Wine speculation is having a devastating effect on family-owned vineyards. Startup WokenWine hopes to tackle this problem, along with wine fraud and counterfeiting, via its wine NFT trading platform.
In 2018, auction house Christie’s sold 12 bottles of 1988 Romanée-Conti for a whopping $379K. It was good news for the vendor, but not so good news for the producer who, despite being considered the best at what they do, doesn’t get a sniff of the auction price.
“Producers get nothing from this speculation,” Valérie Engel, co-founder of WokenWine explains. “Because when a bottle leaves their domaine for €200, and it’s sold on by the buyer at Christie’s for €2-3,000, their estate is valued based on the speculative price of the wine.”
Because of speculative practices, often when an owner passes away, their children are forced to sell the property to settle inheritance taxes.
NFT solution
Valérie Engel, along with business partner Valery Lux, both serial entrepreneurs believe they have an effective solution. WokenWine is a Luxembourg-based NFT issuer and trading platform for rare wines that will go live in the first quarter of 2023. The business model allows producers to issue NFTs for whichever bottles they wish, be it a single cuvée or the entire vintage.
The WokenWine platform also aims to solve a second problem: counterfeiting and fraud. According to WokenWine’s research, a quarter of all rare wines sold on the primary and the secondary market are counterfeit.
“NFT brings solutions to solve these problems. 5-10 years ago, it would not have been possible. But new technology brings new possibilities to solve these problems.”
Valérie Engel
The blockchain platform on which the technology is built ensures the traceability and transparency of each wine bottle’s life cycle. Valérie Engel explains: “Conservation is a problem for rare bottles. A bottle might travel around the world seven times so the last person who opens the bottle ends up disappointed.”
The platform guarantees a record of each time the wine is sold and moved, offering full traceability through the primary and secondary rare wine markets. Aimed at producers, collectors and professionals, it is fully AML compliant, with KYC procedures for anyone wishing to use its trading functions.
Valérie Engel says: “NFT brings solutions to solve these problems. 5-10 years ago, it would not have been possible. But new technology brings new possibilities to solve these problems.”
The team has already signed up some 12 highly sought-after domaines and expects to have onboarded 30 by the time of launching. But the process is slow going. “Most of our customers are very traditional people. We have to explain what NFTs are, what blockchain is,” she says.
As a wine lover herself, the Luxembourger is passionate about improving the lot of wine producers and says that it was over a glass of wine that the idea first took form.
“It is great that we have a solution with blockchain because it is a shame when our producers cannot pass on a domaine to their son or daughter. Normally what would happen is a big group buys the estate and then what happens to the quality of the wine?”
