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Interview, Part 1: Tom Steffanci, President, Deutsch Family Wine & Spirits

January 19, 2022

Deutsch Family Wine & Spirits continues to be one of the most dynamic players in the drinks business, recruiting younger consumers into wine with Josh Cellars and stoking growth across a range of wine and spirits labels from both the domestic and import categories. The company’s U.S. volume registered 12.3 million cases in the 12 months through November, led by Josh Cellars at nearly 4.8 million cases and Yellow Tail at approximately 6.3 million cases. SND executive editor Daniel Marsteller recently spoke with Deutsch Family president Tom Steffanci for an update on the business, which has annual revenues of around $1 billion.

SND: Josh Cellars has become a juggernaut within the U.S. wine category. How did the brand perform over the holidays?

Steffanci: Josh had a tremendous holiday across a wide swath of the items, including a really strong performance from our sparkling business. We’ve got a white Prosecco and a Prosecco Rosé, both of which grew faster than the brand in total. Josh Reserves also grew very rapidly during that holiday period. Josh was the largest share gainer in all of wine as a brand, and the largest wine brand in the U.S. in dollars in IRI channels. We ran national TV for the first time over the holidays, which was very expensive but extremely successful.

SND: Where does Josh Cellars still have room to build on its success?

Steffanci: This brand belongs to consumers, and our job is to be really good students of how we meet the needs of our consumers and where they want to take the brand. There remains quite a bit of runway for Josh, which is now a 5-million-case brand if you include international. If I look at the development of something like our Cabernet Sauvignon, there’s still a lot of room for that and items like Chardonnay, Sauvignon Blanc and Pinot Noir to widen their distribution base and meet more consumers’ needs. We’ve got a younger consumer base than our price tier does, so we’re blessed that consumers 21-35—where wine consumption is lower disproportionately—are enjoying Josh. We feel like there’s a lot of upside for Prosecco to bring consumers into the fold, and I think you’ll also see more rapid growth on the Reserve side.

SND: What’s the latest in terms of innovation on Josh Cellars?

Steffanci: We have two new wines coming in the next 60 days. There will be a Bourbon Barrel Zin on the heels of the tremendous success we’ve had with Josh Reserve Bourbon Barrel Cabernet Sauvignon, and then a Buttery Chardonnay in the Reserve line. We’ve also got new packaging on Josh Reserve that’s a fairly dramatic upgrade in the premium feel of the brand and will be coming in the early fall.

SND: Yellow Tail just marked its 20th anniversary. How is the outlook for the brand?

Steffanci: At the start of Covid consumers were buying brands that they loved and were familiar with. I felt like we were being rewarded on Yellow Tail for having the persistence to continue to advertise, even as we haven’t been able to take prices up since the brand’s inception. Yellow Tail grew for the first time in years during the first year of the pandemic, so now we’re cycling those challenging numbers. The good news is that inside the $4-$8 segment of glass, Yellow Tail has consistently gained share. The price tier is down. But 83% of drinkers are familiar with the brand and more than three out of four wine drinkers consider Yellow Tail when buying in that tier, so the brand remains healthy.

SND: What initiatives are lined up for Yellow Tail this year?

Steffanci: We recently extended with Pure Bright, a low-cal, low-alcohol offering that plays into what we’re calling Dryish January, when consumers tend to moderate a bit. We also continue to be involved in the period around the Super Bowl, mostly through influencers and digital advertising, although we’re not running an ad during the game. So you’ll see the brand a lot over the next five weeks. We’re looking very hard at future innovation. The needs of younger consumers are changing and younger consumers are also much more diverse, so it’s challenging, but you’ll see some interesting things from Yellow Tail on innovation in the medium term.

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