Suddenly, it seems, NFTs are everywhere. Non-fungible tokens – digital certificates of ownership and authenticity that can be applied to literally anything from a racehorse to a plate of virtual sushi – hit the front pages in March when Christie’s sold an NFT of a digital work by the artist Beeple for US$69.3m.
A line of computer code that is unique and immutable (fungible means “changeable”), an NFT is held in the blockchain, an incorruptible digital ledger of transactions. It can be applied to any tangible asset: art, watches, yachts – or wine.
The wine world has in fact been using the blockchain for at least 10 years to secure the provenance and authenticity of individual bottles. NFTs are new in that they’re not only guarantees of authenticity, but tokens that can be traded in their own right.
Various wineries have become interested in NFTs. The biggest name to get involved recently was Yao Family Wines of Napa, a premium winery owned by former NBA star Yao Ming, which auctioned a bottle of The Chop Cabernet Sauvignon in April alongside a “limited-edition NFT”.
Other wineries from France to Georgia are using NFTs as novel ways of marketing and promoting their wines. Flavien Darius Pommier, who owns Chateau Darius in St Emilion, is selling four NFTs for each vintage for around €100. For each NFT you get a piece of artwork, the opportunity to store your wine, and two physical bottles. He has sold eight so far but notes that he’s created many times more interested customers. He intends to increase the number of NFTs he offers per vintage.
“It’s a way of getting my wines into multiple channels, finding new markets and new customers,” he told cluboenologique.com. “It’s simply an imaginative way of marketing.”
Oriol Illa of Màquina y Tabla in north-west Spain started using the blockchain to offer his customers greater transparency. Everything in the blockchain can be scrutinised, from use of chemicals in the vineyard to the number of barrels you buy. Màquina y Tabla is 100% sustainable, and Illa wanted more than a sticker on the bottle as a guarantor.
“Every step that we take is backed by the blockchain,” he said. He then pivoted to offer NFTs as futures, to “try to break the mould of Bordeaux en primeur”, he says. As a trial, they released one barrel of the 2020 vintage en primeur last month for around £18 a bottle, each sold as an NFT. The barrel sold out in a couple of weeks.
The possibilities of NFTs as futures are manifold, Illa reckons. They will release NFTs in different tranches on the 2021 vintage, “starting when we know the size of the crop, then in December when the wines go into barrel…” and so on. The tokens are exchangeable at any stage. “You can keep or trade them, or sell back to us.”
One of the key advantages of NFTs is their ability to attract a non-traditional market
Illa and Pommier are far from the popular image of the cryptocurrency trader, whose arcane vocabulary and shadowy methods seem designed to bamboozle the unwary investor. They are both aware that this is new and little-understood technology. “We’re starting very slowly,” Pommier says. Màquina y Tabla, whose UK importer is the highly dependable wine merchant Lea & Sandeman, is “reliable,” Illa stresses. “We’ve been producing every year since 2013, we are backed by our own product.”
One of the key advantages of NFTs is their ability to attract a non-traditional market, which is where Tommy Nordam Jensen, founder of WiV Technology, a blockchain-based trading platform, comes in. “We sold our first wine NFT a year-and-a-half ago, so we’re really old in the game,” Jensen says with a laugh. They started out with Bordeaux blue-chip wines – Château Lagrange, Château Lafite and its second wine Carruades de Lafite, Château Margaux, Léoville Las Cases – but now are taking “the opportunity to introduce new producers and new regions”.
Màquina y Tabla is one of those, as well as Georgian winery Solomone. Wines from both are offered with original – and striking – artwork. Since March 2021 they have sold 170 NFTs at around US$150-300 each, Jensen says, adding that he sees “some really smart things that you can do with an NFT”; he’s looking into various other assets, with collectible whiskies first on the list.
There are many other ways to buy NFTs. Mike Barrow owns a winery called Costaflores in Argentina and runs OpenVino, a platform whereby a winery can put every one of its operations, from barrel buying to ploughing, into the blockchain (Màquina y Tabla is one of his first partners). For him, NFTs are a way of knowing his market. If you buy a bottle of his wine, scan it and fill in a questionnaire, you will be sent an NFT that is directly linked to a share of the company. “You become a part-owner of the winery,” he said.
The crypto community is buying more than wine people at the moment because they understand the usability of it
The possibilities seem limitless. Financial Times investment columnist David Stevenson recently noted various NFT options, from the $400m of NFTs the NBA sold of specific video grabs of games, to what he calls “the barely believable world of digital horse racing”. On cryptosushi.com you can buy a unique digital sushi – one of them created by superchef Nobu Matsuhisa – and BitWine is a seemingly lively exchange of digital bottles “inspired” by real wine.
This – as Stevenson perhaps unnecessarily remarks – is an “insanely volatile” market. It can also be bafflingly complicated, as anyone who has tried to convert their pounds into Ethereum for the simplest purchase will attest. “The crypto community is buying more than wine people at the moment because they understand the usability of it,” Jensen remarks.
Pommier (who studied risk at King’s College London before he got into wine) wonders where it’s all going. “You might think it’s shocking that someone could be selling NFTs for wine, but then when Beeple’s picture sold for nearly US$70m, people were also shocked. What’s next? No one knows. Ninety per cent of all this will probably come to nothing, but then there’s the 10% that will be there forever.”
What that 10% will be is anybody’s guess. At the moment, wine NFTs remain the preserve of the “crypto-geeks”, as Jensen affectionately calls them. The big auction houses are steering clear. “We have no plans at the moment for offering wine or whisky [as NFTs],” Richard Harvey MW of Bonhams said.
Christie’s, which stunned the world with its Beeple sale, is also being cautious. “We’re wiling to explore NFTs but there’s nothing on the table,” Pablo Huarte, the house’s head of wine and spirits for continental Europe, said. “When it comes to wine, we’re staying classic for the moment.”