Why NFTs and the Metaverse are the Future of Fine Wine

by Guillaume Jourdan

Welcome to 2022. You’ve just been teleported to December 2022, and the label of the 2020 vintage of a prestigious Bordeaux Grand Cru has just been released. The buzz has hit the stratosphere. Because it’s beautiful? Not only. Because Brad Pitt is the artist? No, that’s not it. It’s simply because the 100 NFTs linked to the first hundred bottles have been purchased for 65,000€ apiece, or 100 times more than the bottle itself. Successful buyers receive the NFT, or nonfungible token, which is a virtual certificate of ownership that runs on blockchain technology.

With this proof of authenticity, owners can showcase the digitalised bottle or the artwork on VRChat, where tens of thousands of users interact daily through avatars. Additional revenues were colossal for this initial sale compared to last year: the owner of the château has announced that the six and a half million euros that have been generated by this sale will be donated to different charities chosen by the huge community that follows this brand on social media all around the world. The story could end here but it doesn’t. Why? Because additional income is expected in the coming years. Indeed the encrypted NFT means that each future transaction will earn a château royalties of 10% on each sale making additional revenues to the initial sale…

But to come back down to earth (‘revenons à nos moutons’, as we say in French), or rather to return to the present day in December 2021, what is Blockchain? NFTs? The Metaverse? These words mean nothing in the world of wine, as yet. The Blockchain is a common, connected tool for developing NFT solutions, combatting counterfeiting and offering traceability of a product from the raw material to the finished product. NFTs are digital assets that represent real-world objects.

So, what makes them interesting? Unique and non-fungible, in other words non-reproduceable, their use can quickly be appreciated when associated with the terms rarity, exclusivity, desirability, and traceability. Everything that applies to fine wines. The Metaverse is a collection of digital worlds (verses) that is accessed as an Avatar (a digital representation of yourself) or through a first-person Point of View (Verses have different types of functionality combining gaming, business, social media, retail and entertainment.). Verse will either be augmented overlays onto the real world (through phone or eyewear), verses you enter on devices such as desktops, tablets, and phones, or offer full immersion via VR headsets. They are permanent and will eventually become interoperable allowing you to take your Avatar and goods into and out of each verse.

The Metaverse is already here

This virtual world is not a parallel world as some might imagine. It’s an extension of each person’s experience through Avatars, NFTs and many other virtual objects. It also extends the reach of brands because those which do not figure in this virtual universe will be lacking in cool and street cred in the eyes of the younger generation. Presenting the desirability and visibility of a brand is tomorrow’s challenge. And the Metaverse is already in operation in the world of luxury: the Gucci Garden exhibition (a virtual two-week art installation to build brand awareness) held in Roblox in May, for example, drew over 19.9 million visitors, who could view their avatar’s canvas and those of others, and take screenshots to share on social media.

So why shouldn’t this be the case for fine wines? What about a chateau visit open to the world and time-zone agnostic? Visitors could even purchase digital products that are available only for limited periods each month, creating a sense of exclusivity and encouraging visitors to return. In the future, we see there being scope for an avatar to represent a château and connect with people outside of its own communication channels. Selling tokens to vote on which photos Château Lafite Rothschild should post to social media is possible with blockchain and would generate additional revenues for the château.

Gen Z and millennials don’t see a separation between the digital and physical worlds and these generations are the ones that will create future revenues for the Chateaux of Bordeaux. The wine world knows this, and the Grand Crus of Bordeaux are beginning to realise it too. The great names know that they must inevitably adapt to this transition from the traditional world of luxury that they are used to, to a modern one. While traditional collectibles are created and defined by institutions and find value in their historical staying power, modern collectibles are fueled by popular opinion and find value in demand and ingenuity.

A wine brand can’t just rely on heritage and craftsmanship and provenance. If brands become predictable and stop surprising, customers move on. Don’t do only what is expected: customers need desire and emotion. Try to do things differently. In other words, inspire, by leading with creativity, in an association with the art world, by being a leader in sustainability, and now with NFTs and the Metaverse. Consumers find inspiration about products on social media and will purchase through social platforms, most notably Instagram, Pinterest, Facebook, Snapchat and Tiktok.

The arrival of the Metaverse, an immersive digital world, signals a paradigm shift for wine brands. I expect it to drive a very significant new revenue streams for chateaux in the years ahead. Still considered out of reach, luxury wine brands must try to broaden their horizons, as well as their clientele. First social networks allowed them to reach an important target – Millennials and Gen Z consumers. Video games, costly to put in place, and also not really adapted to the world of wine, have never really been an option for wine. With the Metaverse, the wine world can make up for lost time. In the future, the most successful brands will be the ones that reach a younger audience who, while they might not be able to afford fine wines costing several hundred euros, could buy their virtual equivalents to make their ultra-stylish avatars even cooler. The next few years will be decisive – and not just in the virtual world.

Guillaume Jourdan is the founder of VitaBella Luxury & Lifestyle