A Non-Fungible Token (NFT) is a blockchain based, non-interchangeable, hence unique and non-fungible, unit of data stored on a digital ledger. An NFT can be used to represent any digitizable item. Photos, digital art, videos and audio recordings are all examples of products that have been sold via an NFT. In 2021, it’s estimated the NFT market will exceed $20 billion in sales.
You cannot digitize a bottle of liquor. You can, however, digitize the documentation of its authenticity and store that information on a digital ledger. In the last month, two beverage companies have released rare bottles of spirits via BlockBar, the world’s first direct to consumer NFT platform for wine and spirit products.
Last month, Glenfiddich, a Scotch whisky brand owned by William Grant & Sons, successfully sold, within a matter of seconds, 15 bottles of a rare 46 YO single malt. The whisky had spent 25 years in an ex-bourbon cask followed by an additional 21 years in an Armagnac cask. Successful bidders received an NFT, which contained a revolving image/artistic impression of the bottle that would also function as a proof of authentication and certificate of ownership.
Now, Dictador Rum, a Colombian rum producer, has announced that they have entered the NFT market for alcoholic beverages with the release, also via BlockBar, of 10 limited edition bottles of 1976 Dictador Generations rum; one of the oldest rums in history. Each rum is packaged in a Lalique decanter, together with a personalized offer, giving the buyer the opportunity to get to know the Colombian brand “from the inside out.”
According to Marek Szoldrowski, President of Dictador Europe,
Dictador Generations en Lalique is a unique product and project in the history of Dictador. The knowledge of a few generations of the Parra family transformed into a one-of-a-kind liquid, enclosed within a glamorous crystal designed by Lalique.
Aside from the valuable bottle of rum, the set consists of: a personalized expositor, opened with a thumbprint and equipped with professional lighting to accentuate the beauty of the decanter, a sketch of the bottle’s design and signed by Marc Larminaux, Lalique’s Head Designer, and an album titled “How was it made?” with Hernan Parra and Marc Larminaux, signed by both of them.
In addition, for the first time ever, the purchasers of the NFT will receive an invitation to a private dinner for two with Master Blender Hernan Parra – during which they will also participate in an individually designed tasting of the finest spirits from the Parra family’s private collection. A visit to the distillery in Cartagena, a sightseeing tour of the city and a stay for two at the 5-star hotel Cartagena de Indias in Colombia, is also part of the offer.
The buyer of an NFT has the opportunity to resell or transfer it through the BlockBar platform at any time, or redeem it for the physical bottle. BlockBar is also responsible for storing the bottle and, upon request, will deliver it to the buyer.
The ten sets of Dictador Generations en Lalique, along with the private dinner and tasting experience, were offered on November 9, 2021 on a first come, first serve basis. Each bottle sold for $25,000 USD, and could be purchased from BlockBar with Ethereum (ETH) or by credit card. Within hours of the sale, the NFTs were trading for $36,000.
BlockBar is the world’s premier NFT marketplace for beverages. It connects consumers and collectors with the owners of luxury wine and spirits brands by providing the opportunity to exchange NFTs for unique physical wine and spirits products.
The company was started by The Falic Group, the owners of Duty Free Americas, the largest duty-free retailer in the Americas. They are also the founders of Paneco, the largest ecommerce liquor platform in both Israel and Singapore.
Recently, I sat down with Dov Falic to explore how the NFT marketplace will change the sale of luxury wines and spirits to consumers, collectors and investors.
JM: The recent sales by Dictador Rum and Glenfiddich Single Malt Scotch Whisky via a blockchain based, non-fungible token (NFT) allows the purchaser to exchange or sell their NFT or ultimately to redeem it. Is this essentially a form of securitization that can be applied to any wine or spirit? Assuming the purchaser redeems their NFT for an actual bottle how does the NFT serve to authenticate the bottle received?
DF: We only work exclusively with brand owners, which means any product on BlockBar will be direct from the brand owner and a collector will not be able to upload his collection to the platform. The NFT serves as proof of authenticity, verification of ownership and the right to have the corresponding bottle delivered.
We store the bottle, which is authenticated and verified by the brand owner, and in order to have the bottle delivered, customers must “burn” their NFT. After the product is delivered, BlockBar’s guarantee of authenticity halts because we no longer control the physical asset, and the customer is in the same position as if they were to buy it through a traditional outlet.
Customers can either have the NFT version of the bottle or the actual physical asset, you will never have both.
JM: Where are the physical bottles kept until they are redeemed?
DF: The physical bottles are stored in our bonded secure facility in Singapore with 24/7 security, motion sensors, and temperature control to keep the liquids at the ideal condition.
JM: If I want to buy a bottle just to drink it, what role does the NFT play beyond being a proof of purchase/authentication of the bottle acquired?
DF: It allows customers to buy and interact directly with the brand, without any intermediaries. Most of our products are exclusive to BlockBar, whether that is the liquid, packaging or experience attached, as well as offering interaction with the brand owner, which nobody else can provide. Lastly, the transaction is recorded on the blockchain, so customers can always refer back to it showing ownership of the bottle.
JM: Would it be fair to say that the appeal of NFTs for collectible wine and spirits is primarily to the investor who is not looking to consume the beverage but merely wants to hold ownership in a form that makes it very transferable and therefore more liquid?
DF: All of our products are meant to be consumed, like all wine and spirits. At BlockBar we are experts at the storage of fine wine and spirits and we guarantee the bottles being delivered in pristine condition. Buying on BlockBar also unlocks unique experiences delivered by the brand owner directly to their customers, which would be difficult for them to obtain without a platform like BlockBar.
JM: Do you expect that wine and spirit based NFTs will replace the traditional auction format used to sell these kinds of upscale beverages?
DF: No, our objective is not to cannibalize any existing business for the brands or their auction partners. A big difference between the auction houses and BlockBar is that BlockBar only works with exclusives from brand owners and does not work with individual collectors.
JM: NFTs are electronic tokens that only exist in cyberspace/the cloud much the same way as cryptocurrencies. What happens if an NFT gets corrupted in some way, or you can’t access it for whatever reason? Is there a backup for restoring an NFT?
DF: If the customer keeps their NFTs in the BlockBar Fireblocks Wallet, we have the ability to help them access their account.
JM: What role do cryptocurrencies play in facilitating the sale of an NFT? Couldn’t buyers just as easily pay with a credit card?
DF: In order to trigger the NFT sale, customers traditionally were required to pay in cryptocurrency to interact with the smart contract. We’ve developed a way for customers to pay via credit card or crypto.
JM: Suppose I wanted you to sell some rare wines and spirits that I owned. How would you go about authenticating them and what would be the process of selling them as NFTs?
DF: At BlockBar, we only work directly with luxury wines and spirits brands, as opposed to re-selling collections from individuals. For brands however, we host an individual brand page and mint the products as NFTs for consumers to purchase.
JM: Thank you.