new wine brand. The upshot? None of the lore is exactly true -- but the real story is just as juicy.

The man behind the label

Before his name became synonymous with bargain booze, Charles Shaw was an early pioneer of the Napa Valley wine industry and made delicious, award-winning vino.

Chuck Shaw, founder of Charles Shaw: I was going to Stanford in 1971, taking a small-business class. My professor told each student to find a company in the area to work with. I heard about a guy who was making wine out of his garage, so I started working with him and fell in love. I knew I wanted a vineyard. But my wife, Lucy, said, "You don't have any money," so I took a job at a bank. The bank later asked me to go to Paris and my office ended up being right behind [famous wine expert] Steven Spurrier's school. I got hooked. I flew to Napa and bought 20 acres above Lake Hennessey.

Bob Dempel, vineyard manager for a decade: He used Lucy's mother's money to start the winery. She had grown up wealthy; it was her inheritance.

Shaw: I moved my family there to start Charles Shaw winery in 1974. We were part of a pioneering group out there. In 1978, we made our first production of gamay. We were so excited. It was carbonic, it had an amazing garnet color and was really quite striking. I liked to drink it with a Tiffany's all-purpose glass. You could smell it just sitting at the table, and people said it had notes of banana.

"Charles Shaw wine used to be great -- and nobody drank it. Now, it's terrible and it's selling like gangbusters."

Keith Wallace, wine expert and author: The wine he made back then was actually really good. But nobody was buying it because nobody knew much about gamay. The irony is that Charles Shaw wine used to be great -- and nobody drank it. Now, it's terrible and it's selling like gangbusters.

Shaw: By 1983, we were charging $13.50 for a bottle. In 1992, the business had grown to 115 acres. It was some of the best wine in the Napa Valley. We won awards internationally. Pretty soon, we were putting out 15,000 cases a year of multiple types of wine with some 60 employees.

Dempel: Beaujolais nouveau was his pride and joy. Back then, a bottle was more than I could afford. It used to be very high-end. I would be there weekly inspecting the crop and I got to know Chuck and Lucy well. He was athletic and exceptionally good-looking and so was Lucy. Everyone in the Napa Valley knew them. When they walked into a restaurant, people would stare and say, "There go Charles and Lucy Shaw." They were treated like Jackie and JFK. Like a Camelot couple.

Bad breaks and big mistakes

After years of success as a legitimate Napa Valley winery, bad business moves, a baffling streak of bad luck, and an explosive divorce lead to the downfall of the multimillion-dollar brand.

Dempel: They started bleeding money in the early '90s.

Shaw: I made some big mistakes. I released a batch of wine in small wooden barrels, which was a real popular thing to do at the time. This was 1986. The supplier was supposed to use beeswax but instead they used paraffin [a petroleum-based wax] and it tainted the wine. It ruined it -- you could taste it. And it broke my heart. And I had to recall almost all of them. It cost me hundreds of thousands of dollars. I lost 1,400 barrels.

I also entered into a bad agreement with national distributors. I aggressively suggested we increase production quite dramatically on our Burgundy-style wines [in 1987]. It was my own darn fault. They agreed and we doubled them. But people in those days wanted merlot and cabernet. Nobody was thinking about Burgundies. This was long before the movie Sideways. We overproduced and I should have been more careful.

Then, in the late '80s, we got root louse and had to replace an entire 50-acre vineyard. It was completely destroyed. A couple years later, there was a bit of a recession. One thing led to another and I lost everything in 1992. It was a hit of a few million dollars.

Dempel: Lucy was devastated they had lost her mother's money. He started staying in the empty au pair's room. And there was another guy fast on the scene. [Lucy didn't reply to our interview request.]

Shaw: It was tough because I lost my wife and my business at the same time. It was was a very unhappy time for me. It really hurt. It's still hard knowing it was my fault. It was a mess, in terms of the divorce. I didn't fully recover from losing her and the business until six or eight years ago. I just kept thinking, "I wish I'd done this or that." Now, here I am feeling almost 100% and I'm not a kid anymore. I'm 73.

Dempel: There was a little more to the story. Chuck would fly away all the time for fishing trips and leave Lucy and the kids behind. She told me that's what broke them up. On one trip, the whole family came and they got into a big fight. He told her "it's a woman's job" to bring drinks for the kids on the boat. Boy, she didn't like that.

Backsliding into bankruptcy

It was the early '90s and the business was in a free fall. Amidst the turmoil, a familiar wine mogul known for his shrewd, vulture-like business style snaps up the failing label. Shaw doesn't see a penny from the transaction.

Wallace: The winery had to be auctioned off and all of his vines were ripped up. It was sort of poetic.

Tom Eddy, court-appointed trustee of Charles Shaw vineyard: It was tragic. In 1992, they went bankrupt and stopped producing the wine. The creditors were after them. A judge overseeing the bankruptcy case hired me to protect the property. He said, "You make sure the place is locked and nobody breaks in. Keep the wine safe. Oh, and by the way, neither Charles or Lucy can set foot on the property." I said, "That's fine." But I didn't know what I was getting into.

Dempel: Chuck filed for bankruptcy [in 1992]. Workers never got paid -- I never got paid. The last time I saw Chuck, he had stashed the last of his cash under the floor of his car. I bought him breakfast. I thought he was going through a major form of depression.

Eddy: Lucy was a pistol. She was supposed to leave the vineyard in 90 days. But in her mind, it was her place and she wasn't leaving. I had to change the locks. It was ugly and pretty awkward for me. I told her, "I'd like to help you but I can't. You need to start looking for a place that you and your kids can rent. Otherwise, it's gonna be embarrassing if the sheriff has to come out here." Eventually, she figured it out and left.

"I tried to put it all behind me but I never stopped thinking about wine."

Dempel: Years ago, I ran into Lucy. She was working as a salesperson at a bookstore. She looked me square in the face and said, "Bob, all of the money is gone. It was all my mother's money, and now it's gone." I was taken aback. I thought, Here's the Camelot lady and she's selling fucking books.

Shaw: I tried to put it all behind me. I totally changed what I was doing. I went to Chicago and helped start a company called DataBase Network Systems. But that might have been foolish; I never stopped thinking about wine.

Eddy: We were trying to sell the vineyard for $3 million. The judge called and said, "Is there anything else we can sell?" I said, "Well, the trade name." He said, "Let's try to make a deal." I thought that Fred Franzia, who owns Franzia and Bronco wines, would be interested. He would go after anyone who was in trouble, buy up distressed wineries, turn them around, and dump them off to someone else. It was his M.O. Fred Franzia is a controversial and colorful character. That's all I'll say about him. I don't want him to come after me.

So Franzia said, "What do you want for it?" I said, "$35,000." And he said, "Hell no," and hung up. A week later he called back and offered $27,000. I was stunned because, really, I wasn't expecting a nickel. It ended up being a brilliant business move on his part. [Note: Franzia declined an interview request.]

Shaw: I didn't get any of that money. And I haven't seen a penny since. Franzia doesn't care about me and I stay out of his way.

Charles not in charge

Fred Franzia buys up the trademark and slashes the wine's price. The $1.99 tag stirs up a slew of rumors about the wine's quality, some of which aren't terribly off the mark. The brand is sued for the levels of arsenic in the wine.

Eddy: Franzia used the exact same name and the exact same label on the bottle. Even the same original artwork: a picture of a little pagoda that used to sit by [Shaw's] tennis court. He shocked the world by slapping a $1.99 label on it. Everybody in the industry thought it was impossible. He had the testicles that nobody else had, to sell wine at that price. He'd shoot over to Portugal or France and knock on the door of a cork or glass producer and say, "If I write you a check for $2 million, will you fill up this boat with cork? I don't care about quality."

Wallace: A few years ago, a report came out, claiming machine harvesting left branches, bugs, and birds in the grapes in the wine. It's true that there is method of machine harvesting, which I believe [Franzia] uses, and you get some bugs and birds in it. It sounds gross but it's not really a big issue. The FDA has requirements on how much of that is OK. [Note: Franzia has claimed the company uses methods to filter out branches and animal residue.]

Brian Kabateck, lawyer: The company's white zinfandel is one of 83 California wines that tested positive for high levels of inorganic arsenic. Our conclusion is that something is going on inside the winery, not in the field where grapes are grown. More likely than not, they're adding something to the wine. It may be something in the filtering process that they're using -- something akin to cheap diatomaceous earth. Those high arsenic levels have an effect on the reproductive and cardiovascular systems. It has been linked to cancer. Arsenic is basically poison. It's a significant public health risk. [Again, Franzia declined to comment for this story.]

Wallace: It's not actually good. It's so sweet and nasty. It's full of residual sugar, which is bad for consumers. It's not hard to make cheap wine. You can make anything cheaply by cutting corners. It is the complete industrialization of wine, making it a commodity like grain. A lot of it is automated with little concern for quality.

Eddy: The last time I was at Bronco, they were doing 7 million cases. That was 2010. It's still one of Trader Joe's most popular products.

Wallace: Can you imagine how much that would suck? It's your dream. You work hard and make really good wine. Then, all of of a sudden, your name is tainted.

The amazing $2 bottle

In the early aughts, Charles Shaw wine gets its nickname, rising to cult stardom as the accessible and cheap wine option. But as Two Buck Chuck finds its place in the world, the original man behind the label gets left in the dust.

Shaw: I've seen some reports that are very wrong about why it's cheap. Some of them are so wrong, they're funny. No, the wine is not $2 because I wanted to get back at [Lucy]. I don't know the particulars about how it's made. But Franzia deserves the credit.

Wallace: People went apeshit. This was around 2002. Articles were saying this wine is amazing and actually drinkable. It was a fad -- the "Macarena" of wine. I would always hear about it from college students. And it was this blue-collar pride thing. People thought, "This bottle is just as good as one that's $20. Screw those snobs."

Eddy: I've been in the wine business for 42 years and I've never seen anything like it. You'd watch little old ladies with blue hair line up at the shop and say, "I want one case of that and one case of that."

National Director of Public Relations for Trader Joe's: Somewhere along the way, these wines were dubbed "Two Buck Chuck." We wish we could take the credit for that, but alas, some scribe came up with that moniker.

Eddy: As far as I remember, it was a local wine writer who coined the term. Couldn't tell you his name -- but it stuck.

Shaw: I used to worry about having my name on a bargain wine. I went on 20/20 more than a decade ago, complaining about it. I said, "We started out with premium winery. And now look at it." But now I think that was immature of me. You know? I actually like the name Two Buck Chuck. It ties it to me. It's better than the brand disappearing -- or being forgotten.