NFTs are great for authenticating wine, but is that all? – Robb Report

Produced by man for around 8,000 years, wine is slow to evolve. That said, there have been a lot of innovations recently. Low sugar wine is a growing category, Prosecco rosé production is now permitted, canned wine is very popular and wine releases associated with NFTs are exploding. Since that last bit caught our attention, we’ve replaced checking vintage charts for the best value with researching what Ethereum is worth in USD, as many wine-NFT exit prices are quoted in crypto. -change. That said, most of the offers we’ve seen will also accept traditional currencies, whether it’s dollars, euros or pounds.

We now know about NFTs, right? Otherwise, a quick recap: “Non-fungible token” is basically a rather clunky term for a digital asset representing a real-world item that can include music, art, or video. “Non-fungible” means that it cannot be exchanged or replaced with another item of equal value. Any bitcoin is worth the same amount as any other bitcoin. And while two $50 bills can be exchanged for one $100 bill, NFTs are one of a kind. All NFT transactions are recorded on a blockchain, creating an indelible record.

For authentication purposes, wine NFTs actually make sense, but wine brands’ early forays into the non-fungible realm included enough gimmicky offerings to mask any real value. Take a NFT drop from UK chat host Graham Norton’s Devil, which included the annual “first outing” rights to He-Devil wine (hmm, that sounds like a typical wine club allowance) and a physical print signed by the winery’s co-founders. Or that of Sarah Jessica Parker InvivoX brand’s NFT, which featured digital artistic representations of two of its wine labels. (Meh.) Even the very famous Bordeaux house Chateau Angelus offered 3D labels with a 2020 Angelus sound barrel. Robert Mondavi Vineyard pivoted to a hybrid model, making both wine and art something unique: he created a limited edition of three special wines, putting them in commissioned porcelain magnums handcrafted by the house french porcelain Bernardaud. The price at the time of writing was 1.20 Ethereum, or around $3,510.

Other recent wine and NFT releases include former NBA player Yao Ming Yao Family Wines offering 200 bottles of his 2016 Cabernet Sauvignon “The Chop” with an NFT. These bottles could only be purchased with Ethereum, and 137 have been sold so far. No fancy art attached, just the wine, but with a buzzing crypto twist.

australia Penfolds released two NFTs, one in November with a barrel of its 2021 Magill Cellar 3 Cabernet Shiraz, which sold out in 12 seconds for $130,000. Again, all wine, no number label. Maybe it sold out so quickly because it was offered in dollars; potential buyers may not want to adopt a currency they do not fully understand or trust. A second release in January offered 300 bottles of Penfolds Magill Cellar 3 2018 via BlockBaran online marketplace for wine and spirits NFTs, and all 300 sold out in 10 hours.

If you look beyond buzzwords and art projects, attaching an NFT to a bottle or wine barrel seems like a smart move, especially to combat counterfeiting. Like Guillaume Jourdan, consultant for the luxury and wine industries at Vita Bella Paris, told us, “NFT tokenization of digital identity and real-time tracking of wine bottles is possible… Integrating these solutions into consumer commerce is one way to eliminate counterfeits. With an NFT, a bottle of wine becomes “phygital”, i.e. physical with a digital identity: for each bottle, a unique NFT is created to provide authenticity and verification. »

A bottle of Penfolds 2014 Grange Shiraz.

Courtesy of Penfolds

NFTs also allow the original winery or issuer to continue to make money in the secondary market, which wasn’t really possible before. The highest price a bottle of wine has ever fetched at auction was $558,000, for a bottle of 1945 Romanée-Conti sold in 2018. However, the winery made no money from that sale. , but the dealer and the auction house did. If NFTs had existed 77 years ago and the winery had attached one to this bottle, Domaine Romanée-Conti might have had a share of the profits. Like Jacob Ner-David, co-founder and CEO of Vinsenta digital marketplace for fine wines that pioneered the tokenization of wine, explained, “With many blockchains like Ethereum or connected chains like Polygonthe NFT can be programmed to continue to pay a percentage of each secondary market transaction to the producer or creator of the NFT… This is programmed into the NFT itself and cannot be changed.

Where this is not necessarily true is with a barrel. If the whole barrel were later sold at auction, Chateau Angelus or Penfolds, for example, could have a share of the profits if this was built into the code (which was not the case for Angelus 2020). But once the liquid inside the keg is poured into bottles, the ability to validate it evaporates, unless the winery does like Penfolds, where the single-barrel NFT will be converted to 300 NFT bottles on the bottling date in October 2022, with each container then being identified by a barrel and bottle number.

It’s easy to see the benefits of NFTs for wine, especially rare and expensive bottles, those that are often counterfeited and then sold at auction. But what’s the deal with NFTs posted by wineries that have digital artwork attached? It may have something to do with the fact that the first generation of NFTs were tied to digital art, so the (rather unimaginative) wineries simply continued that trend. A wine CEO pointed out that limited-edition artwork offers something of lasting value to the buyer, as the wine will eventually be consumed.

Sure, but for wine-based NFTs to have lasting momentum and value, winery executives may want to remember that the liquid itself should be considered a work of art. Also, most tangible works of art have no shelf life. The wine yes. Unlike an oil painting, once a wine deteriorates, it can never be restored. Eventually, even the highest-rated vintage will lose quality, making wine a limited-return investment vehicle. If there is to be any value in wine NFTs beyond authentication, someone has to come up with a more compelling idea than a byte-sized piece of art. Anybody?

When not at home in Manhattan or Spain, Mike DeSimone and Jeff Jenssen hunt harvests around the world.

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