Posted by Ranga Bodla, Industry Lead, Wholesale Distribution, NetSuite
For an industry that dates back to the Bronze Age and amphoras, disruptive ideas are a little tougher to come by, but Free Flow Wines (FFW) of Napa, Calif. has done it for wine distribution
The company’s secret sauce lies in its use of stainless steel kegs and a distribution process that enables those kegs to be reused. FFW’s CEO Jordan Kivelstadt got the idea to put wine into kegs several years ago when he noticed that extra wine was stored in steel kegs: “I remember thinking, ‘why can’t we just sell wine in one of these?’ That’s when the lightbulb went off.”
FFW's innovations has made it possible for public venues like restaurants and sporting events to serve wine on tap, by the glass, without worrying that an open bottle will spoil. It has literally transformed the wine industry and helped reduce the number of wine bottles that wind up in landfills.
The wineries and distributors that are partnered with FFW liked the concept, and Free Flow Wines’ new business model took off. It’s annual revenues have grown 300 percent annually for the past two years.
FFW’s innovative idea and implementation strategy has paid off well for the company, and also attracted the notice of others. Most recently, FFW became a winner in Constellation Research’s 2015 SuperNova Awards. Each year, Constellation Research recognizes companies that have been successful at applying emerging and disruptive technologies, and overcoming difficult odds on the way. FFW is a winner in the Matrix Commerce SuperNova Award category which honors companies that have changed their models of commerce to meet changing realities from the supply chain to the storefront in their markets.
It’s been a challenging journey for FFW and the changes they made to make it work have been considerably more complex than simply switching from bottles to kegs. It required a whole new distribution model that could accommodate the shipping, return and reuse of 85, 000 kegs a year for 300 wholesalers who supply wine for thousands of retail customers like MGM Grand, P.F.Chang’s, and Caesar’s Palace.
The first thing the company realized was that its QuickBooks and Excel based financial software wouldn’t keep up with their changing needs. It moved to NetSuite’s cloud-based ERP platform with financials, inventory management, logistics, and work order applications. To adapt the workflow toFFW’s unique needs, it leveraged NetSuite’s open API to create an asset tracking module and reverse logistics processes for collecting kegs from thousands of restaurants, hotels and casinos.
“We had a complex pipeline, and we had all of these assets [kegs] that we needed to track and make sure they came home,” explained Kivelstadt. “We had to have a fundamentally integrated platform and a company that could scale as fast as we were scaling.”
The open APIs have also made it possible to add more sophisticated payment and invoicing capabilities and to create customer portals to make ordering easier.
But the most valuable aspect of the company’s software may be its data collection and predictive analysis capabilities, which will give FFW critical insight into potential problems and opportunities. The analytics give FFW deep visibility into key business metrics and enables them to predict demand months into the future, as well as discover new potential markets.
Guy Courtin, vice president of Constellation Research explained, “Free Flow Wines will have a much greater understanding of the true flow and consumption of the product. The data generated from the movement and use of kegs will potentially open up new use cases for wine distributors and producers.”
Download the complete whitepaper here: Case Study: Free Flow Wines—How a Disrupter in the Wine Business Leads with Thoughtful Innovation.