Wednesday, January 21, 2009
Say it isn't so!
The LA Times reports that California Gubernator Arnold Schwarzenegger has proposed the levy of an additional 26 cents tax on every 750 ml bottle of wine sold in the state.
Surely, most wine drinkers will not notice the increase on their purchases of $7, $10, or $20 bottles, but the impact will most certainly be felt for one of Trader Joe's most popular products, where the wine's price begat its name - Two Buck Chuck.
Anyone who has been inside a Trader Joe's in the last five years, the quirky (and quite successful) chain of grocery stores that dot the state, has likely seen the cases and cases of Charles Shaw wine stacked high by the checkout area - $1.99 a bottle, just like the sign says.
You can buy a case for the same price as two or three bottles from most wineries.
"It's like shooting Charles Shaw in the eye," said Franzia, chief executive of Bronco Wine Co., which owns the brand. The profit margin is already so low we will have to raise the price."Yes, they are taxing everything and nothing ever does change with the budget.
This wine tax is one of many new taxes or increases proposed by the governor. Others include raising the state sales tax by 1.5 cents on the dollar and charging a 9.9% tax on each barrel of oil extracted in California. Schwarzenegger also would extend sales tax to veterinary care, car repair and other items now exempt from the levy.
Franzia said he wasn't sure what the new price would be -- it would have to be worked out with retail partner Trader Joe's -- but $2.29 or $2.49 Chuck would not be a surprise, according to industry analysts.
Trader Joe's, which introduced the wine seven years ago and has never raised the price, declined to say whether it had a stand on the proposed tax and would not talk about its plans for the wine.
Charles Shaw fans are divided on whether the tax is a good idea.
"Two Buck Chuck is a nice wine, and the price is wonderful. You can drink it or use for cooking, and it's not very expensive," Jim Elsten of Long Beach said while shopping at a Trader Joe's in Long Beach last week. "I think it would still be a good deal at $2.29 or $2.49. Wine is a luxury, and I don't see an extra tax as a problem."
But Huntington Beach resident Jamie Kaiser questions the wisdom of placing an extra tax on wine.
"I would still buy it," Kaiser said as she loaded a case of Charles Shaw Chardonnay into her car, "but it seems like they are just taxing everything now and nothing with the state budget ever changes."
Two quick notes: