Exclusive: Deutsch’s Revenues Reach $600 Million, Led By Surging Josh CellarsDecember 12, 2016
During its first quarter-century in business, Deutsch Family Wine & Spirits forged its reputation as one of America’s top wine importers, having built first Georges Duboeuf (now handled by Quintessential Wines) and then Yellow Tail into dominant brands in their respective categories. But over the past decade—the company is celebrating its 35th anniversary this year—a bold push into the California wine category has helped drive Deutsch’s sales to approximately $600 million, with annual growth at 8%.
In 2011, Deutsch began marketing the Josh Cellars brand ($13-$19), created by former Mildara Blass president Joseph Carr, and a year later acquired full control of the California franchise. When Deutsch purchased Josh Cellars, it was selling around 25,000 cases. Since then, the brand has surged—it’s projected to reach 1.5 million cases this year—and become the linchpin in the company’s “low lux” strategy, which focuses on the $10-$25 price tier. “Josh is still being discovered by new wine drinkers,” says chairman Bill Deutsch. “We believe there are ongoing opportunities for further expansion, especially in the on-premise.”
“We’ve seen rapid growth brands like this at $10 and below in the industry,” adds CEO Peter Deutsch. “To see one above $10 that’s rising this dramatically—there’s something very special going on with the consumer. A number of varietals are taking part. Cabernet is the largest, but the Chardonnay, Merlot and Red Blend are the fastest-growing wines in their respective categories over $10. We believe that Josh Cellars has the potential to be a 3-million-case brand in the U.S.”
Looking ahead, Deutsch is aiming to increase Josh Cellars’ presence in the on-premise, particularly in by-the-glass programs. The company also has high expectations for the new Josh rosé, which is currently in test-marketing, as well as a new Reserve range. The Reserve tier, slated to launch nationally during Deutsch’s next fiscal year (beginning in April), includes two different Cabernet Sauvignons—one from Paso Robles and one from the North Coast—each retailing at around $17.99.
While Josh continues to soar, it’s not the only California arrow in Deutsch’s quiver. Sister brand Joseph Carr ($25), which includes Napa Cabernet and Chardonnay, has gained traction on-premise, as has The Calling ($30-$65), a Sonoma brand that Deutsch launched in partnership with sportscaster Jim Nantz in 2012. Joseph Carr has expanded by 70% over the past two years to approach 70,000 cases, while The Calling is now at around 25,000 cases, featuring a Chardonnay and Pinot Noir from the Russian River Valley, a Pinot Noir from the Sonoma Coast and a Cabernet from the Alexander Valley. Deutsch’s California lineup also includes Napa’s Girard and Sonoma’s Kunde.
“We have a good base of California jewels, and we’ll continue to seek opportunities,” Peter notes. “We’ve also begun to open up a Washington state partnership brand with Precept Wine called Skyfall. We first seeded it on-premise. Now that we’ve taken it to retail, it’s growing at 100%, with tremendous interest from chains around the country. We think Skyfall has huge potential.”
A complete profile of Deutsch Family Wine & Spirits can be found at the Market Watch magazine website as well as in its November print issue.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.