Portfolio

BEYOND THE BOTTLE

Are NFTs the inevitable future of the wine industry or a passing fad? We take a closer look at the phenomenon.

- BY WEETS GOH

Of all the asset classes, wine is perhaps the most finicky. Perishable, fragile, and often subject to counterfei­ting, fine wine collecting requires not just the capital for purchase and storage, but the knowledge and network to source bottles of reputable provenance.

Enter the wine non-fungible token (NFT), which creates an immutable record of the wine’s existence on the blockchain—solving the issue of provenance and granting proof that the customer has owned said unit of wine at some point of time.While winemakers have already been using blockchain technology to authentica­te wine for a few years now —Ernst & Young built a platform for this very purpose in 2019–NFTs are a perfect match for wine.

After all,one of the main purposes of NFTs is to represent ownership of art.Everyone from contempora­ry artist Jeff Koons to musician Grimes has minted NFTs;and if you ask any vinophile,wine is art.

If making an NFT out of a consumable sounds like a stretch,consider the fact that wine labels often contain art,and not just designs from a branding agency.The labels of Mouton Rothschild,for one,can boast works from Miro,Picasso, and again, Jeff Koons.For a contempora­ry example: Japanese artist Yayoi Kusama worked with Veuve Clicquot to create a limited edition bottle for the house’s grand cuvee Le Grande Dame.

Even if you’ve popped the cork for a special occasion,the NFT remains in perpetuity,serving as a reminder of your vinous experience or,with demand,an asset.

NEWWEALTH

Then there’s the fact that NFTs themselves are a marketing device with the potential to attract a nontraditi­onal market for wine.How non-traditiona­l? Compared to today’s crypto millionair­es,even the nouveau riche is old money,given that the person eyeing a wine NFT might just be a 19 year old making sevenfigur­e sums flipping Crypto Punks–an NFT collection featuring computer-generated,pixel art characters–in their parents’ house.

Cryptocurr­encies,the best-performing asset class in the past decade,have minted more millionair­es than the gold rush or the dot-com boom.The price of Bitcoin has increased 80-fold in the past five years,and according to Bitcoin wallet tracker Bitinfocha­rts.com,there are currently over 103,000 Bitcoin (at its current price of US$58,626) addresses with a valuation of over US$1 million,and just under 10,000 addresses with over US$10 million.

Throw in the big earners holding one or more of the multiple altcoins,and you’ve got an entire generation of newly rich under-40s looking to spend their newfound wealth.Chances are,these are millennial­s more used to the idea of drinking craft beer than first-growth Bordeaux;so NFTs would be–or so the wine industry hopes–what wine sellers are looking for with a younger, tech-focused crowd.

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