If you deal in fine wine and are constantly walking the tightrope of whether what you are buying or selling might be fake or fraudulent then you really need to be taking the world of blockchains and smart protective digital technology seriously. Here technology entrepreneur, Max Kantelia and founder of blockchain business, Zilliqa makes the case for what blockchains can do and why they are so in tune with the unique needs of the wine and drinks industry.
Zilliqa’s Max Kantelia on the power of blockchains and how they can give the wine and drinks industry unprecedented levels of security and protection.
It is a well-known fact that the wine industry has been the victim of huge fraud for centuries. In ancient Roman times, Pliny the Elder exposed the enormity of malpractice in the wine industry, and in the Middle Ages, London established strict rules to prevent drinking establishments from mixing different wines to prevent false representation.
More recently, we can see the size of the problem has compounded to worrying levels. The Euromonitor 2018 Global Study on illicit alcohol suggests that one in four bottles are fake which leads to health risks for the consumer and losses in revenue for governments estimated to be $3.6 billion each year.
Thanks to the documentaries that now abound on streaming channels, the world has learned about the frightening case of Rudy Kurniawan who sold fake bottles of the world’s finest wines through well publicised auctions until collectors, working with the FBI, unveiled his workshop which filled tampered bottles bearing the world’s most revered labels with cheap wines.
All of this is bad news for producers and consumers. However, help is at hand, and I truly believe that we have a solution with the advent of blockchain technology which thus far has mostly been associated with the growth of the cryptocurrency markets.
For the very first time, we can now digitise the wine supply chain on a blockchain to create a system that can verify the authenticity of any wine from the vineyard to the retailer. At each stage of the supply chain the transaction is recorded as an immutable block in the chain which is transparent to all actors in the supply chain. The huge advantage lies in the fact that transactions cannot be altered as any attempt to defraud a transaction becomes immediately transparent.
The application of blockchain is not just limited to the fine wine industry either. Using a blockchain, we can identify the risk of hazardous chemical usage and even monitor the temperature at each stage of the production and logistics chain.
The development of traceability systems offers enormous benefits to the wine industry and most importantly, to the end consumer, whether it be a bottle of fine burgundy or a table wine.
Taking this a step further is the recent innovation of the Non-Fungible Token (NFT), where the initial use case has largely been in the digital art world where buyers can purchase digital art which is created on a blockchain and a provides a digital certificate of ownership with complete proof of ownership. Furthermore, immediate payments can be made to the seller of these NFTs through an embedded program and even a trail of payments to the originator. Imagine, for example, a wine producer being able to create NFTs, perhaps for the collector of fine wine labels as a starting point.
In my opinion, the real game-changer occurs when we have technology that can also verify the provenance of the physical counterpart and be able to connect the two. The journey towards ensuring both the physical provenance and digital ownership will lead to reduction in illicit trade.
In my view, the emergence of this approach equates to being as important as the creation of the internet and the potential of what it can become is very powerful.
We are increasingly living in a digital world so not only does this technology seek to protect wine and spirits but also opens up wine buying to new audiences and new channels to market. Millennials are more likely to become owners of NFTs so it will connect with new consumers who are interested in wine and digital art.
NFTs will become the digital products that will populate the metaverse, an emerging new immersive version of the web, where we will be represented by digital avatars and be able to view and purchase digital assets as we do in the physical world but through our smartphones and laptops.
I am currently working on a new initiative create a metaverse, the Metapolis, powered by the Zilliqa blockchain for the rapidly growing NFT space. This will allow luxury brands and enterprise clients to create new digital products that can create channels for hybrid digital and physical products. This digital representation of a luxury shopping mall provides luxury brands with the opportunity to create NFTs which are sold alongside the physical item. We see a future where this is a step beyond online shopping as you wander around a digital virtual reality store clicking on items for more information.
Blockchain is becoming increasingly integrated into the corporate world, and luxury brands are particularly well-positioned to reap the rewards of digital innovation, which is set to play a part in an industry that’s constantly seeking to reinvent itself. The big brands are beginning to see that there are new channels, new markets that they can be marketing and selling into.
Further announcements are anticipated in February.
- Max Kantelia is an investor & parallel entrepreneur with over 25 years’ experience in the start-up and rev-up of fast growth tech and financial services companies in London, New York and Singapore. He is a Founder at Zilliqa, the leading high-throughput, low cost and environmentally friendly blockchain and is currently launching new NFT and metaverse ventures, powered by Zilliqa, for the music industry and luxury brands who are seeking to develop new channels for hybrid digital and physical products. Kantelia is an electronics engineer by background, collects and enjoys fine wine and jazz.