Tyler Colman, Ph.D. teaches classes on wine and politics at the University of Chicago and in a joint program with New York University and the James Beard Foundation. He writes about the business and politics of wine at www.DrVino.com. Also by Tyler Colman in Wine Business Monthly, "Currency Hedging Provides Shelter for Importers," November 2004.

With almost seven million cases sold last year, the success of the Australian Yellow Tail brand is well known. And with 430,000 cases sold last year and a quirky name, the French vin de pays Fat Bastard has also garnered renown. What is less known is that these brands are co-owned by American importers W. J. Deutsch & Sons and Click Wine Group. From boutique to big, American importers are adding their own labels to their portfolios.

"Co-owning makes for a better marriage, a closer, healthier working relationship," said William Deutsch. His company, W.J. Deutsch & Sons, Ltd. of White Plains, NY, co-owns the North American rights to the Yellow Tail brand with his winemaking partner Casella Wines of New South Wales, Australia. "If we're going to introduce a new brand from case number one, we would only do it on an equity basis," he continued.

Andrew Browne is also so bullish on the idea that he founded his company Precept Brands two years ago with exclusively imported labels, in which he has an equity stake. "It's the next wave. It's what's going to work for the next 10 to 20 years of the industry. It's an evolution, not a revolution," he said. Browne imports wines from Australia, New Zealand, France, Spain, Italy and Germany.

Peter Click, also a pioneer of this new business model, has started new joint venture projects around the world in the seven years since the launch of Fat Bastard. He now has nine wines from Chile, Italy, Spain and beyond that he has developed as partnerships with local winemakers, applying his characteristically snappy names and marketing.

The idea of equity stakes is gaining popularity with American importers, not only because of the increased profit it can provide but also because of greater control in product design, filling a product niche, pride, fun and even charitable donations.

Starting with case one

Alex Bartholomaus of Billington Imports argues there are three ways to sell wine in the U.S.: with a rock star winemaker, a chateau image or as a concept. With concept wine it can be difficult to gain support from the producer since "a traditional winery is accustomed to marketing themselves as a quality producer, with a pedigree," said Bartholomaus. So the importer can either go it alone to deliver a concept, as Bartholomaus did with his Big Tattoo wines, or team up with local partners in a joint venture, as was the case with Yellow Tail. But a common point of these labels is that they are all new.

"Because we were going to pioneer their wine," said Deutsch of the Yellow Tail brand, "we thought the fairest and most equitable arrangement would be to own the label together. They make the money on the production end, and we make the money on the marketing end. The joint ownership brings about a common bond—we are building it together.

"It would be more difficult to believe that you can work out an equity relationship when the producer wants to double sales (of an existing brand)," added Deutsch. W.J. Deutsch & Sons also has equity stakes in The Crossings from New Zealand, La Francesca from Italy, and co-owns a small Juliénas (Beaujolais) vineyard with Beaujolais producer Georges Duboeuf.

Bartholomaus admitted that at the beginning it was a risk to try to sell his 2,500 cases of Big Tattoo red blend from Chile. "We were hoping tha

"It's like stock options: Ownership in a brand is like ownership in a company. People work harder if they've got some skin in the game," said Alex Bartholomaus. When he launched Big Tattoo, speed was a main factor since they didn't need to wait for the winery to sign off on labels or the flavor profile of the wine.

Generally the American importer is in charge of the sales and marketing while the foreign partner is in control of the winemaking.

Andrew Browne does not like to interfere with the winemaker, saying, "That would be kind of like telling somebody to put salt in their cooking. We picked them to make the wines because we think they can make really good wine."

Peter Click, on the other hand, structures his partnerships so that he not only has the final say on labels but also on the flavor profile of wine itself.

Click also admits the ability to ramp up production is very important. "We try to balance it with the handcrafted nature. We need to know there is some level of volume growth there.... We, for what it's worth, take the view that the wines will be successful."

The arrangement facilitated the scalability of Yellow Tail, too, as the two family-owned companies worked to bring more wine to the American market, with Deutsch adding more sales staff and marketing expenditure and the Casellas increasing production quickly. For Deutsch, it was also about maintaining consistency within vintages. "The quality of case one is the same as case one million," he said.

Yellow Tail and Fat Bastard also show that simplicity of the offer can be important. Yellow Tail had four SKUs at the beginning: a Shiraz and a Chardonnay in 750 ml and 1.5 L. Fat Bastard had just two with two different sizes of Chardonnay.

And of course it creates a lock-in for the producer and the importer. As Dan Philips of the Grateful Palate and owner of the Australian company that makes Marquis-Philips wrote in an email, "I will never lose it, and I can be sure that the owner will follow my advice."

Milking the cash cow or building an asset

Andrew Browne says that his labels are built to sell: both the wine to the consumer and potentially the label to another company. "The brand needs to make money. I should develop this brand so that one day somebody wants to buy it. Other people would want to have this brand in their portfolio."

Though increased cash flow is certainly a positive, Deutsch says that the biggest benefit is having the asset on their balance sheet. But that value can only come if they were to sell the brand, he says, something they are not going to do.

"There is the asset value, but I also treat it like an annuity," said Click, emphasizing the cash flow as much as the asset of the label. Partnerships provide "ways to secure our business, control our destiny, peer into the market to see what consumers want, and enjoy the ongoing operating revenue and profits."

Eric Solomon of European Cellars developed and owns the Las Rocas label from Calatayud in northern Spain. He wanted to show how some old vine Grenache could perform as well as have a smash hit to help the bottom line. He has succeeded on both counts with critical acclaim for the wine that now tops 100,000 cases in sales.

"The intellectual intrigue is coupled with an import company that needs cash cows. When the dollar is weak, offering wines that look, smell and taste like $15 to $20 wines and sell for $10 is more of a challenge," said Solomon. But he admits, "The value of my company is enhanced by owning brands."

Partnering for quality and charity

Solomon often has different reasons for partnering than simply a cash cow. He often wants to show his local producers a new style of wine. A partner by marriage (literally) in Clos Erasmus in Spain's Priorat, he wanted to demonstrate to one of his producers in