It took Steve Kreps 18 years to build Quintessential Wines to the point Accolade Wines came to it, looking for an importer for the Australian winery. The agreement, which was announced a few days ago, represented a major coup for Kreps and his son, Dennis.
Kreps was born in Missouri, about an hour from the giant Anheuser-Busch brewery, but he didn’t have an inclination to work there. After a stint in the Navy (1969-1973), Kreps thought he would return to civilian life and work as an air traffic controller. That plan was dashed when the Vietnam War ended and the military let about 5,000 trained air traffic controllers on the market. “So I had to find another way to make a living I went to school on the GI Bill at the University of Missouri. Okay. Of course you can’t live on the GI bill, so I was bartending,” he told us.
One day, Eddie Weatherwax came in. He was representing Paul Masson Winery and was going to make a presentation to the waitstaff.
“Boy I could do this,” Kreps thought, and then he put on a contest for the waitstaff and I think they could win dinner for two and I said, ‘You know what Eddie, why don’t you put us bartenders on it just for kicks?
“And he says, ‘Well, you don’t have a chance. The wait staff will have it all locked up’.”
Kreps replied, “You know what, you’re right. So, what do you have to lose?”
“He put us bartenders on. I thought I can do this. So I took the wines from the wine list. I put them in my cooler. I had the wine list at the bar when people came in. This was a very trendy restaurant back in 1973. And as people would come in as I would suggest wine too. And I’d say, “Well look, you know, whatever you don’t finish you take to your table.” I had buckets all around the bar.
“My entire lounge was full of wine buckets. I sold more wine than all the waiters put together. I thought, you know what– I can do this.”
In the early 1970s there were a lot of bottlers around the country who would buy bulk from California and make their own blends for their local marketplaces, which encompassed maybe four or five states. Kreps got a job with one.
So that was really clever. There were a lot of bottlers around the United States back in the 1970s. They would buy bulk out of California and they would make their own blends and make it for their own local markets — typically four or five states. Kreps got a job with one as a merchandiser salesman.
“We had to go out and write our orders. We had to go back we had to put up around displays. We had to do our own wine lists. You did everything from the get-go. You had to take care of everything and every detail and it was a good learning experience that way” he recalled.
After that, he worked for Schieffelin & Somerset‘s wine division, then onto Paterno Imports (now Terlato) as a division manager. He was promoted to national sales manager at 29, and decided to go into the business for himself when he was 39.
He started his business as a brokerage. The company grew from eight states to 24, when he was offered some of Diageo‘s Palace Brands wines. When Diageo decided to sell most of its wines, Kreps and the Baroness Philippine de Rothschild, the French vintner, and created Caravelle, in which Kreps was one of four partners. He sold his shares in Caravelle in 2002 and started Quintessential with his son Dennis.
“Our first, second, third, and fourth national sales meeting was the two of us sitting across the table. He went West and I went East. And with all the national experience I had, of course, it helped me open a lot of doors to a lot of distributing companies who had become long-term friends and now lifelong friends,” Kreps said.
We wondered how Dennis did, given that he didn’t have the same long background in the wine business.
“Well, he didn’t have a lot of the national experience. But one day the poor guy called home from college looking for his mom. So he was looking for a little money spending money at college.
“But he got me on the phone and I said, ‘Dennis, here’s the deal. You’re off pretty much on Tuesdays and Thursdays, right?” Why not work with the salesman in the city? “I’ll give you a little T&E to take care of your expenses and I’ll pay you to do it. You know, I give you a commissionable salary.’
‘He did it. He graduates from college and I said, ‘What you going to do now.’ He says, ‘Well, “I’m going to be in the wine business.”
“I said, ‘Well, good. You want me to make some phone calls?’
“No, no dad. I want to be my own person. I have to make my own place in my life.”
“So he goes up to Kansas City, Missouri, where he thinks I don’t know anybody and of course the Distributors there called me and they said, ‘Hey, your son’s up here looking for a job in the wine business. Can we hire him?’
I said, “Well, if you think he’s qualified you should put him on.” And they did and then of course he did really well. He was in Kansas City three or four years. He was with Kobrand for a couple of years and then he came with me” when I was still with Caravelle.
“We only we had about 18 or 20 States when he first came with me,” Kreps recalled, “and he mostly at that time took over Illinois and the City of Chicago and we also put a sales crew under him in the city of Chicago and he did very, very well.”
When Kreps launched Quintessential, Dennis Kreps said he wanted to be a partner.
“I said sure. “You’re going to have to work really hard. You can share in the heartache, you’re going to have to share in the entrepreneurial spirit, which is an extreme sense of urgency, and you’re going to have to understand that and live by that and he goes, ‘I’m in,’ so I just made him 50% owner right from the get-go.”
Steve Kreps gives Dennis credit for the Accolade deal. “Accolade was looking to make the sort of a change in the way they marketed their brands in the United States. They actually had recommendations from our distributor network that they should take a very serious look at us.
“They called Dennis about a year ago. And at first we kind of stood off. We didn’t go after the brand. The more we thought about it the more it made sense, the more it made a good mix for us. They have brands in places where we were void and so about six or eight months ago we got back together with them. We worked through a lot of details and it’s finally come to fruition.”
Long before the Covid-19 pandemic, Quintessential was a dispersed company. It’s headquarters is in San Francisco, where Dennis operates. Steve Kreps is in Missouri, and Lorraine Raguseo, who handles public relations for them, is in New York City. We wondered how that worked.
“Remember there’s technology nowadays. And we talk an average of four to six times a day. He’s telling me what he’s got going on. I’m telling him what I’m seeing, maybe things that we should look for. I’m working more with PR.”
Dennis is “becoming more and more the face of the company,” Steve Kreps says. “I had been for many, many years and I keep stepping back and I’ve been doing it for a long time. That’s probably one of the hardest things for me to do is to get back out of the way of the Next Generation. He has shown that he is he’s not just good at it but has a natural talent for it.”
We wondered how the Accolade deal was consummated.
“Well, we had been going back and forth you know. It’s funny here. We are Americans speaking English in here, all the Australians are thinking they speak English, but you’d be surprised at the differences when you come down to working out contracts. And I know you have a legal background. So you understand that and that’s why this you came through that giggle in there, but it was, you know, just technicalities and taking our time and we knew what was coming. We both wanted it to happen. And it was just getting the verbiage correctly that we could both understand and agree to.
“We’ve been working towards the same goal and it finally did work out but you know, there’s one thing, Joel, that that didn’t ask me and I didn’t offer to tell you, but since you and I first talked 15-18 years ago, whatever it was, my youngest son has also come in and joined us and he’s terrific and in California. Well, he came in as a street salesman and we put him at the bottom, gave him a duster in his hand so he could go out and and work and learn the basics.But now he is he’s developed really well and he’s the sales manager.
“We also run our own distributing company in California and Steve Jr., the youngest of my two boys, runs the wholesale company.”
We wondered if he ever felt threatened by the mega distributors, given that his distributing operation is a relatively small fish in a pond with some really big fish.
“Remember, the big guys call on 100% of the people in California who have a liquor license,” Kreps said. “With the wines that we sell, we don’t have to call on 100% of the people who have a liquor license. There’s stores that will never — you never say never, but potentially would have difficulty selling the kind of products that we import. Many are spirits-only accounts, many of them are 90% beer accounts, you know, those kinds of accounts.” Quintessential has about 20 salespeople in the better wine categories. “We also cover the chains. We have chain managers that cover the chains and it works out really well.”
We asked Kreps to look back and share what he thought was the biggest single positive business lesson he has learned. He recalled that a woman who evaluated the company said he was almost too honest.
“I think that’s been a big plus for us,” he said. “We have been honest with our distributors, the retailers that we deal with. Our sales staff are people inside and I think that has given us a good touch of integrity, and then integrity flows over when you go to a distributor and you want to talk to him about something new. We’ve built trust with the distributor network and the trade.”
What was the biggest mistake he’s made, we wondered. “Not having the ability to see the pandemic or the 2008 recession from a financial viewpoint,” he said. But neither threatened to sink the boat, so to speak.
“We’ve — I’ve — always been extremely conservative. We’ve never borrowed money. We’ve always worked on our own cash flow. I think that’s a positive and not a negative. You know, another person would say, well, you know, if you borrowed money you could you could maybe expand greater and faster.
“But you know, I kind of like to play it safe. So I guess that could be my negative is I don’t take a huge financial risk at any time.” How safe, we wondered. After noting that “the company bank account and mine are kind of one in the same,” Kreps said, “We could easily go another year.”
We wondered where he saw Quintessential in the next few years. Kreps recalled that when we first interviewed him 15 years ago, they were selling about 15,000 cases, “begging for 20,000. Now, we’re well over a million, headed toward two or three.” In addition to getting to 2 million cases in the foreseeable future, he would like to get into high-quality spirits.
With the Accolade deal, Quintessential will be hiring more salespeople, and if the spirits division does come about, that would mean still more hires, he said. He can be reached at steve@quintessentialwines.com.