additional reporting by Cindy Augustine
To wine producers and collectors, proof of provenance is incredibly important. The value of a bottle or collection can increase dramatically if the wine has been transferred directly from the producer’s cellar and stored “in-bond” with a reputable wine storage company; or, the collector is purchasing directly from the producer. These scenarios are ideal although not the norm. As in any commodity or collectible item that relies on verifiable provenance to determine the value, the process can be very tricky, painstaking, and generally not reliable in most cases. Enter blockchain and smart contract technologies.
Companies like IBM have been utilizing their private blockchains for years as a way to efficiently track physical and digital assets. Taking a cue from the European and Asian luxury goods industry as a fraud management tool, some serious wine collectors and auction houses have been using private blockchains to aid in verifying the provenance of their existing or soon to be collections over the last few years too. In early 2021, as non-fungible tokens (NFTs) representing smart contracts experienced a meteoric rise, (mostly in art, music, and gaming), and public blockchains began seeping into the public’s consciousness, luxury goods and commodity collectibles followed suit.
“Every smart contract transaction is forever recorded on a blockchain, offering provenance for collectors and helping to combat wine fraud.”
Once upon a time, collecting wine meant traveling, tasting, purchasing, storing — and perhaps even reselling down the line. These days, innovative winemakers are also accepting digital currencies (including US Dollar backed stablecoins) and cryptocurrencies and what’s more, some winemakers — including Yao Family Wines, founded by retired NBA star Yao Ming — are now auctioning and selling wine and NFTs.
In addition to major auction houses and boutique wineries, at the end of 2021, Robert Mondavi Winery entered the cryptocurrency space as the biggest winery with the largest launch: 1,966 packages are available for purchase, a nod to the winery’s founding in 1966. It’s not just a boon for collectors either: Every smart contract transaction is forever recorded on a blockchain, offering provenance for collectors and helping to combat wine fraud, which costs the industry an estimated $3 billion a year (according to WineFraud.com). The wine industry beginning to embrace the utility that blockchain and smart contract technologies provide to increase product sales and value via the verification of provenance is exceptional news for oenophiles, producers, and collectors.