Fred Franzia was right all along about the price of wine

Fred Franzia was right all along about the price of wine

January 14, 2008 10:55 AM PST

Study: $90 wine tastes better than the same wine at $10

Posted by Stephen Shankland |

This graph shows the activity in the brain's pleasure center; there's more activity with wine subjects think costs $90 a bottle (top line) than the same wine priced at $10. The arrow shows the moment when the subjects started tasting the wine.

(Credit: CalTech, Stanford)

In a study that could make marketing managers and salespeople rub their hands with glee, scientists have used brain-scanning technology to shed new light on the old adage, "You get what you pay for."

Researchers from the California Institute of Technology and Stanford's business school have directly seen that the sensation of pleasantness that people experience when tasting wine is linked directly to its price. And that's true even when, unbeknownst to the test subjects, it's exactly the same Cabernet Sauvignon with a dramatically different price tag.

Specifically, the researchers found that with the higher priced wines, more blood and oxygen is sent to a part of the brain called the medial orbitofrontal cortex, whose activity reflects pleasure. Brain scanning using a method called functional magnetic resonance imaging (FMRI) showed evidence for the researchers' hypothesis that "changes in the price of a product can influence neural computations associated with experienced pleasantness," they said.

The study, by Hilke Plassmann, John O'Doherty, Baba Shiv, and Antonio Rangel, was published this week in the Proceedings of the National Academy of Sciences.

This chart shows that people ranked taste of a $45 wine higher than the same wine priced at $5, and the same for a different wine marked $90 and $10.

(Credit: CalTech, Stanford)

The research, along with other studies the authors allude to, are putting a serious dent in economists' notions that experienced pleasantness of a product is based on its intrinsic qualities.

"Contrary to the basic assumptions of economics, several studies have provided behavioral evidence that marketing actions can successfully affect experienced pleasantness by manipulating nonintrinsic attributes of goods. For example, knowledge of a beer's ingredients and brand can affect reported taste quality, and the reported enjoyment of a film is influenced by expectations about its quality," the researchers said. "Even more intriguingly, changing the price at which an energy drink is purchased can influence the ability to solve puzzles."

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Charles Shaw wines, known to Trader Joe's patrons as "Two Buck Chuck," is celebrating five years of wine for the masses

Charles Shaw wines, known to Trader Joe's patrons as "Two Buck Chuck," is celebrating five years of wine for the masses. Three hundred million bottles ago, Fred Franzia set out to make a statement (and more than a couple bucks) that good wine doesn't need to be expensive. Along the way he built a company that owns an estimated 40,000 acres of land, crushing and bottling plants and its own distribution company. Next he's adding a glass plant to make the wine bottles. Surprisingly, all that wine is sold only through Trader Joe's.

Two Buck Chuck fuels urban legends...

Two Buck Chuck fuels urban legends...
Since its debut in 2003, the insanely inexpensive Charles Shaw wine, better known as Two Buck Chuck, has fueled urban legends.

The fables persist because no one can image how a bottle of wine could cost $2 or $3.Charles Shaw's bitter divorce, one story holds, ordered him to split winery profits with his ex. He responded by selling the wine at a loss, denying his wife a penny. Another tale holds that bankrupt airlines sold warehouses of wine at a discount to pay the bills.The truth is less dramatic.The man behind Two Buck Chuck is Fred Franzia. A nephew of Ernest Gallo and lifelong friend of the Mondavi family, he is perhaps among the most coarse and colorful people in the wine industry. He sells Charles Shaw so cheaply because he has taken advantage of the grape and wine glut. He started out purchasing grapes, juice and wine from desperate and anonymous growers and wineries. He still does that, but also owns about 80 square miles of vineyards.I give part of the credit for the increasing quality of under-$10 wines, and the growing levels of wine consumption to Charles Shaw and Fred Franzia.We love Fred!

Everywine: The miracle of "Two Buck Chuck"?

BY ARTURO CIOMPI

Charles Shaw Winery is the Everyman of the wine universe, that ordinary individual whom the public roots for in the face of extraordinary circumstances. History was made this year on July 12, when the 2005 Charles Shaw Chardonnay was named "Best California Chardonnay" at the California State Fair Commercial Wine Competition.

In the words of chief judge G.M. Pucilowski, "Since we judge all wines totally by variety without different brackets for price, this ... achievement by the Bronco winemakers is astounding."

Nothing short of astounding to those of us who have sampled this wine and those of us who are not terribly big fans of the Bronco Winery, the makers of Charles Shaw. It's not because Bronco owns vineyard land in the steamy, bulk-wine area called Central Valley (even more than Gallo). No, it's because owner Fred Franzia has been involved in two high-profile lawsuits over the last 15 years that should make any wine consumer cringe. In 1993, Bronco was convicted of misrepresenting Central Valley grapes as premium cabernet and zinfandel. More recently, Franzia was promoting numerous brands (Napa Cellars the most prominent among them) that misled consumers into thinking that these wines contained Napa fruit. Again, Bronco lost another high-visibility, low-scruple brand of lawsuit. These practices tarnished the Bronco image and resonated poorly with people who love good, honest wine.

On the other hand, Bronco has caused a positive sensation with a wine called Charles Shaw. Those old enough remember that Charles Shaw was an industrious California winery owner who, plagued by personal issues, sold his vineyard holdings to Charles Krug Winery and his brand name to Bronco in 1991. Bronco brought his name back to life in 2002, producing generic wines with a recognizable name gracing the label. The low-priced Charles Shaw line became an exclusive product of the Trader Joe's stores on the West Coast, and the pricing was a lure to budget-conscious consumers. "Two Buck Chuck," as it's known, was born, and Bronco succeeded in a way that could hardly have been imagined. The public was thirsting for everyday wines, just like the ones they had drunk out of carafes when they visited Europe. "Wine is cheaper than Coca-Cola!" travelers told their incredulous friends. And it was. But where was America's equivalent? Even if not cheaper than Coke in the United States, Two Buck Chuck was still the cheapest thing going in a 750-milliliter bottle. (Another brainstorm of Bronco was to never sell Two Buck Chuck in jug bottles, allowing the public to retain the mystique of a fancy wine in a fancy bottle.)

Bronco constantly reinforces its inventory with grapes grown throughout California. The grape gluts of recent years, combined with tons of grapes that do not meet the standards of their home wineries, leave tons of juice out there for the highest bidder. Oftentimes, Bronco is the one that will take it all, not trying to cherry pick what's available. People turn to Bronco for quick help, and these relatively premium grapes enhance Bronco's quality, even if only in a totally haphazard way. You never know quite what you'll get in a Charles Shaw bottling. A bottle of Two Buck Chuck is a crapshoot, but it may contain some gems.

Word has already spread that the wines Bronco submitted for the State Fair competition were not the everyday wine found in Trader Joe's stores across the nation. I tend to come down on the side of Fred Franzia and believe these were undoctored, genuine Charles Shaw bottlings. But my curiosity got the best of me. So, I decided to buy two bottles of the wine that in North Carolina actually sells for $2.99, and blind taste it in two flights of 10 chardonnays each. (I found the same vintage, 2005, as those that had recently done so well.) How would it do for me surrounded by a wide selection of other California bottlings, all in varied price ranges? Also, how would it do twice against similar but completely different competitors? The wines were poured for me blindly and I had no glimpse of the bottles until both flights were over. This allowed me to not know how Charles Shaw had fared or tasted in the first go 'round. I had no way to try and identify its characteristics in the second flight.

One hardship I realized only after I began was the "finders keepers" syndrome—a quest to try and figure out which was the $3 wine. The judges at the California State Fair had no such baggage. I tried to be totally objective, but that "this tastes like a manipulated, try to please everybody style of wine" was always lurking in the back of my head. I simply persevered.

I never saw any of the judges' comments on the Charles Shaw California victory. This, I think, might have been very interesting information for consumers. As for myself, it left me with a clean slate. I hadn't tasted this wine for three years and so, I think, my opinions were without tribulation.

The results?

CIOMPI'S GRADES

91-100: Wine that seems to give all it is capable of, offering terrific complexities and memorable attributes. Wines at 95 points or greater are extraordinary and worthy of a special search.

83-90: Good to extremely good, with genuine flavor interest and highlights constituting a fine wine.

77-82: Average to quite decent. No true defects, but minor problems hinder charm or excitement. The wine is recommended.

70-76: Irritating flaws and weakness take away pleasure. The wine is drinkable.

69 and under: Undrinkable. Aberrant bouquet and flavor. A turnoff and a failure.

Round 1: Worst to best

2004 Falcor, Durell Vineyard, Sonoma $42

Toasty oak dominates a lavish fruit profile. Hot and alcoholic in the mouth. Bitter finish. More reminiscent of Scotch than wine. 78 points

2005 Pietra Santa, Central Coast $15

A bit dishwater-like with oak smothering the fruit. (Dishwater is a characteristic I often find in California chardonnays; an all too common, unpleasant component. Tart on the palate and not very pleasant.) Well made, but has "issues." 82

2005 Charles Shaw, California $2.99

Butterscotch atop appley, ripe fruit. Warm, fuzzy mouth feel followed by brisk aftertaste. Easy to drink with a taste of residual sugar. 84

2005 Guenoc, Lake County $12

Direct ripe fruit followed by light oak and a touch of dishwatery smell. Short flavors—clean but heady. A bit of alcoholic heat in the mouth. 84

2004 Frank Family, Napa Valley $55

Clean bouquet with biscuit yeast and ripe fruit. Nutty with lemony overtones as it airs. Tangy and crisp in the mouth with a slightly raspy finish. Needs food and may improve. 86

2005 MacRostie, Carneros $22

Very crisp, fruit-effusive nose. Nutty background with a candied apple component. Pleasingly clean fruit with vibrant, long finish. 87

2005 Wild Horse, Central Coast $17

On-the-clothesline freshness. Calm and easy bouquet. Even tempered, smooth mouth texture with seriously styled, long smoky finish. 87

2005 Mirassou, Monterey County $11

Lithe, pleasant fruit. Inviting appley-pear suggestions. Attractive, balanced and edgeless. Citrus-like tang yet low acid finish. Tries very hard to please—and does! 87 BEST BUY

2005 Sequoia Grove, Carneros $20

Spanking clean scents with discreet wood backdrop. Outgoing ripeness with well integrated soft impressions. Mouth cleansingly bright and sassy. 89

2004 William Hill Estate, Napa Valley $27

Deep, intense, exciting with dark fruit extract. Thrillingly balanced fruit and oak. Mouth filling, generous and substantial. Sophisticated Burgundian flavors and lip smacking length. 91

Round 2: Worst to best

The 2004 Chateau Souverain was spoiled by cork failure. A pity.

2005 Clos Du Val, Cuvee BCC $22

Straight up lemon grassiness inside an oaky, brackish water bouquet. Harsh flavors that are persistent and unpleasurable. 72

2005 Charles Shaw, California $2.99

Green and underripe. Says practically nothing. Smooth on the palate. Quaffable and a bit sweet. Boring and cloying. 79

2005 Merryvale, Starmont, Napa Valley $20

Apple, toffee and butterscotch balanced in an extroverted style. Unexpectedly rough and puckery mouthfeel. Not terribly pleasant. Disappointing finish. 83

2005 Clos du Bois, North Coast $14

Focused nose of plush fruit but dishwatery oak distracts. Tangy, peppery and alive flavors. Undistinguished yet good. 85

2005 Bonterra, Mendocino $12

Tangerine, rosebud and citrus overtones; mellow creaminess and good oak underpinning. Brisk flavors just beginning to open. Should improve. 87/88 EXCELLENT BUY

2005 Sbragia, Home Ranch, Dry Creek $25

Caramel- and toffee-laden fruit. Penetrating and lavish. Well endowed, lengthy flavors with just enough acidity. Alcoholic heat on the finish. A paean to lush, exotic California styling (15.9 percent alcohol!). 88

2006 Chateau St. Jean, Sonoma $14

Understated apricot and spicy oak backdrop. Effusive core of fruit. Invitingly live, richly textured flavors perfectly balanced. 89 GOOD BUY

2005 Wattle Creek, Mendocino $26

A gush of fresh fruit. Gobs of spiced apple fly out. Warm, embraceable, marshmellowy texture. Clean, steely flavors with soul satisfying finish. Will improve. 89/90

2004 Baileyana, Firepeak Vineyard, Edna Valley $30

Sunny, fresh and fruit forward. Apples galore! Rich flavors, perfect acids and long clean flavor. 91

What I learned

The Charles Shaw bottles were unacceptably inconsistent. One was reasonably enjoyable, the other barely drinkable. I tasted residual sugar in both examples—the only wines in which this was obvious to me. I simply cannot imagine wines like these two scoring well in—let alone winning—any competition.

I have to recommend that consumers find a different inexpensive pour. Cheaper wines come out of the woodwork every day to compete with the Two Buck Chuck phenomenon. These two bottles sat side by side in a huge floor display as I entered Trader Joe's. They were probably from the same case, yet didn't really resemble each other at all. Yes, at $3, this is a national phenomenon. But would you really serve your friends an apple pie knowing in advance that it might very well be lousy?

Trader Joe's (www.traderjoes.com) is open in Cary (1393 Kildaire Farm Road, 465-5984) and a second Triangle store is scheduled to open in Chapel Hill late this fall at Eastgate Shopping Center.

Arturo's column regularly appears on the second Wednesday of each month. Send comments, suggestions, accolades and complaints to deal5@earthlink.net.

Fast Times with Fred Franzia

Fred Franzia, wine impresario, and the separated at birth twin look alike to Lou Perlman, the impresario of boy bands N’Sync and Backstreet Boys, has a lot in common with Mr. Damone. He’s a veritable quote machine with, assumingly, a Five Point Plan to Score with Wine Consumers (while alienating the rest of the industry).

Among recent gems, Franzia is quoted as saying,

Who gives you the best advice about your business?

Mymirror.

Onhis release of a $4 wine from Napa Valley :

"We challenge anyone to have a blind tastingand see where our wines come out. We think we can run with the top dogs at$100-plus. There’s no wine worth more than 10 bucks a bottle." - FredFranzia, Bronco Wine Co.

Referring toretailers who charge too much for wine:

"greedy bastards,"

Alder at Vinography has a nice summary and a couple of recent article links. You can find Alder’s post here.

And, just in case the future of wine, or at least Fred Franzia’s wine empire, had you concerned about your ability to find a value wine in the future, rest assured that he and the other two Franzia’s involved in the business have 13 kids--nine of whom are involved in the business, as well.

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Fred Franzia still true to his commitment to make affordable wine for all

By MICHELLE LOCKE

The Associated Press
NAPA - Round and round they go, hundreds of bottles of Two Buck Chuck rattling and clinking their way toward a big machine that deftly fills, corks and seals each one in a rhythmic dance of metal and glass.

It's been five years since the first of these amazingly cheap wines started rolling off the line, released by maverick vintner Fred Franzia under the Charles Shaw label.

Some 300 million bottles later, Two Buck Chuck is still selling, and Franzia is still preaching his message of wine for the masses.

"We're not out to gouge people," says Franzia. "What I would like to see is every consumer be able to afford to have wine on the table every day and not feel insecure about it."

Last year, Two Buck Chuck -- available only in the Trader Joe's grocery chain and priced at $1.99 in California, hence its nickname -- accounted for at least 8 percent of California wine sold in-state, said Jon Fredrikson, who tracks wine shipments through his Woodland-based company, Fredrikson, Gomberg & Associates. National market share figures are not available.

The result -- along with the cute "critter" labels and more user-friendly packaging such as boxes and screw caps -- has helped knock a little of the starch out of the industry, the wine-industry consultant said.

"I think it shook up the business in several ways, but certainly it created this interest among consumers to seek out wine values," Fredrikson said. "It certainly plants a seed in everyone's mind about what you get for the money."

Michael Mondavi, founder of Folio Fine Wine Partners, a Napa Valley-based importer and producer of high-end wines, takes the glass-half-full approach to the Franzia effect.

"I think Two Buck Chuck has helped to make people aware that wine is not just for special occasions," says Mondavi, son of California wine country pioneer Robert Mondavi and a longtime friend of Franzia's. "I also believe that the vast majority of the people who originally start buying Two Buck Chuck within a period of a year trade up to better wines and enjoy better wines on a more regular basis."

Deep Roots in Napa
Franzia's roots in the winery business go deep. His grandfather, Giuseppe Franzia, immigrated from Italy to America in 1893, buying land in California in 1912 and beginning wine production three years later.

In 1933, the family started Franzia Brothers Winery, producing 100,000 gallons of table wine that year. After that winery was sold in 1973, Franzia started Bronco with his brother Joseph and cousin John. (The family has no connection with the boxed wine sold today under the Franzia name.)

He has crossed legal swords with the wine establishment more than once.
More than a decade ago, he and the company were fined after he pleaded no-contest to charges of mislabeling some grapes as a more expensive variety.

More recently, he was engaged in a pitched court battle with Napa vintners who argued that it was illegal for Bronco to sell wines that had "Napa" in their name but were made with grapes grown elsewhere.

Franzia lost that fight, but he soon had Napa buzzing again when he rereleased one of the disputed brands, Napa Creek -- this time made with Napa grapes -- and priced it at $3.99.
Making wine is expensive from the ground up, but Franzia owns a lot of ground -- 40,000 acres is the common estimate. He won't say. His Ceres-based Bronco Wine Co. also owns the crushing and bottling plants and has its own distribution company.

Until now, another company has supplied the bottles, but Franzia's latest idea is to fix that by building a glass-container plant near his Napa Valley bottling facility in a business park near the Napa County Airport.

Still in the preliminary planning stages, Franzia says the plant would reduce greenhouse gases by cutting down on delivery driving hours as well as using environmentally friendly technology to cut down on plant emissions.

This spring, he introduced plans for the glass plant by hosting an elegant lunch in Napa -- the whitest tablecloths, the finest food, all washed down with your choice of Two Buck Chuck.

Vintners Love to Hate Him
Industry veteran Richard Peterson, who worked for decades for E. & J. Gallo and other major California wineries and is now consulting for Bronco, sees Franzia as the guy Napa vintners love to hate.

"I enjoy watching them spar," he says with a chuckle.
"We do business with many, many people in Napa," says Franzia. "A lot of my friends are in Napa. Part of the fun is just rubbing their nose in it a little bit and I'm sure vice versa."
For instance: "He says no wine is worth over $10," says Mondavi, whose family's wines include the new I'M line that runs from $13 to $20. "I say, 'Yeah, you're right Fred, unless they're my wines because I've seen you buy 'em.' "

Franzia maintains he is true to his principles, even when the wine in question is his. Bronco's Napa Ridge Napa Valley Reserve often costs more than $10 because it's made with more expensive grapes, but he doesn't drink it.