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Exclusive: At Tenth Anniversary, Two Buck Chuck Holding At 5 Million Cases, But Down Slightly Since 2008

February 15, 2012

When Charles Shaw—better known as “Two Buck Chuck”—hit Trader Joe’s shelves in 2002, the Bronco Wine Co. brand sparked a phenomenon that few industry observers believed would last. But as it celebrates its 10th anniversary this month, Two Buck Chuck continues to rank among the U.S. market’s top-selling wine brands.

After selling nearly 2 million cases in 2002, Charles Shaw zoomed past the 5-million-case threshold the following year. But while those numbers suggested limitless possibilities, the brand’s explosive growth soon halted. In fact, Two Buck Chuck’s annual volume has remained at around 5 million cases since 2003. Last year, the brand advanced by 1.4% to 5.18 million cases, according to Impact Databank. And while it might seem odd that Two Buck Chuck would lose ground during tough economic times, its annual sales in fact have fallen by about 150,000 cases since 2008.

Retailing at just $1.99 a 750-ml. in Trader Joe’s California stores ($2.99-$3.50 in Trader Joe’s stores in other states due to higher distribution costs), Charles Shaw instantly caught on with consumers as it redefined the economy wine category. Packaged in 750-ml. bottles with a cork seal and sold exclusively in a grocery chain with a reputation for high-quality products, Charles Shaw was vastly different from the screwcapped jug wines that had long dominated the economy wine segment.

Two Buck Chuck’s enormous success spawned an array of competing initiatives—mainly in the form of brands retailing at a few dollars higher and offering far wider availability. (Even after years of expansion, at the end of 2011 Trader Joe’s still operated in only 31 states and Washington, D.C.—not all of which allow wine sales in supermarkets—and roughly half of its 365 stores were in California.)

One slightly higher-priced competitor has been Barefoot Cellars. When E.&J. Gallo acquired Barefoot in 2005, it was rising fast, with sales doubling from 2001-2004 to reach 470,000 cases. But plugging the sub-premium Barefoot (around $5.50-$6 a 750-ml.) into Gallo’s formidable pipeline took it to new heights, and it hasn’t stopped soaring since. In 2011, Barefoot’s sales rose by more than 15% to reach the 10-million-case mark. Meanwhile, on the import side, W.J. Deutsch & Sons’ Yellow Tail sold 225,000 cases in the U.S. market in 2001, its introductory year. In 2002, as Charles Shaw arrived on the scene, sales of Yellow Tail—which usually retailed for slightly less than $7 a 750-ml., making it extremely competitive among imports—exceeded 1 million cases. Four years later, Yellow Tail eclipsed the 8-million-case threshold, and sales since hovered at that level.

Despite those and other competitors’ successes, Two Buck Chuck endures. Unlike so many other brands that have gotten off to soaring starts only to fade just as quickly, Charles Shaw is still a strong contender a decade after its launch.

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