Chris Shanahan: Two buck Chuck’s Aussie debut

What’s the connection between Olivia Newton John and two buck Chuck?

Yes, there is one. And it’s in some blue coloured wine bottles sold through Woolworth’s BWS chain a few weeks back.

But before we discover the connection, let’s meet two buck Chuck.

A couple of years ago American retailer Trader Joe’s released the Charles Shaw varietal wine range at an unprecedented $1.99 a bottle. The wine was instantly dubbed two buck Chuck.
What rocked the global wine industry and won American consumers was two buck Chuck’s extraordinarily low price. How could this be?

Well, Trader Joe had very effectively tapped into a wine glut caused by a massive Californian vine-planting spree in the late nineties.

At the time Australia’s own wine glut – also driven by a late nineties planting spree – was looming before hitting with full force following the bumper 2005 harvest and only slightly smaller 2006 vintage.

Here the glut, in combination with an intense nation-wide retail rivalry, drove wine prices down as well as spawning a new generation of ‘clean skins’ – unbranded wine sold in minimally labelled or entirely bare bottles.

But, as low as retail prices fell, an Australian two buck Chuck seemed unlikely until a couple of weeks ago when separate branches of Woolworths achieved the seemingly impossible. And this is where Olivia Newton John comes in.

The word from Mildura is that two Woolworth’s buyers visiting the region earlier this year put two and two together and gave Australian wine drinkers two buck Chuck in blue bottles.

Initially, the story goes, the buyers enquired after grape growers abandoned pre-vintage by McGuigan Simeon Wines. At the same time they learned about a large cache of blue wine bottles sitting in a contract bottler’s warehouse.

These bottles had been bought in optimistic volumes for export to the USA under Olivia Newton John’s Koala Blue brand. By vintage 2006, however, they had become about as white as a white elephant can be – until the Woolies’ buyers came along.

By putting chardonnay from the abandoned growers (by my guestimate costing thirty cents a litre or less) into distressed-priced blue bottles (probably bringing the total packing cost to about half the normal level) they had on their hands Australia’s first two buck Chuck – if they wanted to.

And they did, selling the entire production — an estimated 136 thousand six packs — at $11.93 in just one week.

And what did this achieve? Well, Woolies got the triple whammy – a thumbs up from keen wine drinkers, a modest profit and a poke in the eye to arch-rivals Coles; consumers got a good deal and the abandoned growers and Olivia Newton John each received some rather than no money.

In the same week, Dan Murphy, another Woolworths’ chain, offered two wines – a cabernet merlot and a chardonnay – at just under the $2 mark. Again, I am told that this was a one-off phenomenon.

The question asked by a struggling industry and a delighted consumer is whether or not the Aussie two buck Chuck is dead and buried.

The answer is that, unquestionably, it cannot be sustained. However, until production comes back into line with consumption it’s quite possible that distress sales may cause a repeat.

By all accounts there’s a lake of bulk wine out there – especially chardonnay and cabernet sauvignon. And with prices as low, I’m told, as thirty cents a litre, there just has to be more cheap wine coming our way or flowing overseas.