GO
Loading...

Napa Valley: Off My Beaten Path With Fred Franzia (Pt. 1)

Friday, 10 Aug 2007 | 1:21 PM ET
Fred Franzia
AP
Fred Franzia

Sure, I'm the Silicon Valley Bureau Chief, but every now and then I get to cover stories from that other newsmaking valley just north of here: Napa Valley. We're working up a story on Fred Franzia and when it comes to the wine business, he's probably not a name you easily recognize. There's Mondavi; the Gallos; and yes, Fred Franzia. He's either revered, or reviled, depending upon whom you talk to in the wine world.

Revered because he has become a kind of "everyman" voice in an industry increasingly dominated by high-end, exclusive, craft winemakers who literally turn their noses up at the vast majority of the wine business with their labels charging $20, $50, even $100 a bottle or more. Especially when wineries like Stag's Leap and Duckhorn each sold in multi-hundred-million-dollar transactions.

Or, he's reviled as the mogul behind the esteemed Charles Shaw label. Better known as "$2-buck Chuck." "We feel our wines are among the finest wines made," Franzia told me during my recent visit to his extensive bottling operation in Napa Valley. This massive operation bottles 300,000 bottles a day, for a variety of labels Franzia's Bronco Wine Co. works with. Every day.

Five years ago, this renegade businessman got the idea to offer quality wine at dirt-cheap prices, making money from volume sales. A successful strategy Franzia learned from other industries. "It's the same customer out there that's flying JetBlue, it's the same customer that's buying Dell computers. They're looking for good quality at fair prices," he tells me.

The trick was to find a good retail partner to handle marketing and distribution since his approach to wine really hadn't been done in California's high-brow wine business. So, enter retailing partner Trader Joe's, where these two sides split their pennies-on-the-dollar profits. And that was 300 million bottles ago.

In fact, Charles Shaw has become such a massive success in this country that the label is now going international. And it's beginning to appear in some pretty exotic markets. Franzia tells me he ships 144,000 bottles to Ethiopia every two weeks. (see more in part 2)

Questions? Comments? TechCheck@cnbc.com