Use of NFT in wine industry

The most expensive bottle of Champagne in history was sold in July 2022 at the wine auction. Two Italian investors paid $2.5 m for Champagne Avenue Foch 2017. However, not only the bottle was their ‘prize, but a special NFT created in collaboration with famous artist and the author of NFT ‘The bored Ape Yacht Club’ collection. In 2021 Dom Perignon wine house presented a limited collection of just 100 bottles of Dom Perignon Rose Vintage 2006 and Dom Perignon Vintage 2011, offering to purchase the unique bottles through NFT. Each box sold from the limited collection included the bottle itself and the special token. In April of the same year Napa Valley’s Yao Family Wines traded an exclusive beverage ‘The Chop’ at an auction and the set included a collection of NFTs.
NFTs seem to reach the essence of human life, touching upon the ‘oldest tastes’ such as food or drinks. What role do NFTs play in the wine industry? Let’s see.

What is a wine NFT?

Being relatively new for the industry, blockchain technologies have gained popularity in recent years. Wine specialists collaborate with artists, celebrities and other ‘creative authorities’ to create collections of wine NFTs which can be traded at NFT marketplaces. Wine producers attach tokens to real bottles or barrels and sell them on specific platforms. Vineries store data and history of their products on blockchains, and this information is specified on each token (some of them also contain a piece of art and an invitation to online tasting or another happening). Buying NFTs at such platforms, customers get a token and a beverage. 
A collector buying a bottle of exquisite wine with an NFT certificate may track the history of their purchase or create a personal digital vinery. Blockchain technology helps to track provenance and authenticity of particular vintages, NFT certificates on a blockchain can not be hacked or forged. At the same time wine NFTs can be sold and bought as assets with their own value, elaborating a new method of investing in the wine industry.
There are even completely digital vineries. Such companies as BitWine offer an exquisite collection of digital wines, inspired by a collection of great real wines. The invention allowed a customer to create a personal digital vineyard or wine cellar with virtual pieces of alcohol art which have no expiration date and can be shown as a gallery or even handed down to heirs. These companies sell NFT ‘bottle sets’ of 50 from various regions.
More than that, the ‘Hello Fam!’ company collaborated with an Israeli winery and sells Genesis Vintage 2021 only on a blockchain. The customer receives a digital piece of art as a free gift and can get their wine by burning the token whenever they want to (before shipping it will be stored in a special vine cellar).

Benefits and issues

Not only beverages are offered at specific platforms. Chateau Angelus sold an NFT as proof of ownership for a barrel of Angelus 2020, a collection of 3D images of cult chateau bells, an invitation to a sensory with a CEO, a meeting in person with a Michelin chef and a tour round the vinery during the harvest season. It goes without saying that such offers are sold out like hot cakes… or even quicker.
What are other attractions which NFT offers wine amateurs and specialists?

• A sales agent’s service. Some companies (such as WiV Technology or WinChain) offer producers and distributors from all over the world the possibility to trade their wine NFTs. They help to build dynamic interaction between popular wineries and customers. The latter get access to their favorite premium rarities with a warranty of genuineness. The beverages will be stored in a special warehouse before shipping. The customers can also re-sell their NFTs if they like.
• Direct sales. There are advanced producers (such as American ‘Yao Family Wines’ or Australian ‘Penfolds’) who can do without intermediaries and create wine tokens on their own. They make sets with bottles or barrels, digital art pieces and offer infinite time of storage in the cellar before shipping.
• Crowdfunding. Wine NFT collectors can give a hand to newly-minted wine houses by buying their tokens and investing in the new infrastructure. 
• Aftermarket. Wine aftermarket also welcomes NFTs. Wine houses can get profit even when their wines are re-sold if an NFT is tied to their products. A token can include a condition that the first owner or the producer gets their interest from each deal, no matter how many times the beverage is sold.
• Tackling logistics. A French start-up called ‘World Wide Wines’ created a specific platform, which helps with logistics. The platform launched ‘Grapes’ (special platform tokens) which are used as inner currency. When a customer wants to have the bottle delivered, the system calculates the amount of Grapes the deal will cost. The system also helps to calculate customs duties and taxes for each bottle.
• Protection against counterfeits. One of the main concerns of all parties involved in the process is protection against fraud. No one wants to get counterfeit instead of genuine product, while the notorious statistics reports the amount of fake beverages in the market does not decrease. Adding NFT to each wine bottle or barrel proves their authenticity and guarantees provenance.
• Transparency. NFT transactions offer more transparency. The customer can study the whole history of a certain beverage from rod to stall, including the chemicals used, the number of barrels and bottles in the yield, etc. The consumers will be aware of the process and can rely on the bottles’ labels.
• Non-traditional marketing. New generations are not willing too much to purchase wine through traditional channels. By adding an NFT to their bottles producers can attract new customers and tech-savvy professionals to their products. At the same time, the ability to watch the whole process, which before was a secret of a close circle, makes people more interested and likely to buy the beverage in the end.
• Creative markets. NFT helps wine producers add more art to their work and create their own brands attractive and familiar to more customers, especially common consumers. They may add art-pieces, invitations to events (such as seminars, virtual excursions, meeting with producers or tasting ceremonies) or ability to re-sell or inherit such a piece of property (as long as wine is more and more often associated with art).

Sounds great. But are there any issues that should be taken into account? There are not so many, however young the invention is, but they have to be mentioned to help all parties to the deal stay on the safe side.

• Possible fraud. NFTs can help to protect against traditional forms of fraud but still there is risk of fake wine tokens emerging or genuine tokens being stolen by hacking (as happened to Todd Kramer’s Bored Ape collection in 2022 or Dutch artist Lois Van Baarle when her art works were counterfeited). Thus, customers should keep on vigil and check where they buy wine NFTs and who sells them.
• History tracking. It is possible to track wine history before the first shipping but when the owner decides to take it home its track can be lost. The NFT must be burnt when the bottle is withdrawn from the cellar, as it is valid only as long as the beverage is stored at the vineyard.
• Cryptocurrency issues. There are different rules and regulations in different countries towards cryptocurrencies. Attempts to buy wines through blockchain platforms may become a problem in some legislations.
• Newcomers attraction. Crypto investors and NFT collectors of the young generation are not usually interested in the beverage itself but in the pieces of art and other extras. As some specialists pointed out, the industry in general is not completely ready yet to attract such customers. It is not enough to create NFT and build a promotion campaign with the help of a blockchain. A new approach, different from the traditional one, is still to be elaborated.  

Closing thoughts

Advanced wineries such as Yao family Wines, Chateau Angelus or Chateau Darius are making use of the new technology which helps to avoid complications in wine trade, modernize the good old industry and make wine distribution more efficient and convenient for all sides. NFT wine platforms (such as Hello Fam or WiV Technology) are collaborating with wine yards and help to sell wines rarity beverages with the help of blockchain. A specific wine NFT BitWine has already become popular. So, what’s next? The interaction and collaboration seem to grow further, combining traditions and innovations. And the wine NFT market is predicted to expand greatly in the years to come.

This article is intended for responsible adults of legal drinking age. It is not our intent to promote misuse of alcohol, alcoholism, hazing, binge drinking or any other form of alcohol abuse. Excessive use of alcohol is harmful to health.