Stanford GSB

Stanford GSB

Friday, February 19, 2016

Wine on Tap

Wine on tap. We've discussed it in class and many of us have already tried it.

Wine on tap is sold as a "cheaper, greener and fresher alternative" to wine from a bottle. Restaurants can store it for longer, since no air ever enters the keg and the wine thus doesn't oxidize (the wine is replaced by inert gases as it pours out). A flip side of the same coin is that the restaurant pays fewer shrinkage costs. As a result, replacing conventional bottled wine with wine on tap is great for the bottom line -- even if you charge a little less for it, it's still cheaper to buy, store, and deliver. There are plenty of other ecological and service-related benefits which you can see listed here.

It’s still a pretty nascent market, and as such, there are quite a few young firms out there advertising their specific related technologies – such as, for example, Free Flow Wine .

Reading about this raised the following questions that I’d love to get people’s thoughts on:
1)      In many restaurants, consumers never see the bottle, since glasses are poured behind the bar. But is there a ceiling to the quality and price level where this can go? For higher-end wine, consumers do want to see the label, and displaying the bottle is part of the ritual of restaurant consumption.
2)      Could this ever become a consumer concept? Theoretically, given the lack of oxidization, a wine-drinking family could save money by just subscribing to a twice-yearly delivery of a keg of their favorite wine
3)      Could the expansion of tapped wine bring an ancillary benefit, as the lower price point makes wine more competitive with beer, attracting new drinkers? Especially relevant in middle America, where the tap also removes the "pretentious" label

4)      One benefit of using kegged wine is that it allows for easier on-the-spot blending (again due to the preservative and volume qualities of the system). Might this put more power into sommeliers and local winemakers, as wine becomes more of a raw input and the actual end step of the production chain moves closer to the consumer?

2 comments:

  1. This is such an interesting new development in the wine world. I went to Wente Vineyards last weekend and outside of their main wine tasting room, they have a separate tasting room with wine kegs serving a brand from a different vineyard. I was admittedly a bit hesitant to actually try the keg wine as I assumed it was of lesser quality, but the lady providing the tasting was very good about explaining details on the attractiveness of wine kegs to restaurant owners as well as consumers. I foresee the keg becoming a useful device that will soon be adopted in various homes. I would imagine that wine aficionados similarly want a system that cuts costs, increases wine freshness and reduces the amount of waste caused by bottles and corks. One of the only potential downsides worth considering is that wine kegs seem to be a bit more high maintenance than something like a beer keg, due to the need to be perfectly fitted and restrictions n tubing. The wine in a keg needs the optimal amount of pressure to be dispensed and stored properly, which may present a large barrier to customer adoption. If nothing else, wine kegs make wine seem a bit more approachable to wine novices and even the most finicky of wine snobs will eventually see the benefits of kegs. Like with screw caps, I think wine purists will be slow to adopt but eventually will get there.

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  2. I too was at Wente Vineyards this past weekend and noticed the wine kegs. What was so fascinating to me was that the wine kegs at Wente were actually more expensive than their bottled wines at their own tasting room. (We tried both locations). To fill a bottle with the wine from the keg, it was nearly double the price. It made me wonder whether the novelty of the tasting room was the reason for the price hike, rather than the reasons Soren and Nina mention.

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