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Monday, February 17, 2014, 6:23 am

Free Flow gears up for wider national reach

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    Free Flow Wines on tap at Zero Zero, San Francisco, March 14, 2011.

    Free Flow provides wines on tap for Zero Zero in San Francisco.

    NAPA — A Napa-based company has greatly expanded its ability to put client vintners’ wine in kegs for on-premise consumption and plans further growth this year through outside funding to make it even easier for restaurants, hotels, resorts, stadiums and other venues to pull the handle for these wines.

    Automation has tripled production capacity at the 22,000-square-foot south Napa plant Free Flow Wines (415-626-1215, freeflowwines.com) expanded to late last year, according to co-founder Dan Donahoe. At the same time, the company is conducting due diligence on $10 million in equity funding that would allow the company to stock up on 19.5-liter kegs, which cost $100 apiece, as well as eventual regional kegging hubs and up to five additional staff.

    “Wine is a very capital-intensive business, and the last thing it wants as an industry is to be owning a keg fleet and the logistics of getting kegs back,” Mr. Donahoe said. Free Flow’s fleet has expanded from 50 when the company started four years ago to about 50,000 now.

    Wine industry trendwatcher Jon Fredrikson at the Unified Wine & Grape Symposium in January said wine by the glass, and particularly that served by wine in kegs, would be a hot trend for on-premise wine sales this year.

    Free Flow Wines uses standard 5.2-gallon beer kegs.

    Free Flow Wines uses standard 5.2-gallon beer kegs, which hold as much as 26 bottles of wine.

    Free Flow leases the kegs and matching wine-safe 304-grade stainless-steel tap fixtures, rather than the 303-grade stainless steel and brass used for beer. Wine reacts with those metals, souring the taste for vino on tap when it was first tried in the 1980s. Free Flow cleans the kegs with the same processes used on winery tanks, fills the kegs with wine and tops them with a nitrogen-based gas mix to prevent oxidation, and arranges to have the kegs shipped to and picked up from trade accounts. The goal is to reduce the transportation weight and storage space needed for bottled wine and lower food costs from spoiled wine between wine orders.

    The service cost averages $1 a bottle, depending on volume. The minimum quantity is 250 gallons, enough to fill 48 kegs, but that costs significantly more. Because Free Flow is most efficient when kegs are in motion rather than storage, the company works with clients to provide enough to supply trade accounts for three to six months, so that means kegging three to four times a year.

    As it is, the company’s 18 employees are able to clean, fill and ship up to 5,500 kegs a month by hand. But a new automated keg-filler allows the same staff to clean and fill up to 25,000 a month, Mr. Donahoe said. The machine was made by beer industry stalwart KHS of Germany and said to be the second one for wine in the world after one in Italy.

    In January, 7,500 kegs were filled and shipped, and the goal is to double that throughput by year-end, Mr. Donahoe said.

    Free Flow kegged and shipped the equivalent of a little more than 100,000 standard-sized 9-liter cases of wine last year. That’s small compared with the millions of cases shipped from California wineries annually to on-premise venues.

    Free Flow Wines installed this KHS automated keg-filler at its new Napa plant in late 2013. The device can fill up to 25,000 kegs a month.

    Free Flow Wines installed this KHS automated keg-filler at its new Napa plant in late 2013. The device can fill up to 25,000 kegs a month.

    Starting with brands from early winery partners Constellation Brands, Treasury Wine Estates and E&J Gallo, the list of brands kegged has expanded to include higher-end selections from those portfolios as well as dozens of notable North Coast selections.

    So Free Flow estimates it will need a lot of kegs for significant expansion. For example, each tap at a typical restaurant may need five to seven kegs in the “float” — one on tap at a given time, up to two in reserve, one or two empties in house and a couple in transit.

    To make most efficient use of the keg fleet, the goal is to establish kegging plants to serve major wine-consuming regions.

    “It helps with profitability, because we do not have to get the kegs back to Napa,” Mr. Donahoe said.

    The first hub may be opened early next year in the Northeast, followed at some point but hubs in the Midwest and Southeast. Florida, one of the top wine-consuming markets in the U.S., opened as a target market in July, when lobbying efforts secured a carveout for 19.5-liter reusable containers in the state’s strict alcoholic beverage rules.

    A Northwest hub will help shorten the transportation time for the 24,000-liter containers of Italian wine New York-based Banfi Vintners recently started shipping in “flexi” bladders to Free Flow for kegging, Mr. Donahoe said.

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