The new thing in NFT’s is the NFT winery!
This post is all about NFT’s and how they can be useful for wineries and wine producers.
If you want to understand NFT’s in more detail: how they function, and where they have shown the most promise… in the digitial arts. I’ll give much more detail at the end of this post (click on ‘The Blockchain’ in the contents to read about that first – if you wish).
But first, let’s look at NFT’s and how they can work for wineries. To do this, we’ll examine the first NFT winery in existence, Hello Fam.
Moving forward, I’ll add some suggestions for how wineries could utilize NFT’s better. For example, could NFT wineries become the new ‘en primeur’?
Table of Contents
Just in case you require a bit more information about NFT’s, you can skip to these sections of the post.
What are NFT's?
NFT’s have been around since 2014 and they seem to be the talk of the town right now.
What are NFT’s?
It’s short for non-fungible tokens. Non-fungible means that it is unique and cannot be replaced with something else.
Overall, they are a form of digital investments usually purchased with digital currencies such as Bitcoin. The most famous trading of NFT’s at the moment are ones that represent pieces of art.
Today, I found out that there is now an NFT winery which means, I just HAVE to write about it.
Does it sound like a bunch of BS? It certainly did to me!
But as I researched for this post, I realized that Hello Fam, the first official NFT winery, represents an actual winery. Each NFT you purchase will eventually represent a six-bottle pack of 750 ml wine. You are just purchasing it before the grapes are crushed.
It got me thinking… could NFT’s be a way for new wineries to sell en primeur like the famous wines of Bordeaux? I’ll explain ‘en primeur’ and get back to this point later in the article.
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How are NFT's unique?
So, how do NFT’s work as a winery?
This is not an easy question to answer as there is only one on the market. But I’m intrigued to see where this is going to go.
Overall, I think this is an amazing opportunity for wineries and producers!!
In the next paragraphs, I’ll outline some of my thoughts. But I would love, love LOVE for you to share your thoughts on NFT wineries at the bottom of this post.
Introducing the first NFT Winery...
Enter Hello Fam, the first NFT winery in existence.
When I first visited the site, I thought, “My god, how cheesy!”
It certainly doesn’t fit any other wine marketing model I’ve ever seen. But it quickly began to grow on me so that now, I feel it’s absolutely refreshing! Those colourful grapes make me smile!
Your NFT wine purchase
Hello Fam’s website isn’t the most intuitive as in it’s difficult to understand exactly what they are offering. But I found a video on youtube that explains it a bit more. (Although, the video freezes at minute 8, just when Adam is about to answer what my question is…)
When you purchase an NFT, you are in fact buying a 6-pack of 750ml bottles of their 2021 ‘Genesis’ vintage. So you ARE purchasing actual wine. The wine will be stored for you in an insured temperature-controlled cellar in Israel.
The wine is made from grapes grown in an Israeli growing region called Jezreel Valley. The website says the wine will be made with Syrah and frequently scores 90+ points (they don’t back this up enough but I did find one Syrah from Jezreel Valley Winery which received 91 points by Wine Enthusiast although this Syrah was not from Jezreel Valley.)
Partnership with Vinsent, owner of Jezreel Valley Winery
In the youtube video, they say Hello Fam is made in partnership with Vinsent, an online database that “enables wineries and wine lovers to connect directly” – according to their website. Furthermore, Vinsent’s private winery is the Jezreel Valley Winery so it sounds like they are making your wine.
By researching the prices fetched for red wines from Jezreel Valley Winery, this will be a premium wine.
Vinsent also represents 100’s of other wineries. To this end, Adam advised us to look to the future because your future NFT wines could be made from other wineries in their portfolio.
In the youtube video, they state that your NFT wine is newly created for this purpose and not identical to another bottling from the producer.
Because bottling the same wine under different labels – often at different price points – is a known practice.
The fact that Hello Fam isn’t doing this lends credibility to your NFT wine being a good investment.
Overall, good wine investments are a) rare, b) delicious c) can age long thereby d) make more money for you in the future if you hang onto them.
The problem is, we don’t know any of the above. We don’t know how long the wine is expected to continue improving with age.
This is the question that Adam was asked in the Youtube video, “How long is the wine expected to age? 5 years, 10 years, 15 years…?“
Adam seemed to step around this question just before the video cuts out at 8 minutes (although 30 minutes long).
How you claim your NFT wine and
How your NFT will increase in value
At any point, you can claim your NFT wine which means the winery will ship it to you (if shipping laws permit it) or, you can pick it up at the winery. This is a bit of a humdinger as only people in Israel can pick up the wine.
But, each time this is done, you are ‘burning’ your NFT. That means that everyone else’s NFT wines will become more scarce and will theoretically increase in value.
Jezreel Valley is near Nazareth, Israel
You will certainly be purchasing a piece of history with this NFT.
Jezreel Valley is in Galilee, Lower Galilee to be exact. It’s a large fertile valley planted with many crops.
Jezreel Valley Winery is just 11 km (6 miles) north of Nazareth in a town called HaNaton.
Christians may remember that Nazareth is the hometown of Jesus. It is also where the angel Gabriel appeared to the Virgin Mary to tell her she would give birth to Jesus.
Today, Nazareth is an Arab Muslim-dominated city with a Christian minority… all within a Jewish State. Known for it’s mosques and churches, Nazareth seems like a fascinating place to visit.
How your 'Genesis' Syrah should taste
Unfortunately, we can’t be sure how your ‘Genesis’ NFT Syrah will taste. Hello Fam makes no mention of it. But, we know the grapes come from Jezreel Valley.
Jezreel Valley, in the Lower Galilee has a hot Mediteranean climate. So expect your Syrah to be full-bodied with concentrated black fruit aromas and flavours and likely some toasty oak flavours (think blackberry jam powerhouse with licorice and vanilla notes).
Your ‘Genesis’ wine will probably be similar in style to a rich Aussie Shiraz. It should be smooth with high alcohol… but probably not a wine that can age too long. (Note that this is my assumption because I have no experience with these wines nor does anyone I know have experience with these wines. There is also no information online about the ageability of these wines. But I could be flat out wrong!)
The only Syrah’s I found from Jezreel Valley Winery that were given 90+ points by Wine Enthusiast and the like were made from Syrah grapes grown in the Upper Galilee not in Jezreel Valley in the Lower Galilee.
Well, Upper Galilee is another story entirely. This area is home to many mountains. Vineyards here are in higher-elevation cooler zones (anywhere from 350-1000 feet above sea level). You can expect savoury black pepper notes and hung meat aromas along with the blackberry fruit. There should also be some baking spice notes from oak ageing as well. But because these wines have higher acidity and lower levels of alcohol, they are more likely to improve with time in the cellar.
Again, this is my assumption about how the wines will taste. But, I don’t know!
So if I don’t know, how could you?
Have you tried Syrah from Galilee or Jezreel Valley Winery?
Please share your impressions below in the comments!
What are en primeur wine sales?
The most useful comparison to a wine NFT purchase I can think of, are the en primeur wine purchases in Bordeaux. En primeur is an investment in ‘wine futures’ where wine is purchased 18 months before the vintage.
The first recorded investment into ‘wine futures’ was recorded as early as 58 AD. The vintage was “so exquisite that every grape on the vine was purchased before it was picked.” Today, this practice is most famous every March in the wine region of Bordeaux in France. Although, other wine regions, notably Burgundy, the Rhône Valley, and Porto are doing it too.
Usually, en primeur is a gamble. No one can know whether the vintage will be a good or a bad one. But this gamble, can pay off handsomely in a good vintage.
If your acquisition of grapes not-yet-grown has a good vintage, you can sell your wine for much more than you purchased it for. Moreover, in good vintages, wines can cellar longer. Therefore, the longer you hang onto them, the more money you can make from your investment.
Why en primeur sales are good for wineries and producers
For wine producers, en primeur sales gives them much needed access to cash flow.
Think about it.
First there’s growing the grapes, tending to them, picking the grapes, crushing them, and fermenting them. Then you have a wine that must be aged in barrel or stainless steel, then bottled, then transported to other countries where they are warehoused. Here, they wait to be sold.
As you can see, it’s is a long time investing money, waiting to be paid. Selling NFT’s gives wine producers access to money before the wine makes it to market.
Conclusion: Are NFT wineries good or bad?
I do wonder who the intended target market of Hello Fam is. Are they targeting investors primarily from Israel? Are they an older demographic or the younger, more tech savvy types? Are they expecting oenophiles to jump on board or is NFT wine intended for investors with an amateur interest in wine?
Consequently, I think either the marketing message is blurred or it’s not for me, or both.
But, the idea of NFT wine is mind-blowingly genius!
If wineries can access more cash flow before the wine is bottled… more small, unique producers have the potential to survive and grow during these uncertain times.
On the flip side, I should mention that ‘mining’ currency and purchasing NFT’s is an extremely carbon intensive process. The carbon emitted from Bitcoin alone surpasses the entire carbon footprint of the country of Norway in a year. This problem must be addressed for consumers to find NFT wineries palatable.
If I could offer some tweaking to Hello Fam’s marketing model, I would suggest they focus more on the actual wine the NFT represents.
Surely, focusing on the place, or the terroir of the wine would bring the distinction and luxury branding that would convince people to invest. I would think the main selling point should be the flavour and ageability of the wine to prove the NFT’s worth. Instead, the NFT’s value here is only being tied to the rarity of the NFT. Why not have both?
That being said, the first ‘Genesis’ vintage sold out entirely! It is now available on the secondary market only.
What are your thoughts?
NFT wineries...promising? A scam? Share your comments below!
The key behind NFT’s and digital currencies such as Bitcoin, is the blockchain.
A blockchain is a database that stores information in a completely decentralized way. As a result, blockchain is a more secure way of storing data than has previously been known.
Information is stored in groups called blocks. Each block has a limited amount storage in it and once it is filled, it is closed.
New information must then be added into the next block until that is filled and closed. The blocks are strung together and eventually form a chain all linked to each other in one direction.
How Blockchains are Secure
Every time a bit of information is added to the block, it gets a time stamp encoded into it.
So there’s always a digital trail and history left for everything in the blockchain – in the order it was added.
Each code is a string of long numbers that are mostly identical to all of the others in the chain, with the exception of the few numbers that identify each individual bit within a block.
For that reason, no information can ever be edited in the blockchain. Moreover, transactions can never be destroyed or altered as doing so would make it stand out from the others in the chain, drawing attention to it. If someone ever tried to alter a part of the chain, it would stand out from the rest and easily be pinpointed and discarded.
This technology can be very useful!
Today’s connected world means that hackers can steal personal health records from insurance companies, credit card numbers and even personal security passwords from millions every year. Under the circumstances, it’s clear that we need new ways to keep our data more secure.
Just last year China announced the use of blockchain applications in everything from supply-chain management to contracts to the People’s Liberation Army’s weapons and defence strategies.
How NFT's are Beneficial to Digital Artists
Since NFT’s originally began as mirrors of images already available in the real world, I originally thought the concept was ridiculous. But NFT’s have proven to be beneficial to digital artists. Allow me to explain…
Ethereum is the second most traded digital currency (next to Bitcoin) and it’s where most of the NFT’s are currently being held.
According to Ethereum, an NFT can only have one owner at a time which is why they work particularly well for digital artists.
Previously, digital art would be shared on an .mp3 video or .jpg file or the like. But these can be replicated and copied and there’s no proof that one artist is the original creator over someone else.
This vastly undervalued what a digital artist could be paid for their work.
But, NFT’s have changed that!
Each NFT comes with it’s own unique code. Consequently, an authorship claim of a digital artwork can now be verified by tracing the blockchain.
The blockchain essentially works as a public ledger.
Previously, there was no way to tell if a piece of digital art was the original or the 100th copy. Now with NFT’s, the original artist can be credited… and payed
This is great news for digital artists; now they can benefit financially from their work.
With NFT’s, digital art can be bought, then resold. Each time, the creator can be compensated. Furthermore, the artist will always hold the public key for their art, making it impossible for others to counterfeit it.