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Market Watch: Deutsch Family’s Journey To Become A Billion-Dollar Player

March 9, 2021

As it celebrates its 40th anniversary this year, Deutsch Family Wine & Spirits can pause to look back at a long, remarkable journey. Today’s revenue is at around $1 billion, and annual volume is 13 million cases. The company now employs 350 people, headquartered in a modern glass office building in Stamford, Connecticut.

At the dawn of the 1980s, founder Bill Deutsch was on a bright career path in the corporate drinks world, rising to become senior vice president of sales at Somerset Importers. But the workday was filled with corporate politics, layers of authority, and endless meetings. “I came to the realization that I didn’t want to work for a multifaceted corporation for the rest of my life,” Bill says.

Bill founded his company in January 1981, at 44 years of age. He set to work from his home in Chappaqua, a suburb north of New York City, with just a telex and a phone. “What I believed in 1981 was that an experienced family importer-marketer, working with family suppliers and selling to family distributors, could find a niche in the market and give the big players some competition,” he says. “That was the plan.”

The first big step came when Deutsch linked with a little known Beaujolais producer named Georges Duboeuf. “About a year after I went into business, I received a telex from Georges, saying that he’d like to come to New York to sit down and talk,” recalls Bill. “I didn’t speak French and he didn’t speak English, and yet there was instantaneous communication.” With a handshake, they agreed to work together—forming a partnership that would last more than 30 years.

In 1985, Deutsch won the rights to Francis Ford Coppola Winery’s Niebaum Coppola Rubicon label for the eastern U.S., representing a major coup. “The door was now open at our distributors,” says Bill. “But we didn’t go in with a laundry list of items. We had a couple of potential winners. Duboeuf was our big volume player, our profit generator, and our hook with the wholesalers.”

Another major development came that year when Bill’s son Peter joined the business. He had graduated from college the previous year and landed a job in advertising, where he soon became restless. “Working with my dad wasn’t something I had initially contemplated,” Peter recalls. “But the business was taking off a bit, and he could no longer handle it all by himself.”

Duboeuf’s growth continued, but French varietal wines were starting to face serious competition from Australia, whose varietals were becoming a more popular consumer proposition. In response, Deutsch resolved to seek entry into the Australian category. “That was the intelligent part of the decision,” notes Bill. “The lucky part came when Casella Family Wines approached the Australian Trade Commission and asked for help in finding a U.S. importer.”

Deutsch and Casella’s Yellow Tail brand came to market in June 2001. In 2002, the brand rocketed to 1.2 million cases, and nearly tripled to 4.3 million cases in the following year. In 2006, Yellow Tail passed the 8 million-case mark, overtaking Woodbridge by Robert Mondavi to become the U.S. market’s top-selling wine by value.

In 2009, Tom Steffanci became the company’s president, with Peter and Bill remaining CEO and chairman, respectively. “We’re both actively still involved, but we’re focused on supplier relations and the next big opportunity,” notes Peter.

The next major chapter in Deutsch’s growth came when it heard from its New Hampshire distributor about a wine called Josh that was flying off the shelves. “There’s a simple elegance to the brand—it’s a $15 wine that looks like a $30 package,” says Peter. Josh Cellars was at about 25,000 cases when Deutsch took it on in 2011, and it hit 150,000 in the first full year with Deutsch, which acquired full control in 2014. Last year, Josh reached more than 4 million cases, according to Impact Databank, representing the U.S. wine market’s hottest brand over the past five years. Deutsch’s other California jewel is The Calling, a joint venture brand with sports broadcaster Jim Nantz that also launched in 2011.

From Duboeuf to Yellow Tail to Josh, Deutsch’s history has left people wondering what could be the company’s next million-case brand. One prospect is Layer Cake, whose owner, Vintage Wine Estates, tapped Deutsch to lead sales and marketing in 2017. “Layer Cake is up to about 300,000-400,000 cases, and we see another potential unlocking,” says Peter. Market Watch has more on Deutsch’s 40-year journey in the U.S. wine market.—David Fleming

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