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Charles Shaw by the Numbers

I caught the recent article(s) on Charles Shaw wine celebrating its 5th birthday.  This excerpt from the AP sums it up:

It’s been five years since the first of these amazingly cheap chardonnays and cut-price cabernets started rolling off the line, released by maverick vintner Fred Franzia under the formal label of Charles Shaw wines.

Three hundred million bottles later, Two Buck Chuck is still selling, and Franzia is still preaching his message of wine for the masses.

Last year, Two Buck Chuck, available only in the Trader Joe’s grocery chain and priced at $1.99 in California, hence its nickname, accounted for at least 8 percent of California wine sold in-state, said Jon Fredrikson, who tracks wine shipments through his Woodland-based company, Fredrikson, Gomberg & Associates. National market share figures are not available. A bottle can range as high as $3.49 elsewhere.

Can that be right?  8% of California wine sales.  That is an astounding figure to me.  California, the land of milk and honey in terms of wine and Charles Shaw represents eight out of every 100 bottles sold?

Wow.  Color me shocked.

I did some back of napkin math on the 300M bottles sold in five years:

• Over 5 years Franzia has sold 25M cases of Charles Shaw, or
• Approximately 5M cases a year
• Charles Shaw alone, measured against the Wine Business Monthly list of Top Wine Companies, would be tied for the 9th largest wine company with Jackson Family Wines, makers of Kendall-Jackson
• Trader Joe’s has approximately 274 stores that sell wine and 5M annual cases works out to 18,248 cases per store, per year
• Each store averages 350 cases sold per week or 6.25 pallets of 56 cases

It gets a little complicated to do the math for mark-up and sales because transportation does come into effect and there is a discrepancy between California pricing at $1.99 a bottle and prices in the Midwest($2.99) and the East and Southeast (3.49), but suffice to say that Franzia is probably giving Trader Joe’s, by virtue of their profit rich private label business aesthetic,  a margin much richer than the traditional 30 – 40% mark-up.  If mark-up is 50% on a case of wine that has a wholesale case price of 10.50 than Trader Joe’s is making about $13.40 a case or $244,523 in profit per store!

If you compare that per store profit figure against SIC code 5921.0102 for wine retail shops it would tell you that wine shops in their first three years of operation average $182,927, $214,035, and $205, 085 respectively in gross sales.

So, yes, in sum, a single SKU in a single Trader Joe’s PROFITS more in a year than the average new wine shop grosses.

Unless you’re a small wine retailer, that should make you feel better about your lot in life.  And, it’s a pretty good indicator why Fred Franzia, when his $2 wine wins blind tastings and he controls his own supply chain, doesn’t give a damn what other people think of him.


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The Center of the Wine Universe This Week

San Francisco is on a fault line and this week it’s also going to be the epicenter of a seismic change happening in the wine world—the convergence of wine and technological bits and bytes into the phenomena called Wine 2.0.

Credit the guys at Radcru.com for hosting the 2nd networking party for wine and wine-related technology companies.  Information found here.

The Wine 2.0 networking event is happening this Friday at Club Sportiva in San Francisco and the line-up of companies and attendee’s is stacked and a veritable list of who is who. 

Queue up AC/DC for a little lyrical inspiration, too:

Who made who, who made you?
Who made who, ain’t nobody told you?
Who made who, who made you?
If you made them and they made you
Who picked up the bill, who? And who made who?

It might take me a glass or three to fully decode AC/DC, but I think what they are saying is that collaboration is important—a hallmark of Wine 2.0 companies.  So, I would expect to see strategic alliances, partnering and the like later this summer, as a result of the connections made at this event.

I had the opportunity to attend the first function in November of last year, and it was a lot of fun—by far the most engaging networking event that I’ve ever attended.  It also helps that virtually everybody in the wine industry is a “glass half full” kind of person with a keen interest in the subject matter of their profession, attributes that are definitely not shared in other industries. 

Unfortunately, I won’t be able to make this event, but about 200 others will be there quaffing and being convivial.  Check out this link for a complete list of participating companies, wineries and sponsors.  Cool companies and/or people in attendance that I can personally vouch for include:

Inertia Beverage Group
Boutique Wine Cellar
Appellation America
WineQ
Calwineries
Crushpad
VinoAmigo
Cameron Hughes
Medlock Ames
Halleck Vineyards
Sapid
Stormhoek
Grapethinking.com
Vinography.com
Winecast.net
Pinotblogger.com
Wark Communications
 
I wish more wine bloggers were going to be in attendance in order to do the full-on “live blogging” dorkiness, but I suppose it’s hard to write with a glass of wine in one hand, business cards clenched in another whilst balancing a plate of knoshes.  If you’re in the Bay Area, you can still RSVP here.  


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The Biggest Issue Facing the Wine Industry

I posit that with various reports of consumer direct wine shipping showing anywhere from 100 – 300% growth year over year and virtually all wine being shipped via common carrier—UPS and FedEx—the biggest issue facing the wine industry today isn’t biodynamics, or screw cap versus cork, TCA, or RFID for counterfeiting or any of the other myriad issues that that stoke the passion of wine consumers everywhere.  The biggest issue in the wine industry today is direct shipping and the appropriate care of the wine shipped with the fulfillment provider choices we have.

It’s pretty simple—it doesn’t matter if laws allow the wine industry to ship everywhere willy-nilly and it doesn’t matter if customers wince at the thought of paying expensive shipping charges.  If the wine isn’t going to show up in good shape, it’s all for naught. 

As a wine guy told my brother years ago after an unfortunate incident with an expensive bottle of wine on a hot summer day, “You wouldn’t leave your dog or a gallon of milk in your car during a hot summer day, and you shouldn’t leave wine in your car, either.”

Good point.

It seems, though, that our uniformed delivery brethren don’t follow the same mantra.  And, it’s a mystery really, especially given the focus both UPS and FedEx have placed on the wine industry with specific, dedicated wine shipping portions of their site found here and here.

Over the course of the past two weeks I’ve ordered and received 6 bottles of Patz & Hall Pinot Noir, a 12 bottle wine club shipment from Caparone and some samples from a gracious wine company.  This isn’t the first time, obviously, that I’ve received wine in the mail, delivered by common carrier.  In fact, I receive wine in the mail quite frequently.  And, it seems that shipping to Indiana, with the obfuscation of our local law, is increasing as wineries are starting to adopt Indiana as a shipping state.  In fact, Radcru.com’s current offer with Cameron Hughes is shipping to Indiana, an offer I’m going to take.

Recent experience with both UPS and FedEx is giving me pause for reflection, however. Make no mistake, this is bigger than the wine industry proper and requires participatory, proactive support from the two dominant shippers.

The aforementioned wine and samples were shipped via both FedEx and UPS and both required an adult signature—something I certainly don’t have issue with, but here’s what I found out in the process of trying to provide the said signature:

Deliveries that require signature don’t leave the truck until it’s delivered, at least for FedEx.  In the paraphrased words of the FedEx guy I spoke with, in the process of trying to provide a signature to him, they “hate” signatures and the package doesn’t leave the truck until it’s signed for.  Therefore, if a wine shipment goes out on Wednesday for 2nd day delivery and you’re not at your house on a Friday, that wine is going to sit in the truck over the weekend or until it’s delivered—that’s like setting a bottle of wine outside for five days.  I don’t give a damn if its summer or winter; you don’t want to expose wine to elements for that long.

You can’t have FedEx pull it off the truck for pick-up without significant coordination and if that wine happens to be sitting on the truck during a 90 degree day for two or three days, well, sorry about your luck.

Fortunately, I was lucky, and the wine, insulated with Styrofoam, was cool to the touch when I received it on a 70 degree day.

However, my Patz & Hall is a different story.  I missed a delivery and called UPS to coordinate a pick-up after hours.  When I picked up the wine at 8:30 at night, after it had been on a UPS truck all day on a very warm 90 degree late spring day, the bottles were warm to the touch.  Not a little bit warm, but a lot warm.  Warm enough to cause concern.  I’m guessing that the ambient temperature on a UPS truck, on a hot summer day, can easily reach 120 degrees.  It doesn’t take long to start to worry about the condition of wine in that environment.

These carriers, both with dedicated wine web sites and teams of sales people dedicated to wine shipping, need to step up to the plate and start to care for the tender goods, the wine. 

In order for the direct consumer shipping to increase, the biggest issue in my mind isn’t cost, its quality.  In order for direct wine shipping to increase, consumers need reassurances that the wine isn’t going to cook in transit.  People pay for quality, access, and luxury, that much is certain.  What people don’t pay for is a shadow of a doubt and that’s the effect heat has on wine.

And, frankly, while I’d like to make this a partnering opportunity with the wine industry, I’m hard pressed to figure out what else wine shippers can do short of sending the wine like live lobsters, on dry ice.

In lieu of dry ice, here’s what I suggest:

Wineries should begin to start buying temperature sensitive stickers (example here) and start labeling wine with these stickers.  If a wine is exposed to a determined temperature for an extended period of time (like 100 degrees for more than an hour) the sticker will let the consumer know that the wine has seen adverse conditions and should be rejected upon delivery. 

It shouldn’t take long: enough rejected shipments because of too hot deliveries and I’m guessing the shippers will come to some better solutions pretty quickly.

What have your experiences been and what part of this issue am I missing?
 
For addt’l reading on wine shipping and temperatures see Tom Wark’s Post at Fermentation from almost a year ago, found here.


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Notes on a Modern Cellar Book

File this one under, “I wish I was there.”

Alas, in 1993, when the wine dinner that I’ll get to in a second took place, I was drinking Busch Light Draft or Milwaukee’s Best in advance of swilling Natural Light out a keg later at night.  Such is college life—I couldn’t even afford to drink the “Champagne of Beers,” –-it was more like the “Champagne of Beers’ cousin, twice removed.”

Since then, obviously, my taste has been refined, and I’d now love the opportunity to taste some of the great wines of the previous century.

Barring actually drinking the wines, I’d like to know guys who have drunk them which is where I’m about now, trying to hold my drinking budget under $25 a bottle.  Insert the obvious statement about champagne tastes and a beer budget here.

That said, my wife has a pretty cool job (which helps support a $25 a bottle and under wine price limit) and she interacts with a diverse lot of people—she’s an editor at the publishing company that produces the “For Dummies” series of general reference books.  She gets to work with authors like Dr. Ruth (Sex for Dummies), Howie Long (Football for Dummies) and other experts in their respective fields.  No “Wine for Dummies” though—somebody else has that title, but Dr. Ruth and Howie Long, frankly, to me, pale in comparison to the author on her current project—she is working with Robert D. Gary, an attorney from Ohio, on the book, “Protecting Your Pension for Dummies.”

Now, I don’t have a pension and probably will never have a pension owing mostly to the fact that I was drinking beer in college in the 1990s when big companies started dismantling the programs.

But, if given a free hour and the choice of conversation between Dr. Ruth, Howie Long, or Robert D. Gary, Esq., I’m choosing Bob Gary.

My wife, through the course of conversation with Bob, had wine come up as a topic of conversation.  My wife mentions my little fascination with the grape, Bob mentions his likewise fascination with wine and a fabulous wine dinner he attended in 1993 that featured some incredible wines from the 20th century becomes a topic of conversation.  One thing leads to another and all of a sudden I’m looking at tasting notes from a triumphant wine dinner some 14 years ago.

I love these sorts of things because every wine lover has THAT moment—the point in time when a wine experience transcends space and time to become a reference point for all wine consumption thereafter.

I’m still searching for my moment, but Bob had his.  And, he shared his tasting notes from the dinner that took place in 1993.

Oh, to have been guest at the Tom Mann dinner at Ken Stewart’s Grille in Akron, OH on April 3, 1993.  The wines served that night (w/ excerpted tasting notes) included:

Romanee-Conti D.R.C. 1971         Est. Current value: $3400 + (750 ml)
The most celebrated, exclusive and expensive red wine in the world.  ’71 was massive, bigger on the palate than the La Tache with multiple layers of fruit that literally saturated the mouth with flavor.

Borges 1963               Est. Current value: $125 (750 ml)
Rich, deep, sweet and showing well.  Somewhat overlooked in this group of wines because everything else was so impressive

* Chateau D’Yquem 1982                 Est.  Current value: $350 (750 ml)
The 1982 is considered a great vintage and is just starting to show its potential.  The flavor was honeyed fruit, rich and sweet without a hint of being cloying on the palate.

* Wachenheimer Gerumpel Trochenberenauslese 1971 Est. Current value: $750 (split cost)
Rich and viscous with intense peach, pear and apricot fruit flavors.

* Louis Latour Corton Charlemagne 1989             Est. Current value: $195 (750 ml)
Rich and full-flavored, similar to Mersaults, exhibiting nutty undertones but more refined, showing better breeding.

* Roederer Cristal 1986               Est. Current value: $250 + (750 ml)
Full-flavored and assertive; toasted bread nose and nutty flavor with great balance and finesse

* La Tache D.R.C. 1971             Est. Current value: $4600 + (magnum cost)
Enormous fruit with cherry, berries and grape flavors; an outstanding complement to the gnocchi pasta

* Richebourg D.R.C. 1971             Est. Current value:  unknown
More accessible than the La Tache right out of the bottle.  Lighter in body but still a mouthful of cherries and berries.

* La Montrachet Latour 1982             Est. Current value: $180 + (750 ml)
A very elegant and mouth-filling white wine that stood on its own without food.  Dry, yet luscious.

* Chateau La Tour 1959             Est. Current value: $2100 (750 ml)
it showed great depth of flavor, richness on the palate and power in the finish

Kudos to Bob and double kudos for being able to procure the tasting notes in a suitable manner to email, 14 years later.

I’ve traded the bad beer for wine, now I’ve got to figure out how to get in on some of these sweet wine dinners.

What was your best wine experience?  Leave a comment.


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Wine Library TV Fathers Bastard Video Children

On the heels of my post on Wine Library TV and their acquisition/partnership with Cork’d, comes a couple of more wine-related video blogs.  I present to you two new viewing options for your consideration:  WineTaste TV and Taste of Wine TV. 

Got that?  If you’re mildly dyslexic and a wine lover welcome to Dante’s 7th circle.  The only worse thing they could have done is called it “Lesley sips Sauternes and Swims Sweetly in Sweden” TV and tortured some folks with lisps, too. 

WineTaste TV/Taste of Wine TV.

So much for creativity. 

I’m reminded of movie producers and television executives.  By gosh, if one disaster movie about an asteroid hurtling towards earth gets a green light (Armageddon) than two movies (Deep Impact) must be absolute consumer gold.

Nonetheless, there are now a couple of wine-related video blog Internet viewing options separate from Wine Library TV.

The first and clearly superior option of the two new entries is WineTaste TV.  Lo and behold, it’s a similar set-up to Gary’s.  If imitation is the sincerest form of flattery, then Gary should be blushing.  Brought to us by the good people at Zachy’s, the premiere wine retailer in New York, their vlog is a polished production with occasional appearances by Karen MacNeil, a noted wine expert and author.

Based on the couple of episodes I watched with Oriel Wines founder John Hunt, Richard Betts from Betts & Scholl, and Karen MacNeil it might be a little too slick and produced.  Or, maybe it’s not authentic enough—hard to put my finger on it.  But, in regards to authenticity, to quote former Supreme Court Justice Potter Stewart describing hard-core pornography, “I know it when I see it.”

The overall site is nicely set-up with the ability to buy the wines that are discussed within an easy click, but, strictly from a consumer perspective, occupying real estate in the wine space on the Internet, I’d like to see them be a little less overtly sales-oriented and slick. 

Blogging and online communities thrive on transparency and while the folks at WineTaste TV aren’t hiding the fact that they are trying to sell you something, it seems like a little more do-gooder-ism and less sales bludgeoning might help them out.  Case in point:  underneath the video screen is an area that says, “Contact WineTaste TV about content and sponsorship opportunities.”  Huh?  I mean, c’mon guys.  Bury that somewhere in the navigation, not underneath the area where you watch the content.

Another major faux pas is the fact that a quick check of iTunes indicates that you can’t get the content on iTunes.  No additional comment necessary … it’s just a major gaffe and unfathomable that it occurred.

According to the site, a blog, message board and additional content is pending.

Check it out at: www.winetastetv.com

The other bit of online video content is re-purposed content from a Taste of Wine TV, a show based in So. California that features wine, food, people, and places from the region.  It’s much less polished than the Zachy’s vlog; even though the segments appear on actual television. The show has a regional PBS feel to it.  They do get it right in that their content is available on iTunes, though they chose to use Google video when YouTube or blip.tv might have been a better choice.

Kudos, in general, to them as they get some insightful and engaging guests, too—Mick Fleetwood and Marc Mondavi show up for interviews that end up as podcasts that can be found here and here.

If you’re wine video blogeth cup isn’t quite filled up enough with Gary from Wine Library TV, check out WineTaste TV or, er, Taste of Wine TV, er, both of them. 

Gary, for his part, though, might tell you to take a Passsz.


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