The following article is from our April 2008 issue.

In Praise of 'Two Buck Chuck' The curious link between Germany's richest man and California's cheapest (and best?) wine - By Uwe Siemon-Netto

Reclusive Theo Albrecht, whose frugality is the stuff of legend, built up Germany's biggest discount retailer with his brother. His U.S. chain, Trader Joe's, sells outstanding wine at bargain prices. It's become our correspondent's favorite tipple.

If you want to learn how to save money, watch the wealthy, goes one German aphorism. Theo Albrecht is a good example to observe - if you can ever find this reclusive octogenarian. He is one of Germany's two richest men and spends much of his time in an old captain's cottage on Föhr Island in the North Sea.

Albrecht is so penny-wise that when a lawyer kidnapped him from a parking lot in 1971, he first demanded to see Albrecht's ID. The villainous counselor could simply not believe that anybody as moneyed as this owner of the country's largest discount food retailer could be so shabbily dressed.

I have my own reason to celebrate this old eccentric's sense of thrift. Early in my childhood, my father taught me to love wine, which I have since found to be a pricey infatuation when I happen to be in the wrong place. But nowhere have I ever bought good wine as inexpensively as in the California stores of a quirky supermarket chain called Trader Joe's, which Albrecht owns.

This wine comes in six varietals: Cabernet Sauvignon, Merlot, Zinfandel, Pinot Noir, Chardonnay and Sauvignon Blanc, some of which have won gold medals over vastly more expensive competitors in blind tastings. But this marvelous beverage sells for $1.99 per bottle. Because it is marketed under the label Charles Shaw, Californians lovingly call it "Two Buck Chuck."

One might wonder how even a benevolent Catholic such as Albrecht, sitting on assets worth $23 billion, could afford to bless millions of impecunious wine-lovers with such a fine drink for just change? Is the rumor true that a major U.S. airline bought itself out of bankruptcy by selling off its enormous stock of Charles Shaw wines at a rock-bottom price?

It's false. The secret is simpler, says Harvey Posert, a spokesman for the Bronco Wine Company, California's fourth largest, which has already quenched the thirst of bacchanalians with 360 million bottles of Two Buck Chuck, all sold through Trader Joe's. Bronco owns 40,000 acres of vineyards stretching all the way from Sacramento to Santa Barbara and literally flooding California with grape juice.

Bronco's CEO is Fred Franzia, who despises the pretense prevalent in viticulture. His corporation markets its wines under 58 different labels, some with fancy names such as "Alexander and Fitch" or "Salmon Creek" or "Thousand Oaks." But all are considerably cheaper than comparable brands. As Franzia explained to Business 2.0 Magazine last year, he wants to transform the wine world by pushing down prices everywhere, which includes getting restaurants to reduce their enormous markups.

So how does he do it? Bronco simply uses efficient marketing techniques, according to Posert: "No promotion. No press kit. Low overhead operations. This is what Bronco has in common with Trader Joe's, and this is why they can sell Charles Shaw wines so cheaply." Bronco took the name Charles Shaw from a bankrupt winery he had bought.

Albrecht, now 86 and semi-retired, does not personally run Trader Joe's, a company he purchased in 1989 from its founder, Joe Coulombe. But the corporate culture of this chain of (currently) 296 outlets in much of the United States fully fits the Albrecht business philosophy.

Albrecht and his 89-year-old brother Karl, whose net worth is also estimated at $23 billion, are the sons of a coal miner and his wife, a grocer. Albrecht did his apprenticeship in her shop. Soon after World War II, the two brothers pioneered a new kind of business, a chain of Spartan discount stores. They called them ALDI, an acronym for "Albrecht Discount." The ALDI stores have long become Germany's largest chain and one of the biggest in the world.

Since the 1950s, the Albrecht brothers have stuck to their motto, "Our only advertising is our low price," a maxim arguably shared by Fred Franzia's Bronco Wine company and Trader Joe's founder Joe Coulombe. So tight has Albrecht's rule been that he once chided one of his store managers who had ordered four ballpoint pens: "Show me how you can write with four pens at the same time," he asked.

Though the Albrecht brothers do not countenance frills, they are known to be exceptional employers on both sides of the Atlantic. Trader Joe's, for example, pays some of the highest wages and most generous bonuses in the retail business and is known for its excellent promotion policies. According to Business Week, the corporation contributes an additional 15.4 percent of each worker's gross pay into a company-funded retirement plan and offers full health insurance benefits - dental, vision and medical - even to part-time employees and their dependents.

"This is why we have such cheerful and well-informed employees," said an executive at Trader Joe's corporate headquarters in Monrovia, California, when complimented about his knowledgeable young salesmen who explained to me the complexity of certain brands of wine like a graduate of some fancy oenology school. And with a modesty resembling the reserve of his company's octogenarian owner back in Germany, this executive insists on anonymity.

I want to know how they do make sure that even the Two Buck Chucks maintain a stable quality year in and year out. "We taste each new batch of every grape varietal as it comes in," he assures me. The judges at Trader Joe's management are not the only ones who do.

In a store in Irvine, California, a Two Buck Chuck aficionado reveals the quality control procedures exercised by customers: "As soon as a new load of Chucks arrives, we pop into the shop, buy one bottle, take it to the parking lot. If by chance we don't like it, there's no harm done at $1.99 per bottle. If it's good, we return to the shop and buy enough wine to fill the trunks of our cars."

In other parts of the United States, the Two Buck Chuck mutates to Three and Four Buck Chucks due to transportation charges and local taxes. But if there is one aspect proving the cult character of discount globalization, it's the way it has stimulated artistic imagination - of sorts. In the German-speaking countries, a song whose title "Lied für ALDI-Versessene" is probably best translated into "Nuts About ALDI," has hit the pop charts.

And in the United States, the group Beatnik Turtle Music is singing the praise of the Two Buck Chuck in a way that might not sit all too well with law enforcement or the arbiters of good taste but nonetheless contains a clear message. Its last stanza goes like this:

Two Buck Chuck
Two Buck Chuck
Drove away drunk in my pickup truck
Then I upchucked my Two Buck Chuck.

- Uwe Siemon-Netto, a German foreign correspondent and Lutheran lay theologian, is scholar in residence at Concordia Seminary, St. Louis, MO.