While we've certainly heard enough of the wine itself and the market
forces that led to its creation, I've been thinking recently on the
effect that Two Buck Chuck has had on the retail market in the US.
Specifically, I've noted two possibly related events: first, one of my
"local" fine wine retailers recently announced an across-the-board 15%
reduction in wine pricing, accompanied by a reduction in case discounts
from 10% to 3%. Secondly, I just saw the most recent mailer from Solano
Cellars in Berkeley. For many years now, they have offered monthly
"sampler cases" of low cost wines intended for near term drinking.
Over the last few years, the case price has crept upwards from ~$90 to
~$120, and the number of wines from the US has steadily decreased in
favor of cheaper wines from Southern France, Italy and Spain. However,
this month's sampler
(http://www.solanocellars.com/catalog/index.php/cPath/30) sees a return
to a case price of $90 in which the most expensive bottle is an $11
bottle from the Costieres de Nîmes (!!) In that case, no less than 6
wines of $10 or less are found from the US. While a few are no
surprise (HRM Rex Goliath, e.g.), others from the likes of McManis and
Castle Rock are.

So, the question I have is: does this represent a new pricing trend in
CA? Are wineries consciously crafting lower priced, ready to drink
wines now in order to compete with the likes of Two Buck and
Yellowtail? Or am I reading too much into these developments?

Mark Lipton

Mark Lipton > wrote in message >...
> While we've certainly heard enough of the wine itself and the market
> forces that led to its creation, I've been thinking recently on the
> effect that Two Buck Chuck has had on the retail market in the US.
> Specifically, I've noted two possibly related events: first, one of my
> "local" fine wine retailers recently announced an across-the-board 15%
> reduction in wine pricing, accompanied by a reduction in case discounts
> from 10% to 3%. Secondly, I just saw the most recent mailer from Solano
> Cellars in Berkeley. For many years now, they have offered monthly
> "sampler cases" of low cost wines intended for near term drinking.
> Over the last few years, the case price has crept upwards from ~$90 to
> ~$120, and the number of wines from the US has steadily decreased in
> favor of cheaper wines from Southern France, Italy and Spain. However,
> this month's sampler
> (http://www.solanocellars.com/catalog/index.php/cPath/30) sees a return
> to a case price of $90 in which the most expensive bottle is an $11
> bottle from the Costieres de Nîmes (!!) In that case, no less than 6
> wines of $10 or less are found from the US. While a few are no
> surprise (HRM Rex Goliath, e.g.), others from the likes of McManis and
> Castle Rock are.
>
> So, the question I have is: does this represent a new pricing trend in
> CA? Are wineries consciously crafting lower priced, ready to drink
> wines now in order to compete with the likes of Two Buck and
> Yellowtail? Or am I reading too much into these developments?
>
> Mark Lipton

Mark, my guess it's not that wineries are "crafting lower priced"
wines but that they are in many cases being forced to reduce prices by
current market conditions in general. I doubt styles are changing -
"style" doesn't cost much, after all - only the prices are. Stated
another way, both Two Buck Chuck *and* lower prices in other wines are
symptoms of massive overplanting of wine grapes and overproduction of
wine in California. It's the production "boom" part of the same sort
of boom-bust cycle that happens in other industries and with the same
result in terms of pressure on prices and winery finances. My guess
is that after a few years of people pulling out grapes, grape prices
will return to something like normal and the days of Two Buck Chuck
will be over. In the meantime, we can probably expect more wine
industry consolidation with the likes of Gallo and Constellation
buying up smaller fry, also more bankruptcies like De Loach - again,
just like other industries with excess production capacity. Just my
two cents' worth ;^)

- Mark W.

Mark Willstatter wrote:

>
> Mark, my guess it's not that wineries are "crafting lower priced"
> wines but that they are in many cases being forced to reduce prices by
> current market conditions in general. I doubt styles are changing -
> "style" doesn't cost much, after all - only the prices are. Stated
> another way, both Two Buck Chuck *and* lower prices in other wines are
> symptoms of massive overplanting of wine grapes and overproduction of
> wine in California.

Excellent point, Mark -- I've fallen into the trap of confusing correlation with
causality.

> It's the production "boom" part of the same sort
> of boom-bust cycle that happens in other industries and with the same
> result in terms of pressure on prices and winery finances. My guess
> is that after a few years of people pulling out grapes, grape prices
> will return to something like normal and the days of Two Buck Chuck
> will be over. In the meantime, we can probably expect more wine
> industry consolidation with the likes of Gallo and Constellation
> buying up smaller fry, also more bankruptcies like De Loach - again,
> just like other industries with excess production capacity. Just my
> two cents' worth ;^)

What you say makes perfect sense. However, we must not lose sight of the developments
taking place beyond the borders of CA. As I understand it, Yellowtail has become the #1
wine import in the US. If we try to understand why, we must conclude that beyond
marketing (which counts for quite a bit, no doubt) there is a strong market in this
country for decently made, simple wines selling in the under-$10 range. And why not?
It's been a gaping hole in our wine choices for decades: where are the Vin de Pays/Vino di
Tavola equivalents? I don't know if this represents a permanent trend, or rather just a
response to hard economic times, but I'll be watching with interest for the next few
years...

Mark Lipton

"Mark Willstatter" > wrote in message
m...

> "style" doesn't cost much, after all <snip>

I have to dispute that assertion, Mark. Style can amount to a very
significant added cost. Compare, e.g., a tank fermented, unoaked Chardonnay
such as Calla-lees to a barrel fermented Chardonnay aged in new French oak.
Even if you were to start with the same fruit, the styles would be vastly
different and the cost of production would be more than double for the
latter. The same applies to red wine production, e.g. Beaujolais nouveau vs
grand cru Beaujolais.

Tom S

I went back to Trader Joes today to sample another Charles Shaw wine. Since
the Cabernet I bought was horrid I thought I'd try the Merlot. Since it was
Saturday there were long checkout lines. Almost everybody in line had at
least 3 bottles in their carts. I noticed the Charles Shaw white wines are
selling more than the reds. This stuff is still flying out the stores. I
popped the cork and I noticed it actually had a nice aroma. I took a sip and
it wasn't that bad. The taste was very fruity and not overbearing and
bitter. This stuff is very drinkable. Its not a great wine but its pretty
good. I would definitely buy it again. The taste is equivalent to a $9 or
$10 bottle of another brand. I'm gonna try the Charles Shaw white wines next
and see what they taste like.
At $2 a bottle this stuff is the deal of the century.

Mike wrote:
> I went back to Trader Joes today to sample another Charles Shaw wine. Since
> the Cabernet I bought was horrid I thought I'd try the Merlot. Since it was
> Saturday there were long checkout lines. Almost everybody in line had at
> least 3 bottles in their carts. I noticed the Charles Shaw white wines are
> selling more than the reds. This stuff is still flying out the stores. I
> popped the cork and I noticed it actually had a nice aroma. I took a sip and
> it wasn't that bad. The taste was very fruity and not overbearing and
> bitter. This stuff is very drinkable. Its not a great wine but its pretty
> good. I would definitely buy it again.

.... and it might taste totally different.

;-)

Dana

"Tom S" > wrote in message .com>...
> "Mark Willstatter" > wrote in message
> m...
>
> > "style" doesn't cost much, after all <snip>
>
> I have to dispute that assertion, Mark. Style can amount to a very
> significant added cost. Compare, e.g., a tank fermented, unoaked Chardonnay
> such as Calla-lees to a barrel fermented Chardonnay aged in new French oak.
> Even if you were to start with the same fruit, the styles would be vastly
> different and the cost of production would be more than double for the
> latter. The same applies to red wine production, e.g. Beaujolais nouveau vs
> grand cru Beaujolais.
>
> Tom S

To a point, of course, you're right - if you're silly enough, for
example, to put a wine into 100% new French oak, you can spend up to
$2 or so per bottle on the oak. I think most of us here don't like
wine treated like that anyway but in any case, wines in the price
category Mark L. and I were talking about were always getting their
oak in less expensive fashion. So while it's true that my statement
is not universally true - style *can* cost money if your style is big
oak - I think for the purposes of our discussion, what I said is
generally valid. I *don't* believe wine production techniques are
generally changing in order to make wine less expensive. I haven't
noted any big shift away from oak in wine. I do think the current
grape/wine oversupply are forcing wineries to review and in some cases
reduce their pricing, with corresponding pressure on winery
financials.

- Mark W.