The Scourge of Napa Valley

By Kermit Pattison

(1 of 2)

California winemaker Fred Franzia says the world would be better off without all that expensive Napa Valley wine. And that's not just an opinion--it's a business plan.

"Tell him to get f---ed." Fred T. Franzia is dictating a message for his advertising consultant. Franzia, the chairman and CEO of Bronco Wine, is sitting in his office in the San Joaquin Valley of California. His family business is one of the largest wine companies in the United States, yet his headquarters is about as luxurious as a trailer at a construction site. It's a small, termite-ridden building beside a fence topped with barbed wire. Behind him are shelves lined with dozens of his wines, many costing less per bottle than a six-pack of beer. The bottles clink when the air conditioning kicks on. Trucks rumble through the gate by the guard shack outside the window. A gun safe gathers dust in the corner. He can't keep weapons anymore because he's a convicted felon.

Franzia, 62, is a jowly winemaker with a barrel torso and little patience for critics. After six years, he has just come out on the losing end of a high-profile legal battle against vintners in Napa Valley over whether he can put Napa labels on bottles of wine made with cheaper grapes grown elsewhere. Franzia dismisses the Napa vintners as "a bunch of whiners." He believes that the wine industry has become intoxicated by elitism, inflated prices, and its own PR about terroir--the idea that a wine is uniquely a product of the place it comes from, and by extension that some places are better than others. "Why complicate it?" asks Franzia, voice rising. "Does anybody complicate Cheerios by saying the wheat has to be grown on the side of a mountain and the terroir in North Dakota is better than Kansas and all this horse s---? You put something in your mouth and enjoy it. If you spend $100 to buy a bottle of wine, how the hell are you going to enjoy it? It's a joke. There's no wine worth that kind of money."

It's not just Napatistas who rile him into bursts of profanity. There are the retailers with their excessive markups ("greedy bastards"), restaurants with their overpriced wine lists ("they rape the consumer"), and his paragons of oenophile elitism: the famous wine critic Robert Parker and Wine Spectator magazine ("their expertise is talking about themselves and saying they're the experts"). And don't get him started on corkage fees. Still, the Napa vintners do occupy a special place in his spleen. "This is what pisses off your friends in Napa," he says, and shows his latest salvo: a newspaper advertisement that reads, "Think you have to spend $20 for a Napa Valley Merlot? Think again!"

Soon his secretary appears at his side and slips him a note. It's a memo from his advertising guy, recommending that Franzia not share the ads before they're ready for publication. Franzia abruptly hands it back to his assistant and renders his executive decision: "Tell him to get f---ed."

He chuckles and shakes his head. "Like he's going to tell me what I'm going to share with people?"

Not surprisingly, many Napa vintners view Franzia as the barbarian at the gate. Last summer, at the annual dinner of Napa grape growers, the assembled chanted "Kick Bronco's butt! Kick Bronco's butt!" Throughout his career Franzia has defied conventional wisdom, industry trends, and occasionally the law. In 1994 he pled guilty to federal charges of conspiracy to defraud and paid a half-million-dollar fine. In 2000 he inspired a change in state law regarding the labeling of wines. Then came the six-year fight over that law. "Mr. Franzia is what I would call an unscrupulous renegade who not only loves to find an edge but is pretty ruthless in doing so," says Vic Motto, a Napa Valley consultant. "He not only likes to make a buck, but it's even better for him if he can make it at your expense. It just adds another element of pleasure for him."

Franzia is the most controversial figure in the U.S. wine industry and also one of the most savvy. By moving in exactly the opposite direction of the industry elite, he has built Bronco into the fourth largest wine company in the United States in case sales: Last year Bronco sold 20 million cases, or 240 million bottles, of wine, $400 million worth. His masterstroke is the cheapest of his dozens of wines--the famous Two Buck Chuck, the fastest-growing label in the history of the industry.

"He's the kind of person--there's one in every industry--who loves to go against the grain and make money at it," says Robert H. Smiley, director of Wine Programs at the Graduate School of Management at the University of California, Davis. "He's a very good businessman, there's no doubt. The legal issues I'll leave aside."

Franzia's mission is to make wine so affordable and plentiful that every American can put a decent bottle on the dinner table. He drives down prices by running an efficient operation that takes advantage of economies of scale--Bronco owns nearly three quarters as much vineyard acreage as all of Napa Valley combined--and by swallowing up competitors that fall on hard times. Now, as U.S. wine consumption reaches new high after new high and the domestic wine industry hits the $27 billion mark, Bronco is flexing more muscle than ever. And that is making Franzia the bête noire of some parts of wine country.

Jug wine capital of the world
It's a clear winter morning as Franzia slowly prowls the grounds of his vast winemaking plant in Ceres, California, behind the wheel of his Jeep Cherokee. Ceres lies 100 miles south of Napa in the San Joaquin Valley, part of the larger Central Valley, an area once derided as the "jug wine capital of the world"--don't get Franzia started on that bit of terroir snobbery. This fertile plain, once the floor of an ancient sea, is the center of his wine empire, and outside his windshield looms the citadel: his massive production, fermentation, and storage facility, with more than 400 tanks that collectively hold 80 million gallons of wine. Franzia constantly makes rounds of his production facilities and vineyards to keep a hand in the minutia of his business. His car is well known to his employees as a rolling second office, and the chances are good that if he isn't at this Bronco property, he's at another one. He's twice divorced and by his count works 100 hours a week. "I don't socialize anywhere," he says. "There's no money made in socializing."

Yet Franzia can be charming and extremely funny in his own idiosyncratic way, and there's often a bit of gamesmanship behind his bluster. His profanity isn't necessarily an expression of anger; often it's just an indication that his vital signs are okay. "We often joke in-house that if Fred stops abusing you, you've probably lost some ground," Bob Stashak, a Bronco winemaker and plant manager, says with a laugh. The private man, according to close friends, is somewhat at odds with the public image. "When you start talking about family things, he's very, very tender," says Don Sebastiani, a California winemaker who has known Franzia much of his life. "There's a very, very soft underbelly."

Many other winemakers cultivate their public image as much as their vines. They build architectural wineries, retain publicists, spend face time with customers, and tell romantic stories about their wines. Franzia has followed a different formula: Deliver value, reinvest in the business, and screw the pretense.

The proof lies outside his windshield. His production facilities are an industrial behemoth. Franzia slowly drives through the complex and points out huge lots where hundreds of trucks line up during harvest, crush pits that can process 16 truckloads of grapes per hour, tank presses, enormous decanter centrifuges. He brakes and points at one tank that holds the equivalent of 3,500 wine bottles per vertical inch. It's 42 feet high and holds only half as much as the 700,000-gallon tanks farther down. There are 414 such huge containers of various sizes; the place looks like a tank farm.

"We built this from literally nothing to where it is today in less than 30 years," Franzia says. "Sometimes even I think it's been pretty rapid."

He drives into a cavernous warehouse, clicks a remote control inside his car, and opens automatic doors to reveal storerooms stacked with wine cases and thousands of oak barrels.

"You been through some wineries in Napa, haven't you?" he asks. "You seen any with that many barrels in one place?"

Bronco owns 50 square miles of vineyards and adds three to six square miles every year. The company grows vines, crushes grapes, bottles wine, and runs its own distribution operation, Classic Wines of California. It buys and sells bulk wine. It operates storage and production facilities in the towns of Ceres, Napa, Sonoma, Escalon, and Madera. It bottles about 30 of its own labels, including Charles Shaw, Crane Lake, Forest Glen, and Forestville, plus wines for other companies under contract.

1 | 2 Next