Blockchain Uncorked, Champagne And Fine Wine Hit The NFT Market
In just a few months, NFTs, the digital equivalent of collectables, have generated over $10 billion. Now, luxury champagne and wine brands are moving into the world of digital assets. But as investors and vineyards toast to the future, will the concept pop or fizzle?
PARIS — What's new in champagne? Tokenized bubbles!
In October, Dom Pérignon demonstrated it perpetual creative effervescence by launching limited edition boxes of its 2010 vintage and its 2006 rosé, which were "designed" in collaboration with the megastar Lady Gaga (available only on the French market). The 100 bottles — a few drops in the ocean of bubbles produced by Dom Pérignon — and their digital versions were offered for sale in a 100% virtual space. In search of new fans and eager to "create rarity within rarity," the champagne brand has thus become the very first in its sector to take the plunge into NFTs, the digital answer to collectibles.
So what is an NFT exactly? It’s an acronym for Non-Fungible Token. Here’s an example of a fungible asset: a one-euro coin equals another one-euro coin. They have the same value and are interchangeable. The same goes for bitcoin. The NFT is both a unique, non-exchangeable digital asset and an unfalsifiable digital property title, encoded, recorded and guaranteed by a blockchain. The NFT as a certificate applies to virtual products (a digital creation), real products (such as clothing), and physical/digital twins (the Dom Pérignon bottle and its 3D version, CQFD).
So does Dom Pérignon's concept pop or does it fizzle? It's a hit with its target audience, digital natives aged under 40. The boxes were sold in cryptocurrency (ether) as quickly as a champagne cork pops, causing a lot of hubbub. The traditionalists who prefer old-school, low-tech methods will have to adapt.
NFTs: rare, exclusive, desirable, traceable... and expensive
Artists were the first to understand the interest of unique and non-reproducible NFTs for their digital works. Flashback: in the spring of 2021, the work Everydays: The First 5,000 Days sold for $69.3 million at Christie's. Beeple, its previously unknown author, was propelled overnight to the rank of third most expensive living artist in the world, behind Jeff Koons and David Hockney. Even better — his NFT was encoded in such a way that each future transaction will earn him a royalty of 10% of the sale amount. More than enough to live on…
Rarity, exclusivity, desirability, traceability: NFTs are obviously of interest to the luxury industry. Gucci, Dolce & Gabbana, Karl Lagerfeld and Givenchy are already exploring their potential with limited-edition pieces, often created in collaboration with artists. LVMH, Prada and Cartier have launched the first international luxury blockchain, Aura Blockchain Consortium. It’s a shared tool to develop NFT solutions, fight against counterfeiting, renew storytelling and trace the history of a product, from raw material to finished good.
The virtual and dematerialization are still difficult to explain in a world very grounded in reality
All this can be transposed to the world of great champagnes, wines and spirits, which are covetous and collectable objects. Glenfiddich has put a rare 1973 single malt for sale at $18,000 and other limited edition NFTs on BlockBar, a platform that offers NFTs directly from liquor brands. The buyer of one of the 15 bottles is already offering it for $199,000 and a 45-year-old Colombian Dictador rum in a Lalique decanter is offered for $25,000. But there is still a long way to go.
The real still triumphs over the virtual
Guillaume Jourdan, brand strategy consultant at Vitabella Luxury for major wine companies, says, "We are only at the beginning. The first incursions of the sector into the NFT date from a few months ago, hardly one year. The virtual and dematerialization are still difficult to explain in a world that is essentially very grounded in reality.”
“And yet NFTs are perfectly eligible," says Arnaud Daphy, partner at the Sowine agency, which specializes in wine and spirits marketing. “Because all the criteria are there: "collectability," fan communities, speculative character, the need for authenticity and traceability."
So who are those already daring to try NFTs? Large companies, prestigious brands, celebrities, and even "small" wine producers.
Dom Pérignon is a pioneer in champagne. When it comes to wines, the California estate Yao Family Wines, owned by an NBA star, was the first to offer in NFT last April. The estate launched its 2016 Chop Cabernet Sauvignon, which was associated with a digital artwork.
There's also Château Angélus, a digital pioneer in Bordeaux. In collaboration with CultWines, the world's leading fine wine investment firm, the famed estate auctioned off an NFT this summer that included a barrel of Angélus 2020 primeur, a 3D artwork depicting the house's iconic bells and VIP experiences at the chateau. All of this for the equivalent of $110,000 in USDC cryptocurrency on OpenSea, the leading NFT marketplace. It was described as a way for both parties "to creatively engage a new generation in tune with tech, digital and cryptocurrencies."
Penfolds, the flagship of Australian giant Treasury Wine Estates, has just launched its NFT on BlockBar. It confers ownership of a barrel of Magill Cellar 3 vintage 2021 for the equivalent of $130,000, which will be convertible into 300 tokens for as many bottles that are available in October 2022, and also includes exclusive experiences. It’s a collector's item as this wine will not be available for public sale. Also in Australia, Dave Powell is the first wine merchant in the world to sell an entire vintage in NFT: 100 barrels of 2021 from his new brand Neldner Road.
The winners of this new virtual economy will be the strongest and most desirable brands
And just like that, the world's first NFT wine brand
Sarah Jessica Parker, star of HBO's Sex and the City and And Just Like That..., ticks all the boxes with Invivo X's NFT, her New Zealand wine. The winery that produces it "is exploring the possibility of opening a virtual wine store, where the purchase of a bottle by a digital avatar will result in the delivery of a physical bottle to your home, anywhere in the world.”
NFT holders could have exclusive access to the store opening in the metaverse. (The metaverse is a set of interconnected virtual spaces in which users share immersive 3D experiences.) Finally, the first all-NFT wine brand, Hello Fam, created by two online wine and NFT entrepreneurs, is launching its first vintage, Genesis 2021, a blend of Israeli Syrahs.
Small players are also interested, but with more audacity than financial means. Flavien Darius Pommier, 26, is the owner of Château Darius, a modest seven-hectare Saint-Emilion great vintage. Pommier started the trend in France in April because he wanted to "modernize the business and seduce my generation.”
In the end, it's still about delivering the physical bottle to the customer
This London-educated art and tech fan appears to be a marketing whiz. He has already sneaked into the Elysée Palace and produced a personal wine for the tycoon Mohamed Hadid, whose daughter Gigi, a supermodel, willingly posed with the bottle. As for the Englishman Mike Barrow, founder of Costaflores in Mendoza (Argentina), he sells his wine through his own cryptographic asset. At each harvest, he estimates how many bottles he will have and issues NFTs with a price set according to demand. After three years of maturation, the wine is ready and the NFT holders can then dispose of the bottles or keep their tokens, which also allow them to become shareholders of the vineyard. This is part of the "smart contracts" of NFTs.
Added value with each transaction
Guillaume Jourdan sees further ahead. For him, the benefits for producers and wine lovers are numerous: "In Bordeaux, the owners sell en primeur [wine futures] to merchants and do not know the final customer. With the NFT, they will be able to trace each bottle, know who bought it, where it is stored and under what conditions. The customer who buys a case of wine en primeur pays for it immediately but it is not delivered until two years later. From now on, he will be able to resell his NFT immediately. So even before the 'deliverable,' there could be a chain of buyers adding additional value to each transaction.”
Jourdan adds that nothing will prevent the smart contract from including a royalty for the owner for each transaction. He says, “That's extra business. In Burgundy, where the sale of the Hospices de Beaune has just beaten a new record, we can imagine that the buyer of a 220-liter room will issue 300 tokens the next day.”
He also brings up Champagne, where the great vintages mature for eight or 10 years in the cellar before landing on the market. They could be sold in NFT as soon as the blending is completed, thus immediately enhancing the value of the stock.
The winners will be the strongest brands.
“Tomorrow, sales can be delivered from the physical and the temporal,” says Jourdan. “This is the ultra-positive side of NFT, beyond the cool message sent to the younger generation."
Obviously, the winners of this new virtual economy will be the strongest and most desirable brands that have the means and the talent to afford the necessary technology. Their customers' avatars will be displayed in the metaverse, the ultimate stage of dematerialization, proving that it's always a case of social status, real and virtual, being two sides of the same coin.
The best of all worlds, then? Isn't there a risk of total decorrelation between the NFT and the real product?
“No, we are leaning on very tangible products," says Arnaud Daphy. “It's not a matter of a few encoded pixels, like for digital works. In the end, it's still about delivering the physical bottle to the customer."
Jourdan adds, "The virtual economy will add additional value to the real economy. We can imagine infinite brand extensions."
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