Two Billion-Buck Chuck

Fred Franzia takes on banks, grapegrowers and academia in lively talk at Unified Wine & Grape Symposium

by Paul Franson
Fred Franzia Unified
Fred Franzia speaks during the Unified Wine & Grape Symposium keynote luncheon today in Sacramento, Calif. Photo: Ken Freeze
Sacramento, Calif.—Attendees at the sold-out keynote luncheon featuring Fred Franzia at the Unified Wine & Grape Symposium weren’t disappointed by the irascible president of Bronco Wine Co.

The father of “Two Buck Chuck,” who co-founded his wine company in 1973 with his brother and cousin after their parents sold the family business to The Coca Cola Co., delivered zingers worthy of Donald Trump to enthusiastic listeners.

Along the way, he also announced some news: The company has delivered more than 1 billion bottles of Charles Shaw wine (called Two Buck Chuck for its former price in Trader Joe’s stores, although it now sells for $2.99).

His company also has renamed its Escalon winery Petri Wine Co. in honor of its founder, Louis Petri, whose company was once larger than Gallo.

He thanked The Wine Group, which bought the Franzia brand from Coca Cola, for allowing him to acquire the name, joking, “Maybe we’ll be able to reclaim the Franzia name next.”

Franzia’s talk wandered all over the industry, from its founding in California to some sharp comments about current trends, delivering brickbats as expected.

The largest vineyard holder in California, Franzia adamantly defended the San Joaquin Valley against recent comments that its time had past.

Referring to last week’s annual report from Silicon Valley Bank, he said, “Mr. (Rob) McMillan, working for a coastal bank that makes loans to high-end wine producers, may be crying wolf too loud about the San Joaquin Valley. If he has not noticed, it is the San Joaquin-based and -sourced wineries that are buying the coastal wineries. I will stand by on our belief and am not misled by Mr. McMillan’s doom and gloom.”

California’s wine history
He reminded the audience that wild grapevines grew along the Grape Vine Creek that flows off the Tehachapi Mountains through one of his vineyards at 850 feet altitude, claiming, “The San Joaquin Valley was the origin of grapevines in California.”

More seriously, he noted that Junipero Serra introduced European grapevines to the missions nearly 250 years ago, the early origins of the business.

Franzia’s grandfather, Giuseppe Franzia, arrived at Ellis Island from Genoa, Italy, in 1893. After moving to Stockton, Calif., a year later, he bought 80 acres near Ripon, Calif., in 1912.

Fred Franzia’s father, Joseph Franzia, was born on the family farm in 1912, and Giuseppe began commercial wine production in 1915.

Prohibition ended the elder Franzia’s wine business, but he sold and shipped grapes during that time.

The family started over in 1933, when Prohibition ended, and Franzia said, “The emergence of the American wine community following the dark ages of national Prohibition is one of our country’s great stories of competitive free enterprise.”

Franzia mentioned and honored many important figures in the wine business including his uncle, Ernest Gallo, and Robert Mondavi. “Bob was definitely one of a kind and a special advocate for California wines.”

Franzia recalled how on a long trip to France visiting wineries, “I annoyed a lot of them and Bob made a lot of friends. Some of the things they said were annoying.”

Bronco’s history
Franzia remarked that originally Bronco was a large-scale negociant, not a grower or winery. He said that in 1976, they entered a joint venture with Getty Oil to build a crushing facility in Fresno and used Getty vineyards as the primary source of grapes.

“When Getty sold out to Texaco, we lost our supply of grapes. That’s when Bronco started to acquire abandoned almond orchards,” he said to a large laugh, as many Central Valley growers have recently pulled grapevines to replace them with almond trees. 

His family continued to acquire land and now own or control more than 40,000 acres.

He also said that Bronco grafts about 1,000 to 1,500 acres of vines each year to meet shifting demand. “One of the secrets to our success is to adjust sourcing from our own vineyards.”

On a more positive note, he praised drip irrigation for saving 50%-60% of water and improving grape quality. He said that drip and micro irrigation systems are used on less than 40% of California’s 7.54 million irrigated acres. Flood irrigation is used on 60%. “That needs to be changed.”

San Joaquin Valley land is in high demand for nut trees, and prices have risen, but Franzia considers the land overpriced and predicts prices will fall. He also feels that America could drink much more wine, and that wine must come from the Central Valley.

“Every restaurant should offer $10 bottles of wine,” Franzia said, “that would improve demand.” He thinks the United States will drink 1 billion cases of wine per year by 2040, up from 327 million last year.

Venting on research
Franzia and Bronco are generous donors of research money to the American Vineyard Foundation, but Franzia is against government money for research. He feels much is ill spent, saying $600 million in government funding has been spent on the glassy-winged sharpshooter.

“Our own company has spent $2 million on the inspect and claims to have found no GWSS in 25 years in 25 square miles of vineyards in Kern County. Obviously Napa and Sonoma counties are more conducive to incubating disease than other California grapegrowing areas, but they want the rest of California growers to pay for their research.”

He also said that he welcomes recent changes in leadership at California State University’s wine program in Fresno. “This gives the school an opportunity to hire new faculty and create a great practical viticulture department that can be responsive to industry needs.”

Franzia said that Bronco buys more than 50% of its grape supply from non-related growers, and 85% don’t have written contracts. “If the grower isn’t satisfied with our company, they can go elsewhere, but we’ve been buying for many years from the same growers.”

More controversy
Franzia disagrees with Allied Grape Growers’ statement that growers need to pull more than 30,000 acres of grapes. “We all know what Allied’s hidden agenda seems to be,” Franzia said, implying the cooperative group wants to increase prices paid to growers. “The truth is we should be planting more, better quality grapes and grow them more efficiently in the San Joaquin Valley to attack the 40% of the wine market now being supplied by non-California foreign wines.”

He thinks “California” should be the primary appellation on California wines. “We have engineered over 90 different appellations in California,” Franzia said. “In my opinion, the appellation system caused the downfall of French wines and will do the same in California.”

Franzia claimed that the San Joaquin Valley has been and will be the major source of grapes to produce highest quality California table wine. “Even though some Lodi growers want to secede from the San Joaquin Valley, they send their property taxes to San Joaquin County and are included whether they like it or not.”

Finally, Franzia expressed great concern about the mergers occurring in distribution and retail. “We’ll see less competition and tighter channels to sell wine.”

As expected, Franzia gave everyone their money’s worth, and plenty to talk about once more.

Posted on 01.27.2016 - 07:36:03 PST
Allied's agenda isn't hidden. They advocate for the grower. There is too much planted and vines need to be pulled to improve grower returns. Is it possible Fred is trying to keep grower prices low and his hidden agenda is advocating for self-interest? Nah. Probably not.

Posted on 01.27.2016 - 09:55:36 PST
Fred as usual is opinionated, but his comments on lower priced quality wines makes sense. To broaden the wine market we have to have reasonably priced wines available to new and old consumers. There has to be a quality level that is between box wine and estate bottled that allows entry level consumers to experience good quality at a reasonable price. Premiumization is driving the market and also driving new consumers to craft beer and other beverages such as cider as the wines they were drinking increase in price based on a questionable marketing concept.
Michael Ge

Posted on 01.28.2016 - 13:24:10 PST
Fred continues his legacy of stirring the pot. He advocates for a certain segment of the industry but the industry clearly has many segments. Fred doesn't believe that there really is supportable bottle price at the upper end supported by differential quality, but certain levels of distinctly higher quality product can only be made from grapes grown in an area which has expensive land and relatively lower yields when compared to the Central Valley. His words are surely food for thought. How about a verbal cage match between Rob McMillan and Fred? I'd pay to hear that exchange.

Posted on 01.28.2016 - 16:47:20 PST
This guy is truly a piece of work! If the Central Valley was doing so well then why would they be buying up coastal properties? It's like Coke buying water, juice, and natural products companies because they see the writing on the wall that what they offer is no longer in as high demand. Americans are finally waking up to the idea that they want safe, quality products... thank goodness. I'm not a wine producer but a wine drinker and I'm sure glad that more are buying better made wine and less are buying the low end. Then to argue that we as a society deserve a cheap wine is like arguing that Porsche must sell an affordable sports car. Or that all Americans should have access to affordable caviar. Some products not everyone can afford. Then the appellation comment, of course he doesn't want AVAs listed on bottles, he's in the least respected wine growing area in all of California.
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