Two Buck Chuck: Good or Bad for Wine Retailing?

Discussion
Jul 13, 2012

Trader Joe’s Charles Shaw Wine turned ten years old in 2012. About 600 million bottles have been sold over the last decade. The anniversary has elicited homages to "Two-Buck Chuck" from many of its ardent fans, but it’s also fed another round of catcalls from some in the wine establishment.

To wine insiders, Two Buck Chuck epitomizes the flood of lower-priced wines that have found their way to wine selling floors over the last decade. At $2.00 a bottle for red or white in California (add about a buck more elsewhere due to state laws, taxes, shipment fees, etc.), the California wine has won awards and is seen as at least "competent" for the price by many wine connoisseurs. With previous budget options consisting of screw-capped jug wines, Charles Shaw and other cheaper wines are said to have introduced many U.S. consumers to the category and made wine more accessible to more Americans.

"It’s a good thing, as far as I’m concerned, because it has brought a lot of people into the wine market and wine culture," said Mike Veseth, an economics professor at the University of Puget Sound and author of Wine Wars: The Curse of the Blue Nun, the Miracle of Two Buck Chuck, and the Revenge of the Terrorists, in an interview with The Seattle Times. He adds, "What do they have to lose? Two or three bucks … many people taste it and think, I like it just fine. Then they might try other things."

On the downside, he did note that some wine followers believe the lower-priced wines "lead to arrested development, that people will think of Two Buck Chuck and not go any further."

The bigger concern for many is that other wineries may lower the quality of their offerings to compete with the popular budget options or face going out of business. Yellow Tail, from Australia, is said to have similarly raised the price appeal for imports, particularly Australian competitors.

In honoring the 10-year anniversary in its Fearless Flyer circular, Trader Joe’s wrote, "We do think we know why these wines have struck a chord — they’ve proven that wine doesn’t need to be expensive to be good, drinkable wine."

Discussion Questions: Are Two Buck Chuck and its imitators a positive or negative development for the wine category from the retail industry’s perspective? Should retailers be concerned that the popularity of lower-priced options may dilute the overall quality and availability of wine?

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17 Comments on "Two Buck Chuck: Good or Bad for Wine Retailing?"


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David Slavick
Guest
David Slavick
9 years 10 months ago

Pure snobbery. The old adage, you get what you pay for, applies here. There is a psychology of wine that is just as complex as the chemistry that produces it. For casual enjoyment from the fruit of the vine, nothing wrong with some low priced processed grapes. Most producers, Gallo to Mondavi, are not threatened by this trend. If you grow it, they will drink it. Bottoms up!

Ryan Mathews
Guest
9 years 10 months ago

Anything that expands a category is good and my guess is that Two Buck Chuck has converted many beer drinkers over to the pleasure of the grape.

In time, a percentage of those converts will go on to become more sophisticated in the same way that Americans learned to migrate from one SKU of Kikoman Soy Sauce to a shelf of oriental eating and cooking sauces and from one or two sizes of Tabasco sauce to shelf upon shelf of nuanced gourmet hot sauces.

As to the last question, retailers should count those increased sales dollars and let the market determine what sells.

Ian Percy
Guest
9 years 10 months ago

What kind of no-brainer question is that? There is a huge tribe of frugal wine drinkers out there not even counting those “connoisseurs” who haven’t come out of the closet yet. Most of us have graduated far beyond Chuck to an endless array of options — some as high as $5. If it’s an anniversary we abandon frugality and go up to a whopping $7. We genuflect before entering Trader Joe’s wine section.

As it happens, with the help of fellow BrainTrust panelists (who assured me of their vast experience in adult beverages), we’re launching an amazing beverage pleasure enhancer called a “Ziblee.” It uses quantum frequency technology to make Two Buck Chuck taste like Ten Buck Chuck. Does the same thing to cheap brands of vodka, scotch and even coffee. The Ziblee website will be fully live by the end of the month.

And just btw — the RW BrainTrust is a remarkable resource for any problem or possibility you could ever run into. Take advantage of it!

Robert DiPietro
Guest
9 years 10 months ago

Funny that it hasn’t been 2 bucks for a while in Massachusetts!

It’s a positive development in the category — you need a low price point to drive some trial. Also as an impulse buy, it will expand the segment of wine drinkers. Consumers who already have experienced wine probably won’t trade down, but folks who consume other beverages might give wine a try.

Frank Riso
Guest
9 years 10 months ago

I have always been a fan of two buck chuck wines even when they were two bucks a bottle. The only place for me to get them was after a 60 mile drive into New York City, so we would buy by the case and save even more. If you like the wine and it costs fifty dollars a bottle fine, but it you like the wine and it costs only $5 a bottle, even better. By the way we would also buy a lot more then just the wine at Trader Joe’s, and that is merchandising 101.

David Livingston
Guest
9 years 10 months ago

If consumers find that Two Buck Chuck is a good value and the quality is fine, I see no problems. The only competitors that have to worry are those who produce a lower quality at a higher price.

John Karolefski
Guest
9 years 10 months ago

From the perspective of all retailers selling wine, Two Buck Chuck is clearly a negative development. It represents attractive value to the average consumer and a threat to higher-priced brands. Why spend two or three times the amount for a comparable bottle of wine? My hunch is that sales of Two Buck Chuck have increased greatly during these hard economic times.

For supermarkets selling wine, the lesson here is clear; namely, develop a line of store brand wine that is comparable to Two Buck Chuck. Slap on a fancy name and promote it with in-store wine tastings, etc.

Tony Orlando
Guest
9 years 10 months ago

Cheap wine for everybody!!! Just like the 99 cent hot dog, we always will have low priced stuff in every category. I won’t pay more than $20 for a bottle of wine, and some people would never pay less than $50 for a bottle, which is why we have choices. Cheers everyone!

Camille P. Schuster, Ph.D.
Guest
9 years 10 months ago

Two-Buck Chuck has certainly been tried by many consumers! I do not have data, but suspect that those who purchase Two-Buck Chuck do not purchase that wine only. Whether those consumers try other wine on sale at a low price or Trader Joe’s or somewhere else, introducing consumers to a category is a great idea, generating publicity for Trader Joe’s is a good idea, providing consumers with an incentive or confidence to try other brands is a good idea. Providing a low priced option to expand the customer base seems to be a good idea to me.

Kenneth Leung
Guest
9 years 10 months ago

The Two Buck Chuck phenomena is good for the wine drinking category as a whole. This lower price point category with quality helps drive entry level drinkers and conversion from other categories. Ultimately, the consumers make the choice and if the wine fits their palette for the price, there is a market. Personally, I find Two Buck Chuck perfect for cooking and also making sangria. πŸ™‚

Martin Mehalchin
Guest
Martin Mehalchin
9 years 10 months ago

It doesn’t hurt the wine business and it’s been great for Trader Joe’s from the perspective of creating thousands, probably millions of incremental store visits. Every retailer should be happy if they can find an exclusive offering that becomes an element of pop culture like Two Buck Chuck.

Interactive Edge
Guest
Interactive Edge
9 years 10 months ago

I believe the lower priced wines are a positive development to the wine category and open it up to a new segment of consumers. There are consumers that may be intimidated by the higher priced wines; the lower price of this end of the category allows consumer to experiment with a variety of wines and, hopefully, move up the scale, so to speak, to try the higher end of the category. As long as augmentation, and not cannibalization, to the category occurs, everyone should be happy.

Carol Spieckerman
Guest
Carol Spieckerman
9 years 10 months ago

The other day, I saw a gentleman loading five cases of Walmart’s Oak Leaf chardonnay into his car. I had to ask, first, if he liked the wine and second, if he was having a party. He told me that his wife really enjoys white wine (it was all for her) and that, so long as she doesn’t have a glass of “good stuff” first, the Oak Leaf passes muster. $2.97 Buck Chuck may not have a ring to it, but I doubt that this member of the Happy Wife, Happy Life club would buy such volumes of anything else. All good for the wine category.

Jerome Schindler
Guest
9 years 10 months ago

A positive — but in Ohio Two-Buck Chuck is $3+ Chuck due to the state’s minimum mark-up law at the wholesale and retail level. Gallo has single serving 187ml bottles that I have bought at $1.25 here — equiv to $5 buck Chuck. Very convenient when you have just a guest or two that would like some wine — or a couple that want white, another couple red. More to the point — there are people who don’t appreciate fine wines enough to pay more than $5 or so a bottle. I rarely have wine when eating out as $7 for a 5 oz glass for a rather ordinary variety (maybe from a 5L Box) is a bit much. I think the lower priced wine segment probably is a separate segment which does not hurt better varieties. And perhaps the former will migrate to the latter as their incomes grow.

Craig Sundstrom
Guest
9 years 10 months ago

“Should retailers be concerned that the popularity of lower-priced options may dilute the overall quality and availability of wine?” Of course not! The only losers in this are the “I’m-not-a-Prohibitionist-but…” prohibitionists that want sales to only go down. That having been said, I would point out that quality, inexpensive wines have always been available — at least here in California — so I’m not sure how much credit TJ/Chuck should get.

Ed Rosenbaum
Guest
9 years 10 months ago

Could it be that “Two Buck Chuck” opened the door for those not familiar with wine to test, sample and then become buyers of the more expensive brands? Or could they still be Two Buck Chuck loyalists? Or should we even care?

Ed Dennis
Guest
Ed Dennis
9 years 10 months ago

Trader Joe’s did the industry a great favor. They encouraged many who drank wine infrequently to drink wine more frequently.The success of Trader Joe’s got the attention of others including Walmart, who sought out suppliers who could offer them comparable products, so now we have decent affordable wine almost everywhere.

The wine industry should kiss Trader Joe’s feet daily because I think they expanded wine use geometrically in the US. If other vintners cannot find away to piggyback this broadening of the market to move the consumer up, they have only themselves to blame. And as to the retailers, they have expanded the category for all. If you aren’t getting your share of the action, it’s your own fault due to inept marketing on your part.

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