Wine & Spirits / Channel Strategies

Popularity of wine on tap spreads

Restaurants, bars tap growth opportunities at the keg

Imagine a couple is out to dinner and can’t agree on a bottle of wine. One likes red wine and the other likes white wine; or one ordered steak and the other ordered fish. In the past, they might have been forced to order individual glasses from a short list of house wines, some of which have been sitting in open bottles for days. But now, with an increasing number of restaurants across the country offering premium wines on tap, diners are able to enjoy a more diverse collection of fresh wines by the glass.

Wine on tap began to catch on in the late 2000s in major metropolitan areas like New York City and San Francisco as a way for cost-conscious consumers to sample premium wines without having to purchase an entire bottle. In recent years, the popularity of wine on tap has spread inland from the coasts with states like Colorado, Texas and Illinois being sizable markets for the industry. This rapid adoption of wine kegs also can be credited in part to the increased popularity of craft beer among millennials.

“Millennials understand that fantastic, high-quality beer comes from a keg,” said Jordan Kivelstadt, founder and chief executive officer of Free Flow Wines, Napa, Calif. “This makes it much easier for them to appreciate the quality wine that we are able to bring to them via wine kegs.”

Some wineries, such as 10SPAN Vineyards, now are cultivating wines that are designed for distribution both in bottles and kegs. In 2013, the Livermore, Calif.-based company introduced three varietals that highlight the fruit grown in the cool climate of California’s Central Coast, all of which have been available in wine kegs, in addition to bottles, since the inception of the brand.

The industry is starting to take notice of this growing trend. Although wines on tap currently account for approximately 1 percent of all wines sold, the National Restaurant Association named wine on tap as the No. 1 wine trend in 2013 in its “What’s Hot in 2013 Alcohol” survey. With all 50 states now permitting the sale of wines in kegs (the state of Florida recently passed legislation permitting the sale of wine on tap), the market is ripe for continued, explosive growth.

For wineries, many benefits can be seized by offering wine in kegs including waste and cost reduction. During the course of its lifetime, a single keg reduces the wine’s carbon footprint by 96 percent compared with traditional glass bottles. Surprisingly, only about 27 percent of wine bottles actually are recycled, which also means that a significant amount of landfill waste is eliminated. In addition to these environmental benefits, a cost savings advantage can be achieved by not having to purchase bottles or labels.

Wine on tap also is better for consumers in terms of the freshness of the product versus traditional by-the-glass selections. Because wine is dispensed from a stainless steel keg pressurized by inert gas, there is no chance of corking and oxidation. This also means that whether a customer is drinking the first glass from the keg or the last, the quality of each glass will be consistent.

With wine on tap expected to account for as much as 5 percent of wine sales within the next three years, more restaurants and bars will continue to understand the benefits of offering wines on tap. This, paired with technological advances allowing additional varietals, such as sparkling wines, to be offered in kegs, will lead to vast sales and growth opportunities. Much like a great wine, wine kegs are only continuing to improve with age.

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