NAPA, Calif. — First came Two Buck Chuck. Now, there's Four Buck Fred.

Central California vintner Fred Franzia, who has been fighting a state law requiring that wines with "Napa" on the label be made from grapes grown in that exclusive region, is releasing two new wines under his Napa Creek label, both going for $3.99 a bottle.

The twist: This time the wines are actually made with grapes from Napa.

"This shows that you can put Napa Valley wine in there for the price that we're doing," Franzia said. "People want to buy things at a reasonable price that are good value. It's not new. It's America."

In Napa, where wine is more likely to cost $40 than $4 a bottle, the release was a chardonnay shocker.

Some vintners wondered how Franzia could possibly be making a profit on the new wines.

Others couldn't help but smile.

"I'm glad to see Freddy using Napa Valley grapes in Napa Valley wine," Mike Moone, founder of the boutique winery Luna Vineyards, said with a chuckle.

Moone thinks Franzia is doing Napa Valley a service by buying up surplus inventory. He notes that a large company like Franzia's Bronco Wine — which controls everything from vineyards to delivery trucks — is in a unique position to cut costs.

But most wineries can't make those economies of scale, said Karen MacNeil, author of "The Wine Bible" and chairwoman of the wine department of the Culinary Institute of America's California branch.

"When people buy wine, they have this romantic picture of a husband and wife and he's out on the tractor and then later that day they come in and make the wine and hand-label the bottle," she said.

"But in point of fact, it's like the restaurant business in that it's enormously costly."

Costs aren't the only factor in pricing a wine. There's also supply and demand.

"If you are a top producer and you only make 1,000 cases of a given wine and you know that there are 20,000 people who want that wine, why not charge $70 a bottle as opposed to $50 or $40 a bottle?" MacNeil said.

Franzia's fight with Napa revolves around a California law, staunchly supported by valley vintners, requiring that wines with "Napa" on the label be made with Napa grapes.

Bronco has argued that state law doesn't trump federal regulations, which are similar to the state law but exempt brands established before 1986.

The California Supreme Court has upheld the labeling law; the U.S. Supreme Court declined to hear an appeal. Meanwhile, a state appellate court in May ruled against arguments that the law impinges on Bronco's free-speech rights and hampers interstate commerce.

It was days after the appellate court ruling in May that Franzia announced the new Napa Creek wines. The chardonnay and merlot sell only at Trader Joe's, as does Two Buck Chuck, officially called Charles Shaw, which sells for $1.99 in California.

The new Napa Creek wines stem from Bronco's practice of buying some Napa Valley wine to blend into various brands. This year, Franzia found enough for a separate release.

So far, Napa vintners aren't rushing to beat Franzia's prices.

Wine poured into a glass, Moone said, is not beer. And "if you do it right, it's not a cheap product to produce."

$3.99 bottle of Napa wine? Gulp!