Funny Business with Jane Wells

For the serious wine lover: Merlot in a keg

Merlot sales no longer 'Sideways?'

Drought, schmout. Yes, California is in the middle of what could be the worst drought in 500 years (or not), and Napa Valley has only received a fraction of its normal rainfall. But 2013 was dry, too, and California still produced a record grape crop. Rains came last month, and farmers hope more will follow.

"It's not a complete disaster," said David Duncan, president and CEO of Silver Oak Cellars. "The vines adjust themselves. They're more used to Mother Nature than we are."

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That's not to say all is well in the vineyard. Groundwater supplies may be adequate for the moment, but without more rain, growers may over-pump water. "We're going to pray that all this goes away ... and we're going to get wet," said Clay Shannon, who owns Shannon Ridge Family of Wines.

There may be bigger issues to deal with than water, however. U.S. wine sales grew only 2.7 percent last year, according to one wine analysis, as growth slows in the face of competition from craft beer and cocktails.

Red wine kegs from the Pebble Beach Company.
Source: Pebble Beach Company

So winemakers and marketers are toying with better ways to sell wine, and the best wines to sell. Here are three developments:

Wine in a keg

Pebble Beach is not the sort of place you'd expect to be served wine out of a box, but it is being served on tap. The resort has installed a 150-foot "draw" from wine kegs to taps on the property, the longest such pipeline in the nation.

"This is a way to make wine more approachable," said Ted Carrick of Free Flow Wines, which sells the wine-on-tap systems. "It makes it fun."

It also saves money. Carrick said restaurants end up throwing away 10-15 percent of wine from bottles opened to pour by the glass, as the wine starts to spoil. That doesn't happen in a keg.

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"The last drop is as good as the first," he said.

Tap wine also means buying and throwing away fewer bottles. Wendy Heilmann, director of wine and spirits at Pebble Beach, said the resort invested about $100,000 into the tap system, and it's saved them from sending 10 tons of glass bottles through the recycling system.

"I love change," she said. Her facility brings in $14 million in sales a year, and she sees wines on tap as "a new way to present wine to our guests." She said about half of wine sales are now tap wines, and the number of wineries interested in selling her kegs has tripled since she started seeking suppliers.

Actors Paul Giamatti, left, and Thomas Haden Church appear in a scene from "Sideways."

Free Flow Wines claims that more than 2,000 restaurants will have wines on tap this year, which translates to 300 percent year-over-year growth. Winemakers are split on the concept. "We like doing them," Shannon said of kegs, though he added that handling them can be cumbersome. "We're looking into disposable kegs."

Silver Oaks' Duncan isn't as enthused: "I don't think a 5-gallon keg or a 2½-gallon keg is the best way to age wine over an extended period of time."

"Wine on tap is never going to replace your bottle service," said Carrick. "That $100 to $150 bottle of wine ... that's always going to be on the wine menu. Wine on tap is for the by-the-glass offerings, those wines (that) aren't meant to be bottle-aged."

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Cork or screwcap?

Is the pendulum swinging back into corks' favor? Winemakers have been migrating to screwcaps to avoid cork taint, which is when a bottle of wine tastes bad due to problems with the cork stopper. At the same time, consumers stopped attaching a stigma to screwcaps, plus they're easier to open. Back when Shannon started selling wines "we were having some cork issues, and everyone was into the screwcap thing."

If anyone's drinking merlot, I'm leaving.
Paul Giamatti as Miles Raymond in the film "Sideways"

The switch to metal tops was not good for Portugal, which provides more than half the global cork supply. It launched a campaign to tout cork's sustainability (it's an easily renewable resource), and it worked on the quality of its product.

The efforts may be starting to pay off. Even in Australia, which took screwcap wine mainstream, at least one winery has switched to cork. Shannon also became a convert. "The retail customer started pushing back on some of our wines, I believe, because they weren't cork-finished."

When he went back to cork, he discovered they'd improved: "We have zero problems right now."

Merlot back from the 'sideways' curse

This year marks the 10th anniversary of the film "Sideways," which made pinot noir a hero and merlot a zero. "If anyone's drinking merlot, I'm leaving," said Miles Raymond, portrayed by Paul Giamatti, before shouting the film's most famous line: "I am not drinking any (unprintable) merlot!"

In the years that followed, merlot sales plummeted.

"Merlot is definitely back," said Duncan. In addition to running Silver Oak, he is also a managing partner at Twomey Cellars, where the 2013 merlot has been described as the best ever produced in California.

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Merlot is "absolutely" in favor again, said Jennifer Putnam, executive director of Napa Valley Grapegrowers. "Merlot's delicious." She noted that some wineries are planting the varietal again.

But when you ask Shannon if merlot is back, he scoffs.

"No, what makes you think that?" He has some merlot vines that he may soon pull out. "I grow merlot, and I don't have a home for it."

Merlot has always been an important grape in Napa, and the sting of criticism from "Sideways"—which takes place further south, along the Central Coast—is still felt. Duncan poined out that in the film, Giamatti's character ends up drinking his treasured bottle of wine at a burger joint. That wine, cheval blanc, is a merlot blend.

"Miles was right in the movie a little bit in that there were some not-very-good merlots being made," he said. That's changed, Duncan added. The wines are better. "It's OK to drink merlot again."

—By CNBC's Jane Wells. Follow her on Twitter @janewells