Ever Wonder Why Trader Joe's Wine Is So Cheap?

Trader Joe's eclectic selection of products and reasonably priced in-house brands are well-known, and one of its most enduring offerings is budget wine. The grocery chain's association with wine has interesting roots that go all the way back to its establishment. Soon after opening its first outlet in the late 1950s, Trader Joe's became famous for affordable imported wines. Ever since, the company has pioneered good wines for cheap, resulting in more Americans having access to the drink. While it continues to offer fine plonk at almost suspiciously low prices, how it achieves that has changed over time. Interestingly, Trader Joe's entire philosophy of cultivating customer loyalty for its non-mainstream brands is also inspired by the wine industry.

Presently, many of Trader Joe's private-label wines are supplied by one California-based winemaker called Bronco Wine Company. The late Fred Franzia, who headed Bronco when it signed a deal to supply wine to Trader Joe's, liked to call his product the wine of the people, or "super value" wine. So proud is the company of its bargain wine that, according to the New Yorker, a salesman once said that its only competition at that price point was bottled water. Thus, two major factors feed into Trader Joe's wines being cheap — the grocery chain's marketing philosophy and its major wine supplier's expertise in producing good budget plonk.

Nowadays, Trader Joe's has lots of little secrets that improve buyer experience in subtle ways. However, the chain's founder, Joe Coulombe, got many of his early ideas for enticing customers from how people purchased wine. In an interview with VinePair, Benjamin Lorr, author of "The Secret Life of Groceries: The Dark Miracle of the American Supermarket," explained, "The wine industry really opened his eyes to the possibility of marketing all foods like wine. When you're a consumer, you find a good wine shop, and then you start to trust the owner of that [store] ... Using that as a frame for a grocery store was very novel at the time. The idea that you would find trust in a grocery store, and then they would bring you options, was a shift that he was really interested in getting people to do." Coulombe also realized that he could compete with bigger chains selling branded mass-produced wares by offering eclectic products that allowed people to express individuality. 

With wines, the store initially achieved success by selling imported bottles at drastically lower prices than the competition. Coulombe heavily undercut the price of international wines in California after he found a loophole in the state's wine pricing laws. Thus, Trader Joe's quickly became the largest seller of imported wines in California. He later tied up with Bronco Wine Company to supply wine to Trader Joe's and the era of Charles Shaw wine, aka Two-Buck Chuck, began.

A bottle of Charles Shaw wine, better known as Two-Buck Chuck for its sub $3 price, costs more than $3 in most places. Sure, it was $1.99 a bottle when it hit Trader Joe's shelves in 2002 and again in 2020. However, this was only in California which is home base for both the grocery chain and the wine supplier.

As with many new world winemakers that favor cost-effective production methods, Bronco Wine Company has economized every step of the process. The company is also the largest private vineyard holder in the United States, allowing it to produce copious amounts of wine. Wine Business Monthly estimates domestic sales of the Bronco Wine Company are about 8 million cases annually, making it the 7th largest wine seller in the country.

The company ages wine using cheaper wood chips instead of barrels. Transport and logistics costs are reduced by using lighter bottles (which helped bring prices down to $1.99 in 2020) and cheaper packaging cartons. A perfect metaphor for the wine brand is the cork used. Made from a composite which is one of the cheapest forms of cork there is, the company could cut costs further by using plastic. However, it maintains the tradition of sealing its wines with cork. Unlike the fruity, boozy XXL wines, Charles Shaw and Trader Joe's aren't trying to reinvent wine's image. They're just making bargain wine an acceptable, even respectable, drink.