Cheap Wine Wars: The Two Buck Chuckwagon Heads South
In news that is positively dripping with irony on many, many fronts, Two Buck Chuck—the unbelievably cheap wine that turned the American wine market on its head a few years ago—is going on the road. To of all places . . . Australia.
The news is that Fred Franzia, owner of the Bronco Wine Company, which brought us the brand Charles Shaw (a.k.a. Two Buck Chuck) as well as myriad other cheap, grocery store brands, is doing the same thing in Australia. (May's New Yorker profile of the perplexing, audacious, and brilliant Franzia is a must read—reg required.) Franzia's m.o. is thus: He buys surplus juice in bulk (of which there is a lot these days) for cheap—in this case his Aussie juice reportedly cost only about 24 cents for one bottle's worth—repackages it and sells it for far less than everything on the market. The profit margin on each bottle is small (the glass, labels, corks, etc all cost more than the wine they contain), but he makes money on sheer volume. In Australia, Franzia's wine brand is called "Down Under" and features a koala on the label and is being sold with the catchy slogan: Three Dollar Koala.
Now, let's start counting the ironies.
- Australia is the place that originally altered the status quo of the American market 15 years ago by offering decent quality wine at astonishingly low prices. At the time Australia was hailed as huge international success, though in the last year their wine industry is in crisis due to overproduction and a crashed export market. Lately, publications like the Financial Times and the New York Times have been blaming the current collapse of the Aussie wine economy on their own practices.
- Franzia's using a so-called "critter label" ("fun" labels that feature an animal—Australia made this practice famous with Yellowtail), which 3 years ago were hailed for their impact on sales, but more than two years ago were already being called passé.
- He's squarely going after Yellow Tail, the great Aussie success story of the past decade. Can he beat them at their own game? It's an incredibly audacious move. In effect, Franzia took his model from the Aussies, but took it the nth degree. It's almost mean-sprited that he's now about to plague Australia's hurting wine economy with his cheap wine tricks. However, Franzia likes creating havoc, hates the wine aristocracies of places like Napa, and believes no wine is worth more than $10 a bottle.
All in all, it will be interesting to see how Three Dollar Koala is received. Will Aussies take to it like Americans took to Two Buck Chuck? Or will they reject it completely? I'll be following the results. Personally, I have no interest in drinking the Chuck or the Koala. But I do like to see what happens to the wine economies when Fred Franzia comes to town.