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The real reasons Trader Joe's wine is so cheap

Charles Shaw wine
Charles Shaw wine

(Mack Male via Wikimedia Commons)

Trader Joe's wine is remarkably cheap.

A bottle of the grocery store's most popular wine brand, Charles Shaw, sells for less than $3.

Also known as "Two-Buck Chuck," Charles Shaw wine comes in multiple red and white varieties, including Cabernet Sauvignon, Chardonnay and Merlot.

The wine's low price has attracted some criticism. Critics have called it undrinkable and "sugar water." A wine shop owner once publicly accused the company that makes Charles Shaw wine, called Bronco Wine, of failing to remove dead birds, leaves, insects, and rodents from its grape harvests. Bronco Wine has denied the allegations.

Despite the criticism, the wine is wildly popular. It's one of the best-selling products ever sold at Trader Joe's, exceeding 800 million bottles since the wine debuted at $1.99 in 2002, according to CNBC.

So how does the company keep its prices so low, while still delivering a taste that people love? And is there really animal matter in the wine?

Here's what we found.

1. Bronco Wine has cheap real-estate costs. Most of the company's vineyards are located in California's San Joaquin Valley, where the cost of land is much cheaper than the more prestigious Sonoma or Napa Valley, according to George M. Taber, author of the book "A Toast to Bargain Wines: How Innovators, Iconoclasts, and Winemaking Revolutionaries Are Changing the Way the World Drinks."

Higher average temperatures in San Joaquin Valley can over-ripen grapes, which is a main contributor to the price difference between the regions.

Bronco Wine
Bronco Wine

(Facebook/Bronco Wine) Bronco Wine posted this to Facebook with the caption, "New plantings as far as the eye can see."

"The main issue facing wineries in the Central Valley," Taber writes of the region in which the San Joaquin Valley is located, "is heat. Grapes grow abundantly, and harvests can be huge. The flip side, though, is that too much heat reduces quality."

2. The company ferments wine with oak chips, which are cheaper than barrels, according to Taber, who interviewed Bronco Wine owner Fred Franzia for his book.

Most fine wine is fermented in oak barrels. "Oak improves the taste of wine, but also the price tag," Taber writes. "Bronco continues aging wines in oak, but uses less expensive forms of it, for example chips rather than barrels. American oak is also less expensive than French."

3. The company uses "one of the cheapest forms of natural cork," according to a 2012 report by KALW Public Radio.

It's a mold of cork pieces glued together with a "real cork veneer at the bottom," the report says.

Charles Shaw
Charles Shaw


Bronco could cut even more costs by using a plastic cork, which is what most wines under $10 use.

Franzia believed a plastic cork would affect the taste of the wine and potentially cheapen customers' perception of Charles Shaw, so he used low-cost natural cork products instead.

4. Making wine in huge quantities keeps production costs low. Bronco makes an impressive 90 million gallons of wine a year, according to Taber.

"Little wineries need to get high prices in order to be able to make wine in small quantities" Ed Moody, Bronco's chief winemaker for more than 20 years, told Taber. "You make better wine in a 700,000-gallon tank than you can in a 700-gallon one because there is less exposure to air, and oxygen is the enemy in winemaking."

The company uses machines to harvest the grapes, which helps keep labor costs low, but also increases the chances that bad grapes end up in the wine, according to Keith Wallace, executive director of the Wine School of Philadelphia.

"Everything is automated," Wallace told Business Insider. Mass-produced wine typically has higher amounts of residual sugar and added grape concentrate to mask the taste of inferior grapes, he said.

Critics argue that mass production is also how animal matter can end up in your wine glass. But to be fair, there's a chance of that happening with most agricultural products.

"If you worry about things like that, you shouldn't eat anything; you shouldn't drink anything," Bronco owner Franzia told CNBC. "When the wine's fermenting, they're going to eliminate anything that's possibly there."

Here's one of the company's winemaking facilities.

Bronco Wine
Bronco Wine

(Facebook/Bronco Wine)

5. Bronco cuts shipping costs by using lightweight bottles and cheap cartons. Bronco was a "pioneer" in using lightweight bottles, according to the KALW report.

The lighter glass reduces the weight of a case of wine by several pounds, meaning Bronco can ship more wine at a time.

Bronco also lowered the cost of its shipping cartons by a few pennies by replacing the white paper it was using with a light brown paper, Taber writes.

Here's how the cartons looked before the change.

Charles Shaw
Charles Shaw

(Flickr/Chris Devers)
Bronco Wine and Trader Joe's did not respond to a request for comment on this story.

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