American Wine Laws: Time for a Change?

No food for sale in this NYC Trader Joes. No wine for sale at the Trader Joes next door.

Only in America? You can't buy food at this NYC Trader Joe's wine store. And you can't buy wine at the Trader Joe's next door.

A European visitor pulled me aside recently to complain about American wine laws, which considerably restrict the what, where and how of wine sales and consumption compared to more relaxed European practices.

“I thought there was separation of Church and State in America,” he said, showing that he hadn’t forgotten what he learned in Civics class years ago as a high school exchange student in Cleveland. He put the blame for America’s wine parochialism squarely on the influence of conservative religious groups.

Church and State vs. Special Interests

Religious groups are political powerful, I told him, and they no doubt have had some influence on the development of America’s wine laws. But that’s not the reason the laws don’t change, I said. It is the interests of those who gain from the current set up. He wasn’t convinced. He seemed to think that a moral explanation was inherently more persuasive (or more American?) than an economic one. But I still think I’m right.

My explanation — that economic forces organize around any set of regulations, become entrenched and use their political and economic clout to prevent change — has a good economic pedigree. It is the theory of structural rigidities developed by Mancur Olson in his two classic books, The Logic of Collective Action and The Rise and Decline of Nations.

Olson’s theory is elegantly simply. Restrictive economic arrangements benefit a small number of actors a great deal, so they have a strong incentive to organize and fight change. Eliminating the restrictions benefits a larger but widely diffused set of actors who have correspondingly smaller individual incentive to take action.

Even though the collective gain from liberalizing arrangements is likely to exceed the collective loss, the concentrated established interests have more of an incentive to influence legislators and regulators than the general public. This is why regulations, once enacted, are difficult to change. Public gain cannot seem to trump concentrated private interests.

Olson developed this theory in The Logic of Collective Action and used it in The Rise and Decline to explain why rich, stable economies sometimes experience slower growth rates. Stability allows interests to become entrenched and structural rigidities to solidify. Change becomes more and more difficult and potential collective gains from innovation are systematically sacrificed on the altar of vested interest.

Every once in a while, Olson argued, advanced nations need something that will shake things up and weaken the grip of special interests. Then all sorts of change becomes possible.

A Loaf of Bread But No Jug of Wine

An article by Graham Rayman in the August 11, 2009 Village Voice provides evidence to support this theory. New York is one of 15 US states where it is illegal to purchase wine or beer in a supermarket (and you can’t buy bread or cheese in a NY wine shop, either). It isn’t so much separation of Church and State as the division of  Wine and Cheese. Supermarkets can sell wine, beer and spirits as provided by the law, and some do this, but they must have separate stores with separate entrances, checkout stands and so forth.

Two doors, two lines, two sets of store staff. Greater legal control alcohol sales is possible, I suppose, but at a considerable sacrifice in convenience.  It is probably not a surprise that wineries and wine enthusiasts would want to change this, but it isn’t an easy thing to do.

The Village Voice article explains how liquor store interests organized and lobbied the NY legislature to kill a recent bill that would have permitted supermarket sales. The main force behind the proposal was the state government’s need for revenue — the state projected that increased sales though supermarkets would have added to state tax coffers. The story focuses on the anti-reform lobby — it would be interesting to know more about than the author reports here about how supermarket chain and corporate wine producer interests reacted to the bill. But the point about the blocking power of small but concentrated interests is well made.

Shake It Up, Baby

Supermarkets are just one distribution vector for wine, of course, and New Yorkers have many competitive specialist stores to keep prices down and service up, so we don’t need to feel too sorry for them. But it does seem that the increased convenience of grocery store sales would help expand the wine market and promote wine as a lifestyle choice. It’s too bad the reform effort failed.

The inconvenience of wine buyers in the 15 supermarket-ban states is important, but the grip of special interests on wine regulations extends to other areas.The cumbersome three-tier distribution system and restrictions on inter-state wine shipments are two other areas where entrenched interests have successfully fought off liberalization efforts.The result is the restrictive system my European friend finds so difficult to understand.

If Mancur Olson is right, restrictive regulations will be difficult to change unless something happens to shake things up. Maybe the economic crisis, which has put every link in the wine value chain under stress, will ultimately provide just such an opportunity. Consumers, wine producers and even state tax departments all have something to gain from changing the system now.

We Will Sell No Wine [Reform] Before Its Time

I told my European friend not to hold his breath waiting for wine reforms to trickle up from grassroots wine enthusiasts. The real hope is that the big players will push for liberal reforms.

Personally, I pin my hopes on Costco, the largest single wine retailer. And I wonder if Wal-Mart will get involved now that it is selling wine in many stores (it even has its own version of a Two Buck wine called Oak Leaf). OK, Wal-Mart is a long shot, given its Arkansas roots, but these are unusual times — almost anything is possible.

The New York defeat is a definite setback (and the California plan to increase wine taxes is a step in the wrong direction) but maybe European-style wine market regulations are an idea whose time has finally come.

8/27/2009 Update

Interesting article in the New York Times about Whole Foods’ failed attempt to open a wine shop in New York City.

Whole Foods learned the hard way that opening a wine store in New York is not easy. The wine shop at its market in the Time Warner Center was closed by the state liquor authority because the shop was deemed part of the supermarket; state law bans selling wine in food stores. Then Whole Foods’s license request for a wine shop near its store in the Bowery was denied because of community opposition. But the company succeeded in starting a wine store in the same building as its newest store on the Upper West Side: it opened on Aug. 24, and the supermarket will open on Aug. 27.

Read the whole story at

http://www.nytimes.com/2009/08/26/dining/26whole.html?_r=1

Wine Distribution Bottleneck

I have often argued that to really understand an industry you first need to understand where the bottlenecks are in the value chain.  Bottlenecks disrupt the efficient flow of resources and so industries tend to evolve around them.  I believe that this observation holds especially true for wine. Herewith a brief update on the current situation.

Do the Math

Silicon Valley Bank released their annual State of the Wine Industry Report yesterday.  SVB is a major lender to US wine producers and thus has a strong interest in producing clear, relevant wine economics research. (I also admire the wine economics research produced by the Dutch agricultural lender Rabobank.)

The report provides some good news along with many worrisome  observations (click on the link above to download the study) and fresh data on the biggest single bottleneck in the U.S. wine industry — distribution.

Here’s the basic math.  SVB estimate that there are 6000 wineries actuve in the US market producing about 7000 wine brands.  All these brands need to squeeze through the U.S. three tier distribution system bottleneck.  This means they need to go from maker (first tier) to state-licensed distributor (second tier) to local retailer (third tier). That’s the law here in the United States,  where we still think of wine as a controlled substance.

There are only limited opportunities for producers  to skip a step.  I understand that Bronco Wines, for example, can sell its Charles Shaw brand directly to Trader Joe’s in California because of a legal loophole there, but has to use an independent  distributor in other states. That’s why Two Buck Chuck costs $1.99 in L.A. but $2.99 here in Washington State.  That extra buck is the cost of the extra distribution layer.

The Big Squeeze

Now we get to the big squeeze. These 7000 brands get funneled through about 550 major distributors according to SVB (obviously this does not count many smaller Mom-and-Pop and specialized distributors that I am familiar with), which is about half as many as a few years back.  Hopefully you can appreciate the bottleneck — 7000 brands worth $30 billion in retail sales have to squeeze  through 550 distributors in 50 states on their way to 76 million wine consumers.  Any blockage in the distributor tier backs up the whole industry.

And the problem gets worse because the distributors are obviously getting squeezed themselves by the economy — falling sales, trading down, shrinking margins, credit limits and counter-party risk.  Expect distributors to consolidate in some cases and pull back to reduce cost and risk in others.

The net effect is clear — distributors are reducing their SKUs (stock keeping units to non-economists) and focusing a smaller number of  reliably profitable products lines.  This means that it is harder and harder for new and niche wineries to get on the warehouse pallet.

The Missing Middle

I’m not sure exactly how this all will shake out, but I suspect the problem will be worse in the middle market. Very small wineries can often successful self-distribute.  Very large ones will probably get distribution because of the volumes they can generate.  The middle falls awkwardly in between — too big to sell it all yourself, too small to be worth a major distributor’s time. The fact that the distribution system is fragmented into 50 (plus DC) pieces just makes the situation worse.

In the same way, SVB data suggest that lower priced fine wines ($35 and less on their scale — remember that a lot of SVB’s customers are in Napa Valley) are still selling pretty well and very expensive icon wines apparently are doing OK, too.  The mid-range is in trouble.  SVB calls $35-$50 a “gray area” and $50-$125 a “dead zone.” Ouch.

I would hate to be a new 3000-5000 case winery trying to sell wine made to be priced in the dead zone.  Unfortunately, I think there may be a lot of new wineries coming on line now who planned to do just that back when economic conditions were sunnier. It will take exceptional effort (or truly exceptional wine) to make this business model work in the current economic environment. I recently talked with one middle-sized premium winemaker who has already figured this out and pulled back — lower output, lower prices — to get clear of the dead zone.

This is the “missing middle” effect that economists are familiar with in other contexts (small family operations and huge corporate businesses survive, the middle simply disappears).  The distribution bottleneck isn’t necessarily the cause of the coming missing middle effect in the wine industry, but it will certainly make it worse.

The Sub-Prime Wine Crisis

What does the sub-prime mortgage crisis have to in common with the market for wine today? More than you might think! Read on …

Liquidity Problems

Here’s a simplified version of the sub-prime mortgage crisis narrative. A housing bubble masked the inherent risk of the mortgaged-backed securities that financed the bubble itself. Investors were unable to fully assess risk because the complicated financial vehicles were not very “transparent” and the rating agencies did not prove to be trustworthy guides.

When the crisis came, liquidity dried up and the market deflated (crashing in some cases). The solution to the problem, many think, is to increase transparency — to make it easier to figure what is in a mortgage-backed security and how to assess its risk and return.

Some wine buyers will find it easy to relate to elements of this story, according to the Project Genome study recently released by Constellation Brands (I have written about Project Genome in my post “What are wine enthusiasts looking for?”).

According to this study, the largest single group of wine consumers are”overwhelmed” by the choices confronting them and cannot adequately assess the risk they face when staring down a crowded supermarket wine aisle or endless restaurant wine list. Their “liquidity crisis” is a real one — they are afraid to invest in complicated wine products due to a lack of confidence in their knowledge and lack of transparency regarding what’s really in the bottle. Intimidated, they buy a lot less wine than other groups. They lose and winemakers lose, too.

Project Genome estimates that overwhelmed consumers represent 23% of wine buyers, but make just 13% of all wine purchases. They are the “bottom of the pyramid” of wine and many industry people figure that a fortune awaits anyone who taps this market.

Making Wine More Transparent

So what’s the best way to make the wine buying process more transparent and end the overwhelmed consumer’s liquidity crisis? Better information is one approach. Wine critics are the bond rating agencies of the wine market. Their scores give many wine buyers the confidence they need to make what really is a risky purchase. At their best, wine critics serve a useful function of reducing uncertainty about what’s in that bottle and whether it is worth the price.

But there are dozens of wine critics and their ratings, using different scales and ranking protocols, do not always agree and are not always a clear guide. How many disappointing wines have you bought because of the “89-point” rating on the shelf tag? It only takes a few highly-rated losers to discourage an overwhelmed buyer from taking a chance.

Wine critics are part of the answer, but they are also part of the problem. What other options are available? The May 15, 2008 Wall Street Journal included an interesting article by Charles Passy (the “Cranky Consumer” columnist) that examined how some wine retailers are trying to demystify wine. “For Novice Shoppers, a Little Wine 101” describes four retailers, WineStyles, Total Wine & More, The Grape and Costco, and their different marketing strategies (I wrote about Costco’s system in an earlier post, “Costco and Global Wine“).

I’ve been to a WineStyles store so I can give a personal report. The store is arranged according to wine style profiles (crisp, silky, rich, etc.) rather than varietal type, production region or retail price. So if you know you like a crisp wine, you go to that wine rack and you find wines such as Washington Riesling, Chilean Sauvignon Blanc and South African Chenin Blanc. You are directed to the style you like and hopefully encouraged to try unfamiliar types of wine. If consumers can actually figure out what they like about wine and if they develop confidence in the style categories, this system helps them make better and more self-assured choices.

Food and wine writer Cynthia Nims reports on another strategy on her blog, Mon Appétit. Cynthia discovered a line of branded wines called “Wine that Loves” that are intended to simplify the wine-food pairing choice. Are you looking for something to serve with roast chicken? Pick up “Wine that Loves Roast Chicken.” Fish tonight? Look for “Wine that Loves Grilled Salmon.”

The chicken wine is “Predominantly Garnacha” according to the label — not a wine that an overwhelmed consumer would probably risk as a varietal choice, but might try and like in this format. The salmon wine is a Pinot Grigio/Garganega/Chardonnay blend. I like this concept because it links wine to food, which is very important, and encourages experimentation. It will be interesting to see if buyers embrace it or if it is just a novelty that soon fades.

The British System of House Brands

Great Britian is the most important wine market in the world in part because British retailers have developed a number of successful strategies to increase wine buyer confidence. Supermarkets are the big players in the U.K, and house brands are key to their wine strategies. Tesco, Waitrose, Sainsbury’s and Marks & Spencer all have their own brands of wine (sourced from around the world). Buyers are willing to try an unfamiliar wine because their confidence in the supermarket chain transfers over the the wine.

(It doesn’t hurt that at least some of the house brand wines are very good, of course. A M&S house brand wine is one of the highest-rated New World Sauvignon Blancs in the current Decanter ratings, for example.)

Trader Joe’s uses this strategy here in the U.S. (I have written about this in 300 Million Bottles of Two Buck Chuck). Trader Joe’s sells vast quantities of Charles Shaw (a.k.a. Two Buck Chuck) wine each year and the key is reputation. Not the wine’s reputation — the store’s. Trader Joe’s has a reputation for value and quality, which lends credibility to their house brand wine. As I have said before, the miracle of Two Buck Chuck isn’t that you can sell a wine for $1.99, it is that you can get anyone to buy it. The $1.99 price point just screams “rotgut.” But people happily buy wine at Trader Joe’s  at price points they would never think of considering at Safeway or Kroger because they have confidence in the TJ brand.

My local upscale grocer, Metropolitan Market, is trying the house brand route, apparently with success. For the last year or so they have occasionally stocked limited-release house brand wine specials such as the 2007 Columbia Valley “White Selection #1” shown here. The wines go for $8 per bottle or $88 per case and they are stacked in big displays that remind me of, well, Trader Joe’s.

These house brand wines are kind of interesting. The first release of the year was a Rosé — hardly an easy sale given upmarket consumer resistance to pink wines (too close to White Zin!) and the chilly spring we have had — and now a white that turns out on close inspection to be an oak-free Semillon blend. I like Semillon quite a bit, but I don’t think you could sell it by the case at a neighborhood grocery store with a traditional brand name and varietal label. But “Met Market White #1” and the Rosé are products that buyers seem to embrace as safe bets and good values because of the store’s reputation for quality.

They fly out the door, according to the satisfied customers in line with me last week. You might have trouble selling them as ordinary branded varietals, but they go down easy as trusted house brand wines. The British know the wine game really well. We are smart to learn from them.

Confidence Game

Everyone is trying to solve the overwhelmed consumers’ liquidity problem. Here in the Pacific Northwest we have consumer friendly labels like House Wine (produced by the Magnificent Wine Company) and Wine By Joe, an Oregon brand. Like the Met Market generics, these are good quality upmarket answers to the question, what should I buy to drink tonight? The reputations these brands have developed for value and quality makes buying their wines a comfortable experience for many consumers. (My Costco sells the House Wines brands by the case.)

Take a close look at your supermarket wine aisle and I think you will see a lot of products designed to make wine easier to understand and buy. With so much creative energy at work here, I am confident that the needs of overwhelmed wine buyer market are being well served. Maybe they’ll stop being overwhelmed and their liquidity crisis will end. I wish I had the same confidence about the financial markets!

[Yellow Tail] Tales

caselawinery-coloured-small1.jpgYellow Tail is the best selling imported wine in the United States. Yellow Tail accounted for 11 percent of all U.S. imports in 2005. This one wine brand represents about 8 percent of all Australian wine production and 15 percent of that country’s total wine exports. Yellow Tail sells more wine in the U.S. than all French producers combined.

This is an aerial photo of the winery, which is located in a small village called Yenda in the Riverina region of South East Australia. If it doesn’t look like a quaint little craft winery it is because the volumes are so large. The warehouse structure in the upper right corner can store 900,000 cases of wine at a time, according to Wine Business International. The bottling line next door is the fastest and loudest in the world, filling 30,000 bottles per hour (two more lines are planned to increase capacity). Total production is about 11 million cases, of which about 8.5 million are exported to the United States.

It is a sophisticated factory, with blending facilities that assure that each bottle tastes just like the one before. That differentiates it from Charles Shaw wine (a.k.a. Two Buck Chuck), the Trader Joe’s wine, which people say can vary considerably from case to case.

Yellow Tail is expanding in every imaginable way: more varietals (an Australian Pinot Grigio), a Reserve line of wines sourced from cooler-climate vineyards and now sparkling wines, too. The Yellow Tail’s distinctive yellow-footed rock wallaby “critter” is everywhere.

Yellow Tale is a phenomenon, but not one you will read about in the supermarket wine magazines. They don’t waste much ink on wine that costs about as much per bottle as the magazine itself does per issue. Magazine? Bottle of wine? It’s easy to tell which one the Yellow Tail customer will purchase! So I’ve been trying to find out more about Yellow Tail and here is my report.

Wine as a Family Affair

The interesting thing about the Yellow Tail success story is that it can be told in several different ways. This is not unusual in my experience. Stories of success and failure are frequently spun into meaningful narratives to try to make particular points. One version of the Yellow Tail story, for example, focuses on family and the importance of family businesses in the wine business.

This Yellow Tail Tale begins with the Casella family, winemaking immigrants who came from Italy in the 1950s and eventually planted their own Australian vineyards in 1965, selling grapes under contract to larger producers. Keen to make their own wines and export them, Casella invested in production facilities in the late 1990s and started looking for ways to crash the emerging U.S. wine party.

The key event in this version of the story is the alliance that was struck between Casella Wines Ltd, an Australian family business, and an American one, the William J. Deutsch company. Deutsch is a major U.S. wine distributor — they helped make the French Georges DuBoeuf wines a major U.S. brand — and they were willing to take a chance on an unknown Australian wine with a clever label. A partnership was established, with each family firm owning half of the Yellow Tale brand. Casella made the wine, Deutsch sold it. U.S. sales soared, from about 60,000 cases in 2001 to more than 8 million cases today.

Why was Yellow Tail so successful? One theory is that it is family and trust that are the key elements and that the cooperation and commitment that Casella and Deutsch have demonstrated would not have been possible if either of them had been a public corporation, beholden to shareholders and driven to meet quarterly profit targets Family is the key to Yellow Tail.

Red Ocean, Blue Ocean, Yellow Tail

A second group of business analysts have also appropriated Yellow Tail and made it the basis of a wholly different narrative, this one told using some unfamiliar jargon (unfamiliar to me, at least). Here is the Yellow Tail story told in terms of Blue Ocean versus Red Ocean.

The oceans in question are markets. Blue Oceans are markets for new products. Red Oceans are markets for existing products. Why are they red? I don’t really know but based upon what I saw last summer on the Discovery Channel’s “Shark Week” I’m willing to guess that existing markets are a tough environment to enter. You’ve got to compete with well-adapted predators who will cut you up badly if you aren’t really strong (Red Ocean = bloody ocean — get it?). A Blue Ocean, on the other hand, is uncontested open water. You’ve got a much better chance of profit if you can stake out the market for a new product before the competition gets there.

So how is Yellow Tale a Blue Ocean product? According to one article it is because Yellow Tail isn’t wine as we know it — it’s a whole new thing. The Wine Business International article cited above provides the details. People don’t really like wine, the article suggests. Even the Casellas don’t like it (is this possible?). It’s very tannic and acid and people aren’t used to those qualities except in tea. Who wants to pay $6 a bottle for something that is bitter and sour. The key to Yellow Tail was the realization that wine without tannin and acid could be very appealing, especially to the majority of Americans who really don’t like wine. (It was designed to appeal to the 85% of non-wine drinkers, according to the article, while not offending the 15% who already like wine. That’s 100%, if my math is correct. No wonder it is so popular). Yellow Tail isn’t as strong a brand in Great Britain — maybe it’s because the British actually like wine, acid tannin and all?

The Red Ocean, then, is the market for wine and the Blue Ocean is the market for wine that doesn’t taste like wine. (You might call it the Blue Nun Ocean in honor of a popular semi-wine wine of the 1970s.) If this analysis is correct, then you can see why Yellow Tail is such as success. But you can also see why its success might be short lived (and why, therefore, Casella may be moving into other markets). The Blue Ocean of semi -wine was quickly populated by competing predator species. Two Buck Chuck is an obvious example but there are really dozens and dozens of copycat critter wines out there. The trick for Yellow Tail is thus how to succeed now that their Blue Ocean is turning Pink.

Water Torture

Here’s a final Yellow Tail Tale that continues the focus on water. A third explanation for Yellow Tail’s success can be summarized in a single word: irrigation. Yellow Tail was made possible by the existence of enough water to irrigate the vast Casella and South East Australia vineyards. Water made it possible to grow grapes so efficiently that you could ship the wine half way around the world and sell it cheaply and make a fortune.

a_wby_lg_pic01.jpgBut the environment is changing for Casella’s vineyards. It’s not Blue to Red, but wet to dry. Australia has experienced several consecutive drought years, which have caused vineyard yields to crash and changed the whole business model of Australia wine. Put simply, the plentiful cheap fruit that has fueled Yellow Tail’s growth is now just a memory. What is to be done?

Casella seems to be considering several approaches. The first is conservation. According to their website, they have invested heavily in water recycling facilities, which will allow them to reclaim 400 million liters of wastewater each year for use in their vineyards. That’s a good start — and sustainable winegrowing is everywhere a concern — but I don’t think it will be enough to irrigate all the vineyards.

So another strategy may be considered: outsourcing. There are many places on earth where inexpensive wine can still be produced. Will Yellow Tail consumers care if their wine comes from Chile, South Africa, France or maybe even Romania instead of Australia? My guess is that it won’t matter very much and that Yellow Tail may become a globally-sourced brand. Boy, that little wallaby gets around.

But the long term threat to Yellow Tail probably isn’t water, it is wine. If Yellow Tail customers ever learn to like wine (you know — the stuff with tannin and acid?) then the brand’s days will be numbered! Until then, little critter, wallaby wine is safe.

300 Million Bottles of Two Buck Chuck

Two Buck Chuck (a.k.a. Charles Shaw wine) celebrated its fifth birthday recently, so this is a good excuse to for a new initial thoughts about what the success of this bargain wine says about the wine market today.

Charles Shaw is the brand of very inexpensive wines that Fred Franzia’s Bronco Wine company makes for exclusive distribution through the Trader Joe’s chain. The wines sell for $1.99 in California ($2.99 here in Washington state), which accounts for the “two buck” nickname. Total sales over five years: 300 million bottles.

Two Buck Chuck (TBC) is made possible by the current worldwide glut of wine — something that I will write more about later. There is a lot more wine made today than people will buy and so bulk prices have fallen, creating a profitable opportunity for someone, like Fred Franzia and the Trader Joe’s people, who know how to distribute and market it efficiently. Franzia is part of this glut of course, with perhaps 40,000 acres of vines. TBC aimed to find a big demand for a big supply, and it did it.

Some of my friends buy TBC and they are always amazed by the relative value: it may not be great wine, but it’s lot better than a $2 or $3 wine, they say. I think that’s true, but I wonder how they know — have they drunk a lot of $3 wine? I doubt it! Most supermarket wine buyers judge a wine by its price, or at least that is what the research says. They don’t know for sure what is in the bottle and so they are guided by price more than any other factor. I know some $8 wine buyers, for example, who probably wouldn’t buy a $5 wine under normal circumstances, because they assume that it is lower quality. And they probably wouldn’t buy a $12 wine, either, assuming that it wouldn’t be worth the extra cost. So they stick to that $6-$8 wine shelf (you know where it’s at in the grocery store), not looking higher up and not looking much lower on the rack either. They know what they like, and it costs about eight bucks.

So the trick isn’t making an inexpensive wine — that’s doable in this market environment — it’s getting people to buy it. Once you have made a decent wine that you can sell for less, the hard part is to get buyers to look down from their accustomed price points and try it — and to serve it to their friends without humiliation. If you put a TBC clone in Safeway, for example, it’s entirely possible that no one would buy it because they would assume low quality based upon the low price. That’s where Trade Joe’s comes in. Trader Joe’s has a reputation for selling upscale products for a bit less — for providing relative value. Only Nixon could go to China and only Trader Joe’s could sell Two Buck Chuck — for two bucks.

In fact, if you look around, you will actually see a lot of TBC clones in your grocery store, but they sell for more than two bucks. I am talking about the generic “critter wines” (more about this in future posts). They are also a product of the global wine glut and they provide good relative value. But no one would buy them for $2 — how could they be any good? So they sell for a bit more.

By the way, the Charles Shaw brand is actually a good deal older than the five year birthday suggests. The Charles Shaw winery was founded in the Napa Valley in 1974 by Charles F. Shaw for the purpose of making Beaujolais-style wines. Fred Franzia bought the brand from Shaw in 1991 in order to take advantage of its solid reputation. But that’s history — no one pulling a TBC cork today remembers that original Napa winery, they are only thinking about the bargain price.