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Deutsch Sees Top Brands Accelerate As Off-Premise Booms

August 10, 2020

New York-based Deutsch Family Wine & Spirits has one of the hottest franchises in the wine and spirits business in Impact “Hot Brand” Josh Cellars, and the company says it’s continuing to fire on all cylinders in 2020, despite the pandemic. According to president Tom Steffanci, Deutsch has seen significant growth not only for Josh, but also renewed progress for Yellow Tail and Layer Cake in the off-premise in recent months.

In the first three months of Deutsch’s fiscal 2021, which began in April, its two largest brands have made rapid gains. Depletions for Josh are up 53%, with the Reserve tier nearly matching the core brand at 52%, from a much smaller base. Yellow Tail is also seeing a bump, up 16%, amid the off-premise upswing. Smaller brands like Redemption whiskey (+13%), The Calling (+62%) wines from California, and Bib & Tucker Bourbon (+56%) are also performing well.

“We spent the first few weeks of this pandemic safeguarding our employees, both in the field and the office,” Steffanci said. “We also actually invested more money in the first 90 days of Covid than we had planned to invest.” He points to an increased investment in social media, plus partnerships with Drizly and other e-commerce platforms. Those moves are paying dividends. Josh grew by 61% in IRI channels from March through June, compared to 30% growth from December through February.

Meanwhile, Yellow Tail has seen a rebound lately, as consumers gravitate to trusted brands. In IRI, the accessibly-priced Australian label was down 6% pre-Covid but has seen sales jump by 18% in the months since. Layer Cake, too, has seen IRI sales rise, up 22% post-pandemic, compared to a 0.4% decline beforehand.

The flip side is that, for upcoming brands, the relative lack of name recognition has created challenges amid the current conditions. “Brands like Fleurs de Prairie will be hurt more badly if we see things trend back towards the shelter in place orders,” Steffanci said. Despite that dynamic—and price increases due to tariffs on French wines—he sees a strong future for the Provence-based Fleurs de Prairie rosé label, which reached 73,000 cases last year, up 4%, according to Impact Databank.

Amid the market fluctuations brought on by the pandemic, Deutsch is intent on extending the solid overall growth it saw in its fiscal year through March. “We grew our business from a revenue standpoint at 10% and a profit standpoint at 19%, on depletion volume growth of 4%,” Steffanci notes. said. Mitigating the damage in on-premise channels while continuing to boost the ascendant Josh Cellars—which had U.S. retail value of approximately $550 million last year, according to Impact Databank—will be key to those efforts.—Shane English

Deutsch Family Wine & Spirits – Top 10 Brands 
(thousands of 9-liter case depletions)
Rank Brand Origin/Type 2018 2019 Percent
Change1
1 Yellow Tail2 Australia 7,203 7,000 -2.8%
2 Josh Cellars California 2,523 3,198 26.8%
3 Layer Cake Multiple 306 305 -0.2%
4 Luksusowa Polish vodka 270 295 9.4%
5 Josh Cellars Reserve California 123 174 41.5%
6 Barone Fini Italy 129 129 -0.2%
7 Hob Nob France 112 87 -22.4%
8 Redemption Rye/Bourbon 67 80 19.9%
9 Fleurs de Prairie France 70 73 4.4%
10 The Crossings New Zealand 68 72 4.5%
Total Top 10 10,871 11,413 5.0%
1 Based on unrounded data

2 excludes sparkling

Source: IMPACT DATABANK © 2020

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