Fred Franzia and the future of the wine business

Fred FranziaFred Franzia, the man the California wine business loves to hate, reminded us why last week when he spoke to the wine industry’s most important trade show. “One billion bottles of Two-buck Chuck,” he said to the audience, and I can imagine almost all of those in attendance cringing. Because the last thing the 21st century California wine business wants to be known for is very ordinary $3 wine sold at Trader Joe’s.

Still, Franzia is one reason why California is the most successful wine region in the world. His successes, whether becoming one of the first to sell competently made cheap wine like Two-buck Chuck or pioneering the Big Wine model that is the blueprint for the industry’s domination today, are indisputable. But his speech also revealed why so many in California wine who aren’t Gallo and Constellation aren’t prepared for the rest of the 21st century.

That’s because it was written through the lens of his family’s three generations of success, which was built on better winemaking technology, an unparalleled knowledge of the supply chain, and a canny insight into the Baby Boomers who transformed the way Americans drink wine. Franzia’s Bronco Wine is an example of 20th century manufacturing at its finest — give the consumer a quality product at a fair price, and make sure the retailers who sell your product make lots of money, too.

Those days are long gone. Does Apple really care about its retailers? Does Whole Foods really care about the manufacturers who supply its stores? And does Amazon really care about anyone other than Amazon? Know, too, that Amazon became the largest retailer in the U.S. and it got there without selling a drop of wine.

Yet Franzia spoke about the wine business as if none of that mattered. His talk was firmly rooted in what has been, and not what will be. He was particularly critical of the recent Silicon Valley Bank report that spoke of serious challenges facing the wine business as the Boomers age and consumption declines, dismissing the report as irrelevant because it didn’t accept the truths that he has seen over the past 50 years.

He also quoted Mel Dick of Southern Wine & Spirits, the largest distributor in the world, who has said famously that if U.S. per capita consumption was as big as the French, we’d drink 1.6 billion cases of wine a year — five times what we drink now. The catch? Besides the French wine culture, they don’t have distributors, and buying wine there is as easy as buying a baguette. Which, of course, is not the case in the U.S. That Franzia doesn’t realize that the three-tier system damps down wine consumption and is increasingly irrelevant in the 21st century is not surprising, because he still sees distributors as crucial to wine’s success as perhaps they once were.

One of my regrets in some 20 years of wine writing is that I’ve never interviewed Franzia; the couple of times an interview seemed possible, something fell through. That’s because I admire and respect what he has done, and if nothing else for his constant harping about too-high restaurant wine process. And his success with Two-buck Chuck revolutionized the wine business, something for which many of his colleagues will never forgive him.

But past success is no guarantee of what will happen in the future, and it’s not change that matters as much as how one adapts to change. And change is coming to wine, whether anyone wants to believe it or not — even if you’re Fred Franzia.

Fred Franzia cartoon courtesy of The New Yorker, using a Creative Commons license

One thought on “Fred Franzia and the future of the wine business

  • By Joe Jensen - Reply

    Wine is much cheaper in Europe and it is not because of distributors since there are distributors in all major wine making countries.
    Quality wine is always cheaper when you live in the neighborhood and I hope you don’t consider 3 buck chuck a quality wine, it is more like a commodity fruit flavored alcohol delivery system.
    Retail wine prices tend to be pretty fair in the US when you consider the cost of finding product, moving it across the world, storing it and selling it.
    Wine in restaurants is another story and that has nothing at all to do with what a distributor charges!
    The French are drinking less due to many reasons, including some government actions and I believe that they younger generation in the US will drink maybe not necessarily more but most definitely more diversely then their parents!
    To Fred Franzia’s credit he realizes that they may not be willing to $85 on a bottle of mediocre big name or appellation California wine when they can buy something better for half or less from many other wine making countries.
    The problem for Fred Franzia is that he makes sweet wines that baby boomers think are dry but their children will spit out and buy something from France, Italy, Spain or Portugal that actually tastes like wine for $8!

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