NFTs, pretty digital pictures or pioneering brand assets? We say the latter for sure. Take a look at how NFTs are helping the luxury liquor industry solves some of their biggest challenges.
2021 saw the explosive growth of the NFT market. More investors than ever before jumped on the bandwagon, while the majority of us scratched our chins trying to make sense of how a digital picture collage could sell for a whopping $69.3m.
A year on, we’ve recovered from the initial shock, and we’re starting to have a better understanding of what an NFT actually is, and how it works (if you’re still a little lost, read this). But very basically, an NFT (or non-fungible token) is a one-of-a-kind digital asset. Non‐fungible simply means each individual token is unique and not interchangeable with others, so it’s completely secure and potentially valuable. We’re also just scratching the surface of what the technology can actually do, and all of this makes the NFT space a really exciting one for brands to be playing in.
“But why?” I hear you say… Well, let’s take a look at the wine and spirits industry, and more specifically, luxury alcohol brands and collection investors. Some of the main challenges that brands and collectors face in the luxury alcohol sector are: proving the authenticity of the premium products, finding people who are willing and able to purchase the products, and the logistics behind the storage and transportation of the products.
Here’s how NFTs and their unique features make them perfectly suited to solve these problems:
1. Unforgeability
One of the biggest hurdles in the luxury spirits category is around authenticity. Before blockchain technology, there was no way to prove that a product is authentic without testing the liquid, which in turn would reduce the value of the item.
Each product that is backed by an NFT is unique, unforgeable and authentic thanks to blockchain technology. This eliminates the cons and is a major breakthrough due to how incredibly difficult it is to do with physical assets.
2. Fractional Ownership
Blockchain technology has the ability to fractionalize ownership of physical assets through tokens. This is particularly valuable for luxury spirit brands who are looking to sell vintage/rare collections with a hefty price tag to collection investors. Finding someone who is able and willing to spend $100k on a vintage whiskey collection can be somewhat of a challenge, but finding 100 people who are able and willing to spend $1000, now that seems more doable.
3. Tradability
NFTs are extremely easy to sell compared to the alternative, physical assets. Each week NFT sales range between 15,000 to 50,000! This allows luxury collection investors to buy and sell their ownership of an asset with ease.
4. Storage and importation
Collection investing has always been difficult due to the issues with storage and importation of the assets. Asset backed NFTs have a major logistical advantage over traditional assets. NFTs may change hands several times but thanks to newly established companies like Block Bar who facilitate the NFT trades and store the products in the ideal conditions, the physical asset only ships twice; once from the brand to a climate-controlled, secure facility, and once to the final consumer when they are ready to redeem the asset. This reduces the risk of breakage caused by moving a collection, spoilage due to high temperatures, or even water damage.
WRAPPING UP…
There was so much hype about NFT art that it can be difficult to view the benefits of these digital assets beyond that, but they are uniquely positioned to solve some of the major headaches for many brands and in this article’s instance, collection investors.
Imagine launching a campaign in which you mint a select number of product-backed NFTs. Customers lucky enough to buy the NFT not only get the product and a cool work of art, but also access to exclusive brand events and even a distillery tour. Don Julio recently used an NFT drop to support local bar and restaurant workers. They raised money by auctioning a NFT designed by Mexican artist Claudio Limón. A great way to build brand loyalty if you ask me.
But we’re only just scratching the surface when it comes to what NFT tech will be able to do in the future. These digital assets are set to revolutionise many sectors in the next few years. The opportunities for brands are limited only by the imagination. Just watch this space…
NFTs are more than just a pretty digital picture. They have some truly exciting benefits for brands. Register for one of our creative tech Masterclasses and we’ll help you see how to work these digital assets int your marketing plans.