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Trader Joe’s

Trader Joe’s

Charles Shaw: What A Long Strange Trip It’s Been

by Tim Elliott on February 4, 2012

This week stories about the 10 year anniversary of Charles Shaw wines began to hit the news. If there is a single wine brand I get asked about by people not into wine, it’s this Trader Joe’s success story. The funny thing is the story of Charles Shaw started over 35 years ago but few have written about it. Look around on the web a bit and you can piece together a tale of a man of vision who made well regarded wines in Napa Valley only to lose his winery and brand. In the end, however, Shaw returns to winemaking in an unlikely appellation. This is his story.

Charles F Shaw Gamay label

Photo via Napa Valley Wine Blog

Charles and Lucy Shaw settled in St. Helena in 1974 returning from France where he became fascinated with the production of Beaujolais using the whole cluster fermentation method. Back in those days, the Napa Valley was a vastly different place than it is now with perhaps 50 wineries in the appellation (today there are over 450). Like other new winery owners of this era, Shaw and his wife bought land and planted a vineyard just outside of St. Helena in the middle of Napa Valley. In all, Shaw farmed 70 acres of vines with the majority on the valley floor and about 20 acres on Howell Mountain. Chardonnay, Sauvignon Blanc, Pinot Noir and Gamay were produced garnering accolades for quality.

While the winery made other varieties, it was Gamay and Sauvignon Blanc that were the lynchpins of the Shaw lineup when they opened the winery in 1979. Shaw had developed a love for Gamay while in France, particularly the nouveau style made by carbonic maceration or whole berry fermentation. This technique was not used in California in the 1970’s so Shaw was a pioneer in it’s practice. Beaujolais has always flown under the radar with American consumers and continues to be amoung the best values coming out of France today even with unfavorable exchange rates. But their nouveau style, sold with great fanfare on the third Thursday in November, is viewed by most as a curiosity, others as a marketing stunt and a few as a joke. So hanging your hat on making Napa Valley Gamay Nouveau was not the best business plan. And while a more serious version of the wine was also made getting $8 a bottle proved to be a challenge when well respected Cru Beaujolais was selling for the same price or less. Consulting winemaker Ric Forman, who helped craft the style of Charles Shaw Gamay, summed it up later, “It was unfortunate that his idea didn’t work. It was the wrong product.”

Running a winery is a capital intensive business and by the late 1980’s the Charles Shaw Vineyard & Winery was under extreme financial pressure. These pressures took their toll on the Shaws’ marriage and in 1991 the two were in divorce court. Since Shaw’s wife’s inheritance was used to finance the winery she took over and Charles Shaw left the wine business with nothing more than hard won experience. A year later, Charles Shaw Vineyard & Winery filed Chapter 11 and was eventually sold off in pieces to pay creditors.

This is when the story of Charles Shaw, the Trader Joe’s wine brand, began. Fred Franzia of Bronco Wine Company based in California’s Central Valley purchased the brand name for a reported $18,000 in the early 1990’s. This is not uncommon in the wine business where wine brands with good reputations are purchased and revived later with bulk wines vastly different from their first incarnations. It is unclear why Franzia sat on this brand for a decade before reviving it for Trader Joe’s in 2001.

There are a number of urban legends about Charles Shaw wines that date from the first limited releases in 2001 and 2002. The first anomaly was the 1999, 2000 and 2001 vintages were nearly simultaneously released and quickly sold out. Rumors of fire sales due to airlines selling off stock after September 11 when corkscrews were banned made the rounds. A nasty divorce forced the liquidation at a loss was another story; somewhat closer to the truth but a decade too late for 1999 vintage wines to be sold. The true story is one of wine economics where a huge wine glut created an opportunity in the bulk market that Fred Franzia exploited.

The initial releases of Charles Shaw wines created a sort of reverse wine snob cult. I remember hearing stories from friends in Southern California of people showing up at Trader Joe’s, buying a bottle of each variety in stock and immediately tasting each in the parking lot before buying what they liked by the case. In those days Trader Joe’s had some fairly drinkable private label wines but it was their branded wines sold at closeout prices that were the real values. I once bought some Ridge Merlot at $4.99 a bottle when we lived in LA in the early 1980’s that was an extremely good value. So the use of the Charles Shaw label and not Trader Joe’s was a stroke of wine marketing genius. And from memory the first vintages of Charles Shaw were actually pretty good, most likely the result of savvy bulk wine purchases and good blending. Today the wines are less exciting but certainly more consistent in style made from mostly Central Valley grapes Franzia grows or controls. Highly mechanized agriculture combined with highly mechanized winemaking keep cost low. Selling directly to Trader Joe’s also eliminates another cut of the profit which keeps the selling price at $1.99 or $2.99 a bottle depending on where you live in the U.S.

The result is over 50 million cases of Charles Shaw wines have been sold in the past 10 years. For many this is their everyday wine and while the wines are not very exciting to a lot of us wine geeks they are certainly almost always worth the price charged. And they have created a market for other extreme value brands such as Cameron Hughes and Castle Rock to bring vastly better wines at somewhat higher prices.

And Charles Shaw did get back in the wine business a few years ago making Riesling in Michigan under the Oerther Vineyard label. Let’s hope this venture works out better for him than his experience in Napa Valley.

What a long strange trip it’s been.