The $10 bill made headlines in June when it was announced that an updated version of the currency would feature a woman’s face. But in the wine aisle, the founding fathers are reigning supreme.
A new wine brand called The Federalist has stuck a nerve since it debuted on liquor shelves early this year. The brand has shipped 50,000 cases within four months and is expected to hit 100,000 cases within its first year, according to wine producer Terlato Wines. The Federalist, which features etched portraits of founding fathers including George Washington, could ship even more than that, if it weren’t for the wine’s short supply.
“We completely underestimated how well it was going to do,” Terlato Wines Chief Executive Bill Terlato told Fortune. He said the wine producer could ship more than double what it had initially anticipated “if we can get the wine bottled up and produced in time.”
Illinois-based Terlato Wines is a family-run business with a portfolio of nearly 70 brands. The company has carved out a niche for itself by commanding about 20% of the U.S. market for wines that cost more than $20. But the wine industry is highly fragmented, and it can be hard for brands to break out in liquor stores, which offer thousands of wine options.
Still, Federalist’s Americana appeal is resonating. Roughly 15,000 wine retailers across the U.S. stock the wine, including Kroger (KR) and Safeway (SWY) grocery stores, making it one of only a few of Terlato’s brands that is so broadly distributed. Terlato said the brand could one day become a 1 million case per-year brand.
That’s a pretty rare achievement for a wine like Federalist. While roughly half of total case volume sold in U.S. food and liquor stores are for brands that put out at least 1 million cases in sales annually, almost all of those brands cheaply priced boxed and jug wines or inexpensive bottles. Only two brands that sell 1 million cases a year sell for more than $10, according to data complied by Nielsen. Federalist wines, conversely, are priced between $18 to $34.
Why is the wine a hit with retailers and consumers? Terlato appears to have learned some lessons from how it marketed and produced its Seven Daughters brand, which is a line of blended wines that primarily targeted millennial women. The company ships 175,000 cases of Seven Daughters every year, though it took seven years to get to that level.
The Federalist, which is a sibling brand to Seven Daughters, primarily targets men and is growing even faster. The zinfandel and cabernet sauvignon were instant hits and ranked among the most popular wines within their respective categories. Three of the five wines under the brand sell for $17.76 (in honor of the year the U.S. ratified the Declaration of Independence). When those wines go on sale, they are priced at $14.92 (when Christopher Columbus discovered the Americas). Those price points, along with the packaging, were what made the brand a hit with retailers.
“It is the only product we’ve ever launched where every single person we’ve done a presentation for has stocked the product,” said Terlato.
That explains why Terlato is spending $1 million on advertising and promotions for the brand in this year alone.
Beyond the various American holidays that are ideal promotional times for the brand (including the Fourth of July), there are historical dates that play well with the Federalist wines. One of the wines, called Dueling Pistols, marks the famous duel between Alexander Hamilton and Aaron Burr. That event occurred on July 11, 1804 – perhaps another alternative for a historical-based sales promotion.
