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Spirits

The Whiskey Unicorn Goes Crypto

October 21, 2021

Story: Kara Newman

art: Carolyn Figel

Spirits

The Whiskey Unicorn Goes Crypto

October 21, 2021

Story: Kara Newman

art: Carolyn Figel

With the launch of BlockBar, an NFT marketplace for luxury spirits, buying and selling rare bottles now happens on the blockchain.

On October 19—coincidentally, the 34th anniversary of the 1987 stock market crash—a new trading platform launched: BlockBar, a blockchain-backed marketplace for luxury spirits.

Fifteen nonfungible tokens (NFTs), each representing a rare bottle of 1973 Glenfiddich, a 46-year-old single malt Scotch finished for 21 years in an Armagnac cask, debuted that morning, priced at an already-lofty $18,000 (or 4.7 ether) apiece. By the next day, all of those bottles had been purchased, and five of those bottles had already been flipped and flipped again, with asking prices soaring between $189,000 and $288,000.

BlockBar isn’t the first marketplace for trading spirits-focused NFTs; they’ve been available on platforms like OpenSea and BarrelFinance for some time. Nor is this the first single malt Scotch to sell as an NFT (contrary to an early claim by BlockBar). But this particular venture connects a few key dots in the still–Wild West world of NFTs, and may present a model for the future of trading high-end wine and spirits.

The family behind BlockBar, the Falics, has a history in global travel retail, where exclusive spirits are part of the airport shopping experience. This has provided a handy leg up in the space, providing deep contacts among well-known spirits companies and insight into what—and how—well-heeled consumers like to purchase.

In particular, co-founder Dov Falic (global spirits director of Duty Free Americas, part of Miami-based Falic Group) is versed in the duty-free business, where brands frequently release limited-edition exclusives and collectors casually fly in and fly out to scoop them up (at least, in pre-pandemic times).

“We see this problem all the time,” Dov Falic says. “They buy this high-end spirit, they’re traveling, a month later they can’t get it.” A marketplace like BlockBar means that if spirits connoisseurs “can’t get it on the primary drop, they can get it later,” he adds.

Meanwhile, BlockBar co-founder (and Dov’s cousin) Sam Falic saw the potential to use NFTs to trade luxury goods. After an early test run with a digitized Christian Lacroix dress, he connected the dots to home in on a key part of the family business: luxury wine and spirits.

He’s particularly passionate about the potential of NFTs, talking a blue streak about how the technology can help capture the remarkable purchasing power of “the new wealthy class,” which he sees as including aficionados of both high-end spirits and super-speculative cryptocurrency platforms like Bitcoin and Ethereum. “With this new demographic, it’s about offering them a way of purchasing [that] they like better.”

In theory, the option to buy (and sell) bottles just like art, jewelry or any other luxury item already exists at auction houses like Sotheby’s, Christie’s and online-only platforms like ReserveBar, but paying in Bitcoin is not usually an option. Further, even upscale auctions of rare bottles carry risks, notably, fraud.

Likewise, properly storing and protecting bottles between sales presents significant pain points: breakage caused by moving a collection, spoilage due to high temperatures, or even water damage. And of course, there’s always the risk that you might be tempted to open and drink the bottle—a spirits-lover’s dream, but an investor’s nightmare.

“At the end of the day, the biggest hurdle is around authenticity,” Sam Falic notes. When a bottle is passed from a buyer to seller, “there’s no way to prove it unless the next person tests the liquid, which kind of ruins the whole thing.”

To pre-empt that issue, BlockBar takes the bottles direct from the producer and tucks them away in a storage facility in Singapore. A buyer can redeem the bottle to drink (the site facilitates compliance information for the import process and shipping, similar to an online e-commerce platform) or hold it in the Singapore facility indefinitely.

But, odds are, many will trade the NFT, as they might any other commodity, flipping it over and over again for profit, as they did this past Tuesday. All the while, the bottle never leaves the climate-controlled warehouse in Singapore. All transactions are listed on the Ethereum blockchain, so it can be traced back to the brand. That traceability is the primary advantage of an NFT marketplace, experts say.

“An NFT is a certificate of authentication,” says Dr. Merav Ozair, a leading blockchain expert and financial technology professor at Rutgers Business School. “It’s harder to scam with NFTs. Because it’s on the blockchain, eventually you have to show the physical good, that it really exists.” That accountability has led to an increase in NFTs—and secondary markets to sell those NFTs—across an array of luxury goods spaces, she notes, from retailers like Dolce & Gabbana to real estate.

Looking ahead, products are lined up for the next four months at BlockBar, with one scheduled to drop every two weeks. “We’ve had conversations with every major spirits group in the world—Diageo, LVMH, Whyte & Mackay, William Grant & Sons, Sazerac, Bacardi, Edrington—we’ve spoken to everyone,” Sam Falic assures. Bourbon, rum, wine and tequila are expected to come to market alongside Scotch, although exact names have yet to be announced as of Wednesday. Prices will vary widely; one might be $200, another $150,000, he notes, and some of those NFTs will include experiences—such as hotel stays, distillery visits or a session with a master distiller—as well as bottles. In about a year, the goal is to hold weekly NFT releases.

Farther down the road, BlockBar plans to extend the model to luxury goods, from high-end fashion to cars, collectibles that investors might admire but don’t necessarily feel compelled to possess in three-dimensional life.

“Everybody wants to own cool stuff. But there’s no reason for you to store it on your shelf anymore,” says Sam Falic. “That seems so antiquated.”

Crypto experts might agree with that statement, but those who enjoy single malt Scotch might be perfectly happy to see that whisky on their shelf—or even better, in their glass.

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