Why Use Blockchain for Tokenizing Premium Alcohol

Tokenization of real assets refers to the process of converting physical assets into digital tokens that are issued, stored, and transacted on a blockchain — a technology ensuring security, immutability, and decentralized data management in digital transactions.

For instance, a company involved in building homes and selling apartments in new developments can tokenize real estate. Each apartment or square meter of property is linked to a token, recorded on the blockchain. By purchasing a token, an individual obtains ownership rights to the real estate. These rights allow the owner to manage the property, similar to traditional ownership rights transferred in a standard purchase transaction.

Various types of real assets can be tokenized, including stocks, bonds, designer clothing, artworks, antiques, and premium beverages.

We've previously discussed tokenization of real assets in greater detail.

Imagine you're a collector with a passion for premium wines. You've decided to purchase several bottles for your collection but are concerned about counterfeits and hesitant to deal with complex logistics, especially since the wines you're interested in are on the other side of the world.

You sign up on an investment platform that trades in luxury wines using blockchain technology, working directly with small wineries and large producers. The platform takes full responsibility for storage, sales, and delivery of the wines to investors. All wines are stored in a specially equipped warehouse. Each physical bottle has its digital representation in the form of a unique token — known as an NFT (Non-Fungible Token).

You select a wine and purchase its NFT token, thereby becoming the owner of a valuable bottle of alcohol. Ownership rights allow you to manage the purchased bottle as you wish. You can keep the wine for investment purposes, waiting for its value to appreciate, resell it to another collector, or even enjoy drinking it.

Investing in wine, like other real world assets, offers an opportunity to diversify your investment portfolio, regardless of whether the investor understands cryptocurrencies or not.

Intermediary platforms facilitate the sale of collectible alcohol for tokens and fiat currencies, such as dollars and euros, making the purchasing process straightforward and convenient for various users.

NFT, or non-fungible token, is a unique token that cannot be replaced by a similar one because it exists as a single, one-of-a-kind instance. NFTs are particularly suitable for tokenizing premium alcoholic beverages since these drinks are produced in limited quantities, with each bottle holding significant value.

An NFT for premium whiskey or wine is a unique digital certificate linked to specific information corresponding to a real bottle.

NFTs began gaining popularity in the premium alcohol market in 2021. That year, leading brands such as Hennessy and Glenfiddich introduced their own NFTs to support the release of beverages from limited collections.

You select a wine and purchase its NFT token, thereby becoming the owner of a valuable bottle of alcohol. Ownership rights allow you to manage the purchased bottle as you wish. You can keep the wine for investment purposes, waiting for its value to appreciate, resell it to another collector, or even enjoy drinking it.

Investing in wine, like other real world assets, offers an opportunity to diversify your investment portfolio, regardless of whether the investor understands cryptocurrencies or not.

Intermediary platforms facilitate the sale of collectible alcohol for tokens and fiat currencies, such as dollars and euros, making the purchasing process straightforward and convenient for various users.

Trading rare and collectible beverages using blockchain technology opens up new opportunities for both producers and investors.

Benefits of tokenization for sellers

Manufacturers can enter the crypto market, automate transactions for selling premium alcohol, and gain an additional marketing tool.

A new distribution market. By issuing NFTs for a bottle of expensive wine, a company enters the crypto market and attracts funds from digital investors. These investments can be directed into real business ventures.

Automation of transactions through smart contracts. A smart contract is a digital agreement between a seller and a buyer that operates on the blockchain. The smart contract establishes rules for the company to sell premium alcohol for tokens, ensures both parties' commitment fulfillment, and automatically executes contract terms upon specific actions. For example, when an investor purchases a bottle of whiskey as an NFT, the investment platform receives 10% of the purchase price.

Marketing and PR tool. Many premium alcohol producers issue NFTs to attract new audiences and strengthen their positions in the offline market.

Benefits of tokenization for buyers

The key benefits for an investor who decides to purchase tokenized premium alcohol are security, liquidity, traceability, and control over storage conditions.

Security. Investment platforms offering premium alcohol source lots directly from manufacturers and verified collectors. Investors can be completely confident they are investing in authentic wine or whiskey, not counterfeit products.

Liquidity. Collectible wine is a highly liquid asset that can be challenging to sell on the secondary market due to high shipping costs and time-consuming logistics. Intermediary platforms eliminate these barriers by handling all logistics, making transactions as straightforward as trading stocks.

Traceability. When purchasing an NFT, it can be difficult to prove ownership of the physical item, especially if the wine bottle is located elsewhere, often on the other side of the world. For instance, each wine bottle sold on the Vinesia platform is marked with NFC and BLE tags. NFC tags transform the bottle into a trackable digital asset, ensuring the investor is the sole owner of that wine. BLE tags display the bottle's location on the website, reassuring the buyer that their wine is indeed in storage.

Control over storage conditions. It's challenging for collectors to monitor the temperature and humidity of wine cellars and ensure their beverages are safe. Therefore, platforms selling tokenized drinks allow buyers to monitor storage conditions in real-time. Typically, on the product page, you can see the current temperature and humidity in the wine cellar and how these metrics have changed over the storage period.

The first platform to trade premium alcohol as NFTs emerged in 2021. Today, there are several such platforms, each offering investors various opportunities to make collecting rare beverages as simple and secure as possible. Explore market leaders to discover useful features and inspire best practices.

BlockBar was the pioneer in selling wine, whiskey, and other premium beverages as NFTs. Operating on the Ethereum blockchain, BlockBar allows users to verify the authenticity of each bottle and track its ownership from production onwards.

BlockBar exclusively collaborates with leading manufacturers such as Bacardi, Hennessy, Pernod Ricard, and William Grant & Sons, avoiding alcohol from intermediaries and private individuals on its platform.

Brands partnering with BlockBar offer users additional value, such as winery and distillery tours, exclusive content, discounts, and early access to new collections. These initiatives help brands establish trusted, long-term relationships with collectors by engaging with them post-purchase.

WineChain. This platform trades collectible wines from around the world.

Collectors can build and stock their remote cellars on WineChain, exchange lots with other collectors, thereby increasing the value of wines in their collection.

The first smart contract on WineChain was released in 2022. The main currency is wiNeFT tokens. As of November 2023, the platform has collaborated with one hundred partners from France, Italy, Germany, and Portugal.

BarrelX. This investment platform brings together collectors of premium bourbon.

An investor can purchase a barrel or a share in one. The cost of bourbon depends on its aging process: the earlier a collector buys the drink, the cheaper it is. Bourbon matures for four years — only then does the collector gain the right to manage it — and is stored in warehouses in Kentucky.

A distinctive feature of the platform is its active involvement in developing the Web3 ecosystem. BarrelX collaborates with renowned digital artists, entrusting them with the design of bottles and labels.

InterCellar. This marketplace trades collectible wine and is currently in its launch phase.

All lots come directly from producers, and the company advocates for environmental sustainability by encouraging purchases of wine in digital formats to reduce carbon emissions.

Collectors can buy lots at fixed prices or participate in auctions to trade with other investors. Everything operates on the Ethereum blockchain.

Vinesia. The investment platform Vinesia trades wine as an asset using NFTs that confirm ownership rights to rare beverages from prestigious wineries and verified private collectors.

The platform's main audience consists of experienced older collectors who have a deep understanding of wine but are not yet ready to fully engage with the world of blockchain, tokens, and digital wallets. Therefore, Vinesia offers users a convenient Web2 interface while leveraging blockchain's advantages: security, immutability, and decentralized data distribution for digital transactions.

Blockchain. With every wine purchase on the Vinesia website, an NFT is issued, representing a digital ownership certificate for the bottle. It goes beyond a mere certificate; NFTs allow for recording and storing information.

Vinesia is an example of solving a practical problem using blockchain without imposing unfamiliar or unnecessary features on users.

For example, Vinesia ensures that wine is stored under optimal conditions and allows investors to verify this. Blockchain helps to solve such tasks.

Another example is transferring a bottle to another buyer. In this case, the history of storage conditions and the history of the wine itself as an asset are also reflected in the NFT. Therefore, through the transaction history of an NFT, one can track how liquid this bottle of wine is.

For each wine on the Vinesia website, real-time temperature and humidity are displayed on the left, while an interactive graph shows the history of changes in these parameters.

Discovery. We started with a brief discovery phase. Within two weeks, we described the entire blockchain architecture of the platform, made our suggestions, and outlined both functional and non-functional requirements.

As a result, the client received easily readable diagrams that describe the operation of APIs and smart contracts, along with a detailed estimation of the effort required to implement everything.

Development. We developed and fully tested the smart contracts in less than two weeks. Afterward, we provided comprehensive documentation and necessary scripts for deploying the smart contracts into production.

Vinesia left a positive review about us on Clutch, thanking us for delivering high-quality work within tight deadlines.

• Tokenizing real assets involves creating their digital copies in the form of tokens, which are issued and traded on the blockchain.
• By purchasing a token, an investor obtains ownership rights to real assets such as stocks, bonds, artworks, antiques, or premium beverages.
• NFTs for premium whiskey or wine serve as unique digital certificates linked to specific real bottles.
• A collector acquiring premium alcohol as NFT gains ownership rights to a particular bottle stored in a physical warehouse.
• Ownership rights allow the investor to manage the purchased bottle as desired: keep it, resell it to another collector, or consume it.
• Producers tokenizing premium alcohol enter a new market, automate transactions using smart contracts, and gain a new marketing and PR tool.
• Key benefits for investors buying premium alcohol tokens include security, liquidity, traceability, and control over storage conditions.
• Premium alcohol in the form of NFTs can be bought and sold on investment platforms like BlockBar, WineChain, BarrelX, InterCellar, and Vinesia.