It’s been around for a few years now, but can blockchain and NFTs still revolutionize the wine industry? database investigation.
Almost five years ago, databases Arabella Mileham spoke about the ‘Fourth Industrial Revolution’, as discussed by Lord Holmes of Richmond, co-chair of the Assistive Technology, Fintech and Blockchain Parliamentary Groups at the Wine and Spirit Trade Association conference (WSTA).
Holmes explained how technology could transform the wine trade, even reducing trade friction, providing more information to consumers and ensuring a transparent supply chain.
But has this dream come true, and if not, why?
Blockchain
The first and most obvious point is that the wind has taken the wind out of NFT market sales globally. In 2021, the industry was valued at around £31 billion, but is now worth between £7 billion and £10 billion. Some have predicted that only about 5% of NFTs have retained their value.
Still, there was a clear “bubble,” and there were only a limited number of copies of the Bored Ape Yacht Club model that consumers were willing to purchase. And most importantly, it was all about digital assets.
But here, we are obviously talking about a tangible and real product: wine. Of course, this can possibly be drunk. In this case, and as with many other luxury products like fashion, blockchain and NFTs still offer significant potential.
Platforms
These questions were addressed in a recent podcast with Scott Melker, host of The wolf of all streets and David Garrett, an Argentinian winemaker who launched dVIN, a blockchain-based b2b platform for the fine wine trade.
The conversation wouldn’t come as a surprise to tech players in the wine business, but it was informative about the issues and how the issues need to be resolved to make blockchain and NFTs a success.
Garrett pointed out that wine was “one of the most regulated products in the world” but showed how some traders, such as Berry Brothers & Rudd, “took the wine directly from the winemaker, stored it for customers, l ‘exchanged between customers’. .
Its approach is to use blockchain. dVin tokenizes bottles, then tracks the movement of wine around the world. Such end-to-end solutions could inevitably change the dynamics of a centuries-old, nearly £100 billion trade, and there are obvious reasons for this.
Practical implications
As Garrett notes, this has profound practical implications for all producers and retailers, as one in ten bottles of fine wine is spoiled. So, through blockchain – through this intimate, digital, constantly tracked data about wine – this could solve a £10 billion a year problem for the entire trade.
By creating a universal protocol for putting wine on the blockchain, it would provide “unified liquidity” to a previously dispersed luxury asset class, as at the time of writing, approximately £600 billion of global trade of wine per year are investment grade luxury products, rare to collect. wines.
Furthermore, once fully adopted, it could potentially completely destroy the counterfeit wine trade, by demonstrating to the consumer that the wine comes, via blockchain, directly from the producer’s barrels.
Will producers take note?
So far, the evidence is scant. Other luxury products and assets have already joined the NFT and digital asset space, but the wine business has been slower to expand. There are outliers, like Chilean producer VIK. After releasing its most iconic wine VIK on La Place de Bordeaux last year, Viña VIK offered a limited release of 50 double magnums of its 2018 vintage in the form of NFT.
In perhaps the most striking example of the potential of using NFTs, Bordeaux winery Château Malartic-Lagravière said: database last year, how its entire series of 150 NFTs linked to engraved and numbered magnums of its 2022 vintage were recovered within an hour of being put on sale.
There are also some examples of Web3 platforms setting up in the space and offering en primeur bottles of Bordeaux in the form of NFTs. Plus, there’s BlockBar, founded in 2021 by cousins Sam and Dov Falic, who told db that NFTs were a “simpler and easier way to do business.”
Responsibility
Sam Falic said the genius is in its simplicity: “So, in very simple terms, anyone, anywhere can go online and see who owns what, and that really gives more responsibility to someone. one who owns an asset. »
But despite the obvious benefits for commerce, this solution has not yet been widely adopted. Examples are still rare, years after the technology became available, and adoption of this technology is still low on the ground.
A producer who recently spoke to database made a simple but powerful point: “I just don’t really know what it is.” »
Incentives
So how do we change hearts and minds in a traditional business, which may not be as digitally born as its own consumers, and which may be afraid of the implications of such technology?
Besides the obvious security of logistics and movement of goods offered by blockchain, Garrett’s solution is also to offer incentives for adoption and show producers how it could be an effective source of income.
Garrett’s token, nicknamed vincoin, offers customers rewards and winemaker status when they open a bottle of wine. They can then use these incentives, like popular consumer products like airline miles, to either pay for additional bottles of wine or purchase wine experiences.
Such NFT products then offer not only security to the producer, but clear potential to increase profits for a new audience of digital asset owners.
Data
The other critical issue for the wine business is data. Marketing insights, consumers and basically their behavior lag far behind other luxury products. Here, Garrett was blunt and said, “They have no idea who is drinking their wine.” »
Through the use of digital technology, for the first time, multi-million pound wine producers will know exactly who is buying their products, what is happening to them on the secondary market and even, ultimately, who is drinking them . In many other sectors this is all commonplace, but for wine it would be revolutionary.
This would enable producers to know areas of potential growth, its impact on foreign and non-trade, as well as consumer demographics of specific varieties and bottle types.
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