Marketwatch spotlight
Blockchains, NFTs, cryptocurrencies: if you want to stay up to speed, now’s the time to start seriously looking into the new world of wine investment
The dash for digital in the fine wine trading world
From online auctions to the mysterious world of ‘NFTs’, the ongoing digital makeover of buying and selling fine wine has thrown up several recent trends.
Online auction specialist iDealwine said in its Barometer market report in June that the ‘digitalisation’ of wine sales has accelerated.
Jamie Ritchie, Sotheby’s worldwide head of wine, has previously said that enforced changes during the Covid-19 pandemic have sped up the group’s digital transformation. He said that new digital tools ‘resulted in the growth of 40% of new buyers [in 2020], with particular strength in the under-40 category’.
In another example of how digital tech is being used to attract new buyers, the Vinovest app that launched in 2019 has extolled wine’s potential as an alternative asset. Wine investment is never going to be risk-free, but the app’s founders have said they want to make it more accessible.
At the more experimental end of the spectrum, the buzz-term in the collectibles market this year has been ‘non-fungible tokens’. Known as NFTs, these digital tokens are underpinned by a unique ID that is stored on a digital ledger, or blockchain. Christie’s recently sold a digital artwork by artist ‘Beeple’ as a NFT, for $69m (£50m).
The implications for fine wine are not yet fully understood. NFTs could act as certificates of ownership, with blockchain technology also making provenance more transparent. It’s very early days, but experimentation in this digital space may uncover new collectors and markets.
UK merchant Cult Wines and Château Angélus launched a NFT in July linked to a one-off, 3D digital artwork of the St-Emilion estate’s famous bells. The NFT’s owner is also entitled to a barrel of Angélus 2020, plus a VIP experience at the property. At the time of writing, the NFT was being auctioned via online marketplace OpenSea. Cryptocurrency offers could be made, Cult Wines said, adding that this is ‘the first step of several’ it is planning with blockchain technology.
‘We have been committed from day one to evolving fine wine as an asset class,’ Cult Wines CEO Tom Gearing told Decanter.
There is a younger generation of tech-savvy wine collectors, he believes. ‘These people are au fait with digital, with cryptocurrencies.’ This could be an area of the market to watch in the coming years.
On a more general level, Liv-ex co-founder Justin Gibbs said technology has helped to broaden the secondary market. The number of distinct wines trading on the Liv-ex global marketplace has been rising consistently, partly because of digital tools that enable merchants to publish ‘live’ lists of their stock.
‘I don’t think this broadening is about to stop,’ said Gibbs. He said the technology was in its early stages but that ‘it gives merchants an efficient, low-risk route to market, [and] it gives the buyer access to more and more wines.’
However, some fundamentals of the wine market haven’t changed.
Matthew O’Connell, head of investment at Bordeaux Index, said he believes wine investment specifically is ‘heading in a more open and broad direction’. Registrations on the merchant’s LiveTrade platform rose by 60% in 2020 (see ‘The Bordeaux Index View’, right). But he cautioned that specific knowledge is still required. ‘People are generally still coming to the specialists.’
He added that it’s still only a relatively small number of labels that have the reputation and credentials to be investment-grade wines.