Millennials raise a glass to draft wine

Robert Louis Stevenson once wrote that “wine is bottled poetry.” Yet, it is wine on tap that is becoming an increasingly popular on-premise service in established Western markets. As with many disruptive drink trends, wine on tap (or draft wine) first emerged on the West Coast of the US a few years ago. The trend then spread to the rest of the US, into Canada, and more recently the UK, from where it will no doubt spread to other European destinations.

Wine from a keg is a huge jump for an industry which took over a decade to (largely) accept the ultra-convenient screw-top over the traditional cork, which suggests that wine from a keg should be a very hard sell. However, it has so far proved hugely popular among the open-minded US Millennial generation, which enjoys this kind of “theater of the unexpected” and concepts which blur the boundaries between different alcohol segments. In fact, the rise of craft beer has made kegs seem much more trendy and premium again, and the biggest barrier wine kegs face is likely to come from the wine trade rather than the drinkers themselves.

28% of Young Millennial on-premise drinkers seek a “unique drink experience” when deciding which restaurant or bar to visit

The novelty of wine on tap has been embraced largely by upmarket and early adopter bars and restaurants seeking to create “unique” experiences for their predominantly Millennial customer base. According to Mintel’s On-premise Alcohol Consumption Trends US 2014 report, over a quarter of US Millennial on-premise drinkers seek a “unique drink experience” when deciding which restaurant or bar to visit, far higher than older American generations, including 19% of GenX and 13% of Baby Boomers.

Wine on tap is more than just a gimmick

Serving wine on tap is about more than just the theater of the unexpected. Some winemakers actually prefer it, believing it ensures a fresher and more consistent taste. For example, in theory there is no chance of corking and oxidation as the wine is dispensed from a stainless steel keg that is pressurized by inert gas. A problem with on-premise wine is that bottles can be left open for days, meaning consumers might get lucky, but too often get served days’ old wine that is in less than optimum condition.

Wine on tap also means a far lower carbon footprint ― a bigger deal for Millennials than other age groups. It also saves a significant amount of money on packaging and shipping costs. This allows on-premise outlets to pass savings on to consumers, meaning entry level wine drinkers get to enjoy higher quality wine for the same price.

Wine on tap also opens up intriguing possibilities such as the greater use of wine “flights” ― a concept which originated in high-end wine but which craft beer has arguably done most to popularize in recent years. It allows drinkers to try smaller portions of different beers instead of a large glass of one type only. This caters to Millennials’ preference for experimentation rather than sticking to the same drink, and would be a great way to encourage wine drinkers to take more risks, such as trying a new brand or grape varietal.

Of course, wine on tap does not suit everybody. There has been controversy over the growing frequency of Prosecco on tap in London bars, with a consortium of Italian winemakers complaining that Prosecco on tap is illegal under 2009 European Union rules. “The Prosecco you get on tap is so pale you could confuse it with soda water and the bubbles are so big you can hear them bursting out of the glass,” according to Bruno Cernecca of Italian specialist merchant Vini Italiani, in a comment for wine publication Drinks Business.

Bag-in-box can benefit from the emergence of draft wine

It is 25-34 year-olds who are likely to be the most open to the wine on tap concept, according to data from Mintel’s Wine US 2014 report. American wine drinkers age 22-24 years old are significantly more open-minded towards new types of wine packaging than US drinkers overall. However, as consumers graduate to the 25-34 age group, and become more confident about their wine preferences, their acceptance of new packaging concepts peaks. For example, among 25-34 in-home wine drinkers, 62% are interested in trying wine in packaging types beyond glass bottles (eg boxes, plastic bottles, pouches) versus 40% of consumers overall.

From a retail perspective, growing acceptance of draft wine in the on-premise channel is likely to benefit the bag-in-box (BIB) format the most. Both use the pouring tap mechanisms, and BIB reduces the price of good quality wine in the same way that wine on tap does in bars and restaurants.

46% of 25-34 US wine drinkers think boxed wine is as good as bottled wine

BIB has long been seen by consumers as an inferior container for wine. Yet, consumers are likely to reappraise the general concept of wine being poured from a tap as they experience draft wine in upmarket on-premise outlets. There is no logical reason why BIB should be seen by consumers as inferior, and it is actually a superior way to retain wine quality for much longer periods than glass bottles.

Almost half (46%) of 25-34 US wine drinkers believe that boxed wine is as good as bottled wine compared to just one third of total wine drinkers. This suggests that older Millennials are already coming around to the idea of BIB. But the growth of wine on tap is likely to accelerate such acceptance.

Jonny Forsyth, Global Drinks Analyst, is responsible for researching and writing all of Mintel’s UK drinks reports. He brings ten years of experience working in the marketing industry, with roles at Starcom Mediavest, AB-Inbev, and Trinity Mirror. He is a regular contributor in global and national media outlets such as BBC, CNBC and Bloomberg.