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Right after
2001 grape season, Fred realized that his industry was fastly moving into an over supply condition of grapes. Soon it would become less expensive to let
grapes rot on
vine then to harvest them, and Fred felt this was unacceptable. Always considered a maverick within
wine community, Fred decided to think outside
traditional winemakers' box. Fred's marketing approach is simple and straightforward. He states, "Our strategy is to fish where
fish are. I think more people want value in their wine purchase and realize it doesn't have to cost them $10-25 dollars."
Hence his Charles Shaw brand of budget wine was born and
stage was set
Fred Franzia met with Dan Bane in early 2002 and
Charles Shaw saga began. Dan recognized that
budget wine from Fred Franzia's Bronco winery would bring customers into his store and while there, they would be introduced to his offering. He was confident in
quality and pricing of his products and felt this would prompt many to conveniently buy items they would normally purchase at their regular grocery store. This was
catalyst Dan was looking for.
The other force in this success equation is Fred and he clearly understands how to make money. Fred knew that Bonco was in a unique position to take advantage of present market conditions because his winery is one of just two California wineries with a distributor's license. The other is Kendall-Jackson. That means Bronco can dramatically cut
middleman costs. Direct delivery to retailers is not something most wineries can do. Bronco delivers a case of Charles Shaw to Trader Joes for a meager $19. Trader Joes decided to sell this same case for $24 or $1.99 a bottle.
With virtually little promotion,
Charles Shaw brand has become
most successful wine brand ever. Mostly by word-of-mouth it has gained almost mystic status.
People need logic or a believable reason when a major price shift takes place on anything they purchase. Justifying
new price and
value of
product must be rationalized.
Almost immediately, rumors began to surface about
$1.99 bottle of Charles Shaw wine. A few well-publicized stories like
tale that this $1.99 bottle of wine beat out a $68 bottle of Chardonnay wine in a blind tasting, although totally unsubstantiated, has given it front-stage billing. Another common rumor for
low price suggests that Charles Shaw was a premium wine dumped by American Airlines because of a ban on corkscrews on airlines precipitated by
actions of 9/11. Other rumors included that "Two-Buck Chuck" was a financial bailout of a premium wine from United Airlines trying to avoid bankruptcy. None of these are true (some say Fred Franzia floated these rumors, but he denies it), nor is Charles Shaw a fire sale Napa wine from a nasty divorce of Charles Shaw and his wife.
Charles Shaw continues to fly off-the-shelves resulting in handsome dividends to both Bronco winery and Trader Joes. With its Charles Shaw loss-leader marketing approach, Trader Joes has driven many new customers into their stores resulting in double digit growth for
firm, with no sign of slowing. And Bronco winery, with its maverick CEO Fred Franzia, cannot keep up with
demand. Bronco has already delivered more than 60,000,000 bottles (about $100M in Bronco annual revenue) of
now famous two-buck-chuck.
Innovative, risk-oriented, marketing always trumps linear thinking in any market. How are you infusing innovation into your marketing ideas?

Frank Williams is a marketer and astute businessman. Frank has many post graduate courses in management, leadership, marketing and technology to his credit. He has given many speeches, written numerous articles and introduced new technology. He has significant knowledge in marketing strategies and sales development programs and is the founder and CEO of Global Marketing, Inc. - a leader in business, marketing and sales consulting