Does the Future of Wine Lie in NFTs?

July 29, 2022

Does the Future of Wine Lie in NFTs?

Wine has been produced for thousands of years, and other than a few technological advances, it’s slow to change. Nevertheless, there are key innovations taking place such as low sugar wine, rosé Prosecco, the popularity of canned wines, and of course wine NFTs. While at first a strange pairing, the combination of wine and NFTs makes a lot of sense and it’s a pairing taking over the wine industry. But how does the pairing work when wine is a tangible thing and NFTs by design are not and what are the benefits to wineries and wine enthusiasts of wine NFTs? These are the questions we’ll explore below, but first, what are NFTs?

What are NFTs?

In the midst of the pandemic, NFTs have become all the rage. Standing for non-fungible tokens, NFTs are digital assets that represent a real-world item, typically for art, music, or video. All NFT transactions are recorded through the blockchain and thus, create an inexpungible record. In other words, NFTs cannot be exchanged for something of equal value. Take two ₱500 bills as an example, whilst these can be exchanged for a single ₱1,000 bill, the same isn’t true of NFTs. This makes them one of a kind. 

Since these assets exist on the blockchain, they cannot be hacked or cloned (at least in theory) and certificates of ownership and authenticity cannot be replicated. This is where the value of an NFT lies, and where its relevance to wine comes into play. But first, let's look at the two types of wine NFTs:

  1. A purely digital and intangible NFT in which the buyer won’t get to taste the wine they purchased. Examples include those created by BitWine who released 1,000 original wine NFTs on OpenSea, a larger NFT platform, in the form of pixel art. Their value depended on the rarity of the NFT, much like Bored Ape NFTs. As of July 2022, the most expensive of the BitWine NFTs was a 2018 Côtes du Rhône at 444 ETH, or $676,038.84
  2. A “physical twin” wine NFT. These are digital counterparts of physical bottles of wine, examples of these can be seen from Yao Family Wines, a winery established by former NBA player Yao Ming. They released 200 physical twin NFTs for their exclusive top wines 2016 The Chop Cabernet Sauvignon. Everyone who bought one of these NFTs would receive an authenticity certificate signed by Yao Ming and have the option of either having the wines delivered to their home or storing it in a premium cellar in Napa Valley. 

To simplify: NFTs can help combat fake products, increase a brand’s reach, and generate additional revenue from a new market and with that being said, let’s look at more ways wineries are using NFTs.

How Does Wine Come into Play with NFTs?

We’ve already seen some popular wineries move into the NFT sphere. Robert Mondavi Winery pivoted to a hybrid model in which they released wines together with unique pieces of art. They created limited editions of three wines, putting them in commissioned porcelain magnums handcrafted by the French porcelain house Bernardaud. Last April 2022, these NFTs were going for 1.2 ETH, approximately $3,510. Penfolds also released NFTs. The first was in November 2021 for a barrel of its 2021 Magill Cellar 3 Cabernet Shiraz which sold in 12 seconds for $130,000. They released another series of NFTs in January 2022 where they offered 300 bottles of Penfolds Magill Cellar 3 2018, all of which sold within 10 hours. 

So why the move to NFTs? As alluded to, attaching an NFT to a bottle or a barrel is a great way to fight counterfeiting. Something that The European Union Intellectual Property Office reports costs the global drinks industry about $3.8 billion each year with experts predicting 20% of all wines sold are fake. With an NFT, a bottle of wine becomes “phygital”, aka something physical and digital, and has authenticity and verification built in. They also allow the winery to continue making money on the secondary market. For example, in the past when wines have been sold at auction the original winemaker wouldn’t make any money off those sales. By selling through the blockchain, the NFT can be programmed to continue to pay a percentage of each secondary transaction to the winery. 

Of course, NFTs lack when it comes to barrels. Once the wine is poured out of the barrel into bottles, the ability to track it evaporates. Unless of course you do as Penfolds did with their second release and identified each wine with a barrel and bottle number. Wokenwine, a “wine+NFT” company announced earlier this year its plan to launch an online platform in which wineries can use NFTs to track their wines and prevent counterfeiting. 

Another benefit to wineries with NFTs lies in expanding their customer base. After all, not everyone is into wine so if wineries continue selling in the traditional market they can only tap the traditional wine buyer. By moving into NFTs they can pair digital collectibles with their wines. Chateau Darius is one such winery who began selling digital Bordeaux wines on BakerySwap with each NFT including artwork, two physical bottles, and wine storage facilities. The goal was to expand their wine worldwide and appeal to younger wine drinkers.

But it’s not just wineries that can benefit from wine NFTs, wine buyers also stand to benefit. 

What Do Wine NFTs Mean for Wine Buyers?

There are two key benefits for wine buyers when it comes to wine NFTs: new forms of investment and wines that are traceable. Other than simply growing their collection, wine NFTs can also open other forms of investment as seen with Costaflores winery in Argentina. When people buy wines from Costaflores, they can scan the labels on the bottles, and fill in a questionnaire, after which they receive an NFT that is linked to a share of the winery.

For avid collectors, authenticity is as important as it is for winemakers. WiV Technology is a company that helps with this. Teaming up with vintners, wineries, and distributors worldwide they mint and tokenize physical bottles of fine wine into NFTs. The trading process remains fully transparent and allows customers to purchase fine wines on the platform with confidence. 

Nevertheless, wine is a limited return investment: unlike art, wine deteriorates and once it does, it can’t be restored. So whilst currently the value in wine NFTs remains at authentication, new technologies and advancements are being developed every day so who knows what the future holds. 

In the meantime, browse our selection of great-value wines guaranteed to satisfy your wine cravings. Shop over 2,000 wines at the best prices online in the Philippines

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