A Different Perspective on "Wine on Tap": It's Working. And is Growing.

By Mark Grimaldi, Director, Marketing and Events

The subject of wine on tap (WOT) has always been one for debate, especially here on the New York Cork Report. Having been involved with kegged wines since they first started to become commercial a few years ago, I am now even more a proponent, seeing just how successful it is becoming. 

Some still see it as a downfall for our industry, “cheapening” the way their product is portrayed to the consumer, like a “bag-in-a-box” would, but I believe that thinking is has dated itself, and the proof is right here in front of us.

I recently had the chance to talk with Charles Bieler of Gotham Project for a few hours as we got his custom kegged-wine dispenser all geared up for an event here on Long Island. He poured two wines that day: a North Fork red blend and North Fork chardonnay.

We talked for a while about the business and how things were going for him. What he said was astounding: Gotham Project cannot keep up with demand, not just locally, but nationally.

The industry is not catching up as fast on the production end as it is on the consumer end.

Right now, Gotham is moving about 250 kegs a month in New York alone, mostly in Manhattan, Brooklyn and here on the East End of Long Island. And to put to bed the notion of these wines being “cheap,” many top restaurants and wine bars are going ahead with this format including Paul Greico’s Terroir wine bar, Colicchio & Sons, The High Line, Luce & Hawkins and Southfork Kitchen. Gotham Project also cannot keep up with the demand coming from distributors and restaurants in other states either.

Gotham Project is not the only company kegging local wine these days, either.

In New York alone, there are a number of wineries taking advantage of the market, including, Paumanok Vineyards, Shinn Estate Vineyards, Martha Clara Vineyards, Jamesport Vineyards, Raphael, Channing Daughters Winery, Hermann J. Wiemer, and even the tiny producer Heart & Hands Wine Company has done a custom blend for a local Finger Lakes restaurant in keg.

In my opinion, this is huge for New York wine. If these local wineries were not paying attention to this growing market’s demand, there would be a lot less New York wine in consumers' glasses at top restaurants.

Look at it this way, the competition for a traditional out-of-bottle glass pour at a restaurant is extremely fierce. I know it is because I live with that competition daily in my line of work. If poured out of a bottle, would a Long Island chardonnay be poured by the glass on the High Line in NYC? Would a Finger Lakes riesling be poured by the glass in northern Westchester County? 

Maybe. You may say sure, a local wine most surely would be poured in New York, especially here on the East End.

But, now pretend you are a winemaker competing with the many other Long Island chardonnays, or Finger Lakes rieslings, or North Fork merlots out of a bottle, and your chances of having your wine by the glass at a restaurant is extremely limited.

This is where the wine-in-keg niche and differentiation comes into play. I think I can count on one hand the number of Long Island chardonnays being offered in keg. As a matter of fact, I think I can count on one hand which wineries offer each variety in keg around the state. There is a lot of opportunity here.

Kareem Massoud, winemaker for Paumanok vineyards and huge proponent of wine on tap (as well as screw caps and large-format bottles) has had great success with kegging his wines. He said, "In the last year alone we sold over 100 kegs of our wine to two local restaurants. One of which has taken about 70.”

That is the equivalent of 225 cases of wine in addition to their normal on- and off- premise sales. If you are a winemaker or running a winery, you have to be thinking to yourself that moving that much more wine out of your door is extremely attractive, no matter what it’s packaged in. Imagine the dollars being left on the table if you aren’t? Kareem has figured that on average as long as prices do not change and cost savings continues to be passed on to the customer, each keg will pay for itself when filled four times.

Some small wineries may not have enough wine to sacrifice their bottle sales for keg sales, but many who produce more wine do. Especially if you are a winery that produces so much wine that you have multiple vintages of the same wine for sale at any given time or hold back releasing current vintages until you sell through older ones.

Kareem added, “As a winemaker, I have a responsibility to make sure that our wines make it to the consumer in the same condition they were in when they left our winery. Wine in keg ensures that for me. I don’t worry about corked bottles, waste or freshness if it’s being poured by the glass. Factor in the financial and environmental benefits and it is the ultimate vessel for wine. When Southfork kitchen closed for a month because of their kitchen fire, I went back before their reopening to check on the wines, (they were pouring the chenin blanc at that time) and it was just as fresh after sitting for a month as it was when it left the winery. It was amazing.”

Luce & Hawkins restaurant in Jamesport has been pouring six different wines on tap since it’s inception in early 2010 including Gotham, Shinn, Wiemer Martha Clara, Paumanok and Jamesport. While they also offer an extensive glass pour list from bottle, the wine poured from keg has proved to be more popular than the wine poured from bottle. “We've found that the keg system not only allows us to cut way down on packaging waste, but also gives guests an opportunity to taste a greater variety of wines at a greater value while not worrying about cork taint or freshness issues”, says owner and chef Keith Luce.

And what about the future? Is this a fad? I don't think so. Besides factoring it’s environmental, financial and spoilage benefits, we have not even “tapped” into a whole other beneficial market for wine on tap. Retail and “Wine to go”.

Just around the corner is the day that the SLA will loosen their grip on some of the ancient prohibition laws that prohibit kegged wine being sold both retail and in growlers or other “to-go” containers. We already see many “filling stations” for beer throughout the state, including supermarkets like Whole Foods and many retail beer distributors. Very soon we will be able to fill growlers of local wine or pick up a keg for our home kegerators. There is already a “picnic” tap with mini nitrogen canisters being produced by Leland for this very purpose.

With only two major markets really working with wine on tap, New York City and San Francisco, and others emerging quickly, Gotham plans on taking what they have done here to other states that have a growing demand for their local and non-local wine on tap. With connections around the globe, they will bring the wines of New York, Chile, Washington, California, France, Germany, Italy and Spain in addition to other city’s local AVA’s wines like they have done in New York.

Even though New York Wine sales are better than ever due to the rise in quality and the "local" movement, it is still the “the new guy on the block” when compared to other historic grape growing regions around the world. The fact that this young region has this unique vehicle and marketing right now to help get the wines into consumer’s hands that may or may not not get there otherwise is huge and can only help to open eyes to NYS wines.

Comments

[peter]

Good article, dude!! Bring on the Gruner!!!!!

[Michael Gorton, Jr.]

Nice post Mark. This still did not push me over the fence on WOT.

As a consumer I think it is fantastic. And true if the SLA ever allowed "growler" fills, I am sure I would be in line.

Where I am not in favor of it is if I was an winemaker, vintner or owner. Image, label and identity of the "label" that the winery has spent money and time to develop is lost when someone orders a glass of wine from tap as well as from an open bottle pour. When one orders a bottle of wine while at dinner, and they enjoy it, that wine bottle is with them from start to finish. Subliminal advertising. The logo/label is branded into the consumers brain.

[Lenn Thompson]

Michael: You're right -- a kegged wine isn't going to offer the opportunity for the label to sit on the table, but as you point out, the same is true with anything by the glass, right?

I don't think ANYONE is suggesting that kegged wines are going to replace bottles. But, I think they are the ultimate by the glass scenario for ALL involved.

[mark grimaldi]

Thanks, Michael. Your are right, as with all glass pours, the label never gets shown, unless you are at a place where they bring the bottle table side which is extremely rare. But, you are forgetting that the wines have tap handles, just like a beer, and actually I think the branding is MORE visible than if you had your bottle of wine by the glass sitting in a fridge or behind a bar. We never worry about this with beer, so why are you stressing it about wine?

Also, a lot of wineries do this in addition to their regular bottles and already have their wines branded in the market, this is simply a supplement to their lineup. And of course, they can have their wines on the list whether they are in bottle of by the glass.

[Michael Gorton, Jr.]

Lenn & Mark

Do all the wineries have tap pulls? If not they should. How about on the WOT menu that is presented to the table, is the wineries logo or at least font type used.

Tacky as it may sound, how about coasters for the wineries that are being poured.

The beer market has done nice with fancy and eye catching tap pulls...wineries should as well.

I very VERY rarely order wine by the glass because of how it may be stored or how long it has been open. WOT is perfect for the consumer because one does not have to worry.

I don't think that WOT will replace bottles, jeesh I hope not.

I am a consumer, but at the same time a businessperson. For example, when someone has services at my location image and brand is set. When someone has services outside our facility, image and brand is lost. When services are held in a building like a fire house. They don't know who is handling it.

Now, I could have just compared apples to oranges, but I tried :)

[mark grimaldi]

Of course they don't all have handles, but they should. And I think that most of them will at some point. As of now a couple have professional handles, and others make their own. I think that tap handles is something every winery should have in some way shape or form. But again, this is all very new, with most wineries just starting to try this out in 2011. It is also very easy to make a tap handle. Plenty of beverage supply websites sell customizable handles.

Coasters? a by the glass is a by the glass. Don't need coasters for a wine BTG if its out of bottle, then you surely don't need it if its out of keg. Again, the tap handle takes the place of the wine label if its by the glass, IMO. Maybe if WOT starts getting popular in bars, but again, it's not budweiser or miller lite.

[jim silver]

I am enjoying my friend Mark's enthusiasm on the subject, he delivers the message well. In fact, I've warmed (ever so slightly) to the idea of the occasional WOT after having Kareem's CB at Luce-Hawkins. Dynamite wine, and fresh as a daisy.

There is some hollowness to the arguments though, so let me posit some ideas as well:

1) I think there's a self-serving tone to the arguments in that it is expected wineries will be lining up to re-tool their operations to accommodate a keg program. And that restaurants are lining up to re-tool their bars as well. That somehow this is all a natural progression and that there really isn't a massive outlay of cash and expertise needed to build this extremely small aspect of the business. And that somehow we are to be ashamed of ourselves for not changing to meet this "wave." These ideas are costly, make no mistake about it - and it requires reallocation of space/storage, inventory, and human resources.

2) I think there is a supposition being made that the consumer actually wants this. Maybe they do, how do we know? What is our thinking behind this movement? Do bag-in-the-box sales count to those people predisposed to the idea of tap wine - and if so - does that mean they expect it to be cheap? Does the consumer expect "great" wine to flow from a tap? Can we point to five restaurants in NY as proof positive, when there are 22,000 accounts in NY? I think the problem is that enthusiasm doesn't make it right.

3) MG had a fine point with the relinquishing of marketing for the ease of use of WOT. It is hard to give up the portability of label-based marketing, and relying on your customers (retail/restaurants) to represent you correctly can be disappointing - ask anyone who tries to order their own wine in restaurant they don't always patronize. It is very difficult to get a waitron to pronounce the words properly, never mind get the vital ideas of the wine being served translated to the end-user. In other words, just forget the idea of your wine being sold properly off of a tap all of the time. Tap handle? Fine, if you're sitting at the bar. Just because we are wine geeks talking to other wine geeks, you must still remember that 99% of the population takes what they get and considers it the truth.

4) The two biggest notions that ring totally hollow are the false idea that this is somehow going to be a cost-savings that rolls down to the consumer. Really? Think about that for one minute. A restaurant - a business that suffers the worst bottom-line margins of any industry on the planet is going to happily donate a $1 from each glass of wine they sell to prove your point about the benefits of WOT. Or that they will somehow sell more wine because it flows from a tap and costs $6 a glass rather than $7. The consumer has no idea what things cost or should cost. They don't know the benefits whatsoever (as regards markup and cost of production, transport, or delivery.) The other falsehood would be that proximity is a long-term benefit to local producers. If that were true we would only drink local wine right now. But once you make kegged Chilean SB and California Merlot available, and cheaper than the local wine, it will supplant the local product - no matter what. Local and small wineries can only dabble when major manufacturers decide they want to play in this field. And they will want to play.

5) I can't argue cleanliness anymore. I am sure that all restaurants and bars maintain the perfect conditions 100% of the time. They do, don't they? I can't argue the greenness of this since we know for a fact that shipping and cleaning of empty kegs for refill is better for the environment. It is right? And I think I can't argue spoilage anymore since kegs are always transported and stored under optimum conditions. Always. Right? So at least that's out of the way.

Actually, full disclosure, I am friendly with Mark, and I respect him (and his great palate!) very much. I know he enjoys selling this keg wine. He knows we differ on this. I am a traditionalist when it comes to selling wine in the perfect vessel, glass. Just because kegs were the actually method of selling wine two hundred years ago doesn't mean it's still okay. Lot's of things have improved but I don't feel that mass storage units like kegs are a positive move forward, especially when we KNOW that glass is clean fill and a perfect container, that cork is natural product and renewable, and that screwcaps have nearly eliminated other taint issues. WOT is fixing something that's not broken, then selling it to you like the latest and greatest vacuum cleaner.

[mark grimaldi]

Jim, You make great points, as always, and I am glad you chimed in. I think that a big point of my article was the fact that kegged wine have enabled exposure for NY wines in ways that would have never risen from traditional bottle. Putting costs, green-ness, taint issues, cleanliness aside, kegged wines have been a positive thing for NY wines. If Peconic Bay had Nautique in keg, i would almost gaurantee that it would be poured in places around NYC and LI where Peconic Bay is otherwise unknown. How is that not good for your brand? And hand in hand with that was my point about just how much wine a winery with the means to do it, can move product in this way.

The other main point of my story is simply that WOT is growing at a tremendous rate. Whether it's a fad or not, well thats to remain unknown for the time being. I just wanted to show some hard core facts and figures.

I also feel that having a Chilean SB or Argentine Malbec in keg would not undermine NY wine sales in keg just because they may be cheaper. While it could, under certain circumstances, happen, it will ultimately be up to the account. For instance, we have sports bars where they pour every flavor of Turning Leaf out of magnum. If WOT were here, then sure, the cheaper the better. But WOT so far has been starting out at higher end restaurants, where the buyers care about what is in the keg. Some of the cheapest wines in bottle these days are still chilean SB, does that scare you from putting your local wine in bottle? In the end, the right account will care about the type of wine that is in keg, just as they care whats in bottle. Again, you are being scared off by the "cheaper the better" "bag-on-box" mentality. Buyers of keg wine are not like that, so far. if they were, then Paumanok would not have 50 kegs full of Chenin Blanc, which is one of their more pricier wines.

It's just another vessel option, and it's pretty dang cool, And it's helping bring NY wines to people's glasses where they never were before. Are you not on board with that?

[jim silver]

To suggest that a NY wine should only find its way to certain accounts by virtue of its vessel is the disappointing part. Why can't you appreciate my wine from a bottle? Out of a keg, that's okay, but bottles are too "five minutes ago?" I find this argument degrading to NY wines to a point.

You said: "If poured out of a bottle, would a Long Island chardonnay be poured by the glass on the High Line in NYC? Would a Finger Lakes riesling be poured by the glass in northern Westchester County?"

And I say: "I sure as hell hope so...and why not?"

Kareem's business is none of mine, and he surely knows what is what better than a lot of us - but I still feel that 50 kegs is 1,200+ bottles that won't find their way to anyone's table - unless they eat at a handful of (excellent) restaurants. That serves you, the account, and to a certain extent the diner that evening - but only at the expense of brand building to the consumer and the cost of retooling the system.

Also on the list of pretty dang cool: Betamax, HD-DVDs, New Coke, the USFL and cars that steer with all four wheels.