controller.rb

    @grouped = {}
    Deal.all.each do |deal|
      letter = deal.background.slice(0,1).upcase
      @grouped[letter] ||= []
      @grouped[letter] << deal
    end

<% @grouped.sort.each do |letter, deal| -%>
  <%= deal.background %>
<% end %>

Calling #sort on a Hash will turn it into a nested array:

{"b" => "x", "a" => "y"}.sort
# => [["a", "y"], ["b", "x"]]

Fortunately #each is smart enough to still support .each do |first_value_in_nested_array, second_value_in_nested_array| on that array, so the loop will just work like it's a Hash.