Pump up the Volume
Reeling from a year in which Oregon wine dollars tanked, one inventive winery has found a way to increase profits by selling 25,000 extra glasses of wine in kegs.
By Janet Eastman
One year into an experiment in which fellow winery owners feared she was making a big mistake, Kara Olmo is reciting the win-win of not using bottles, labels, corks, capsules and cartons. Instead, she’s selling her prized Wooldridge Creek wine in kegs at restaurants. She’s saving money in production without compromising quality and she’s slowly converting people to the idea that bulk wine can be something good enough to ask for by name. With her method, customers pay $6 to $8 for a glass of her wine on tap instead of $12 or more for the same wine served from a bottle.
“We’ve sold 25,000 more glasses of wine via the kegs,” says Olmo of her Chardonnay-, Viognier-, Tempranillo-, Syrah-, Zinfandel-, Cabernet Sauvignon- and Merlot-filled kegs. “Everyone’s fears of what bad could happen – like the brand would be devalued – have not materialized. We are breaking the stereotype that bulk wine is not great wine.”
Wooldridge Creek’s wine is on tap at The Melting Pot in Portland and eight other Oregon restaurants. One of them, 4 Daughters Irish Pub in Medford, no longer serves by-the-glass wine from a bottle. Olmo is working with 10 new restaurants that should be set to pour keg wine this summer.
This success story is in direct contrast to the Oregon wine industry overall. State winemakers sold 5 percent fewer cases last year than in 2008 and wine sales tumbled 16 percent, according to the USDA's National Agricultural Statistics Service. And, while others are dealing with an overstock of inventory and juice, Olmo and her winemaker husband Greg Paneitz reserved 20% of their fruit for this experiment. That fruit has found a new market.
Two of their Grants Pass neighbors, Troon and Rosella's, are also selling wine in reusable kegs. Troon is selling its keg wine, made from Oregon fruit, under the Applegate Valley Wine Company’s Trifecta label, “to differential it from Troon’s boutique wine because it’s such a departure,” says spokeswoman Liz Wan.
Rosella’s Vineyard sells about 25 gallons a month under its label to 4 Daughters Irish Pub and other nearby restaurants. “It’s a great way to get high quality wines to compete in price with bag-in-the-box wine,” says Rosella's owner Rex Garoutte. “It allows the little guys to compete with the big guys.”
The wine is kept fresh in pressurized stainless steel kegs with nontoxic argon gas. This reduces the typical spoilage factor caused by air seeping into opened bottles that don’t get emptied quickly enough. It also reduces restaurateurs’ and winery owners’ fear of displeasing a customer by unknowingly serving oxidized or flat wine.
If a restaurant can sell 125 glasses of wine a month, it’s a good candidate for keg wine, says Wan. Wineries have to meet certain factors, too, to make it worthwhile.
Ted Gerber of Foris Vineyards in Cave Junction tried selling his wine in kegs, but he discontinued the project because it didn’t pencil out. “You think you’re saving a lot on glass and corks, but the price of keg wine doesn’t come anywhere close to what you could sell the wine for in a bottle,” he says. “And you have to save wine without really knowing how much to hold back.” Empty kegs were returned to him via UPS, which added to the cost, time delay and hassle.
Gerber says the Foris name wasn’t publicly associated with the wine, so it didn’t help build a reputation for his winery. In the end, he decided: “It was a real nightmare to manage. It’s just a way to sell more wine at barely above the breakeven point.”
Garoutte, however, is gung-ho. He thinks the only factor keeping more restaurants from jumping on the wine-tap wagon is the initial expense for the tap system, which he estimates can range from $500 to $5,000 depending on the size.
Dustin Myers, manager of 4 Daughters Irish Pub, says the cost to install two eight-tap systems – one on the first floor; one on the second – was $1,200. “We regained our investment in a month, and now, six months later, we continue to offer a higher quality product at a lower cost,” he says.
Myers acknowledges that this delivery system will never replace the presentation of the bottle at the table that’s expected at a fine restaurant. But for a tasty burger-and-band joint like his it works just fine. A 5-gallon keg costs him about $300 and he sells 125 glasses from it at $6-7 each. That’s clears about $500. And he doesn’t have to worry about dealing with a pile of empty bottles or adding to a landfill.
“I think this is going to change how restaurants serve wines by the glass,” Olmo posted on Wooldridge Creek’s Facebook page in early October. The day before, a winery staffer delivered 13 large kegs to restaurants and the winery’s fans on Facebook were alerted. One fan, Alan Bergstom wrote: “Had the Tempranillo at Standing Stone [Brewing Co. in Ashland] last night. It was nice knowing it hadn't come out of a bottle that may have been open for days. Thanks for making great wine and being green.” In September, Olmo posted that Wine Spectator magazine published a story about her kegs. She remarked: “Everyday a step in the right direction.”
Recently, Olmo sold kegs of wine to be served at a fundraising dinner held at the Craterian Ginger Rogers Theater in Medford. She supplied carafes that the wait staff used to pour the wine at each table. She charged less than the nonprofit group had budgeted to buy inexpensive wine and Olmo still made money.
“A wine-on-tap program has allowed us to grow our businesses in an environmentally and business friendly manner without compromising the quality of our wines,” says Olmo. “Hopefully this is only the beginning.”