In the not-so-distant past, luxury spirits investors made their purchases through auction houses, in travel retail shops, or at select high-end retailers. While those avenues remain highly relevant, new platforms are seeking a slice of the luxury spirits pie. BlockBar is one such company, offering a non-fungible token (NFT) marketplace for luxury wine and spirits producers that has upended traditional models.
Launched last year, BlockBar offers asset-backed NFTs directly from brand owners. Each NFT corresponds to a physical bottle, and customers have the ability to exchange the digital version for the physical version. In simple terms, the buyer owns the physical bottle, BlockBar stores it for them, and the digital version serves as proof of authenticity, verification of ownership, and the right to have the physical bottles delivered.
Thus far, the platform has attracted rare, luxury bottles from Glenfiddich, Patrón, The Dalmore, Royal Salute, and other spirits brands, as well as Penfolds wines. BlockBar has sold only spirits and wine since its inception.
BlockBar was founded by Dov and Sam Falic of The Falic Group, the owners of Duty-Free Americas and founders of Paneco, the largest e-commerce liquor platform in both Israel and Singapore. “Our family has been in the spirits industry for many years, so we came into this new business with a huge amount of industry knowledge, and great relationships with brands we’ve worked with over the years,” says Sam Falic, co-founder and president of BlockBar.
Falic says the concept’s inspiration came from witnessing challenges faced by investors. “Luxury wine and spirit sales have been booming for some time now, but we noticed several issues faced by consumers and brands when it came to purchasing and selling, particularly concerning storage and authenticity,” he says. “We were aware of NFTs and then in doing some more research, we realized how efficient NFTs are at proving authen- ticity and verifying ownership, both of which are issues consumers and brands typically face in the wine and spirits industry.”
BlockBar authenticates each bottle and a purchase on the Ethereum blockchain allows consumers to track ownership back to the distillery or production facility. The physical bottles are insured and stored by BlockBar in a secure facility, but purchasers can trade the NFTs attached to those bottles at any time on the BlockBar marketplace. Customers can also “burn their NFT,” meaning the bottle will be removed from storage and shipped directly to the owner for consumption.
“BlockBar’s fee structure is very simple,” explains Falic. “We always set the drop at the RRSP (retail recommended selling price) and the cost you see on the site is the final cost, there are no hidden fees.” NFTs are typically purchased in Ethereum (ETH), the cryptocurrency on the blockchain-based software platform of the same name. Purchasers can also create and account and pay in U.S. dollars with traditional credit card if preferred. “Once an individual has purchased the NFT, they do not pay any fees for storage or insurance,” Falic adds. “However,
if consumers choose to trade their NFT and redeem the physical bottle, shipping fees and local duties will be charged. If they wish to relist and sell on the NFT, collectors receive 90% of their selling price and the remaining 10% is split between BlockBar and the brand. These fees help cover our warehouse and insurance fees.”
“Burning” is quite rare so far. Falic says the company had, as of mid-February, “seen a number of resales already taken place in our marketplace and we will soon start to see redemptions.” He adds that the community is constantly growing. “We see our members communicating within our platforms, such as on Discord, about expanding their collections and we have many keen members who hold multiple bottles from BlockBar.com,” Falic says. “There’s always a buzz surrounding previous and upcoming releases.”
Glenfiddich was the first spirits brand to partner with BlockBar. Last October, Glenfiddich launched a series of 15 limited-edition liquor NFTs that correspond to a physical bottle of a 1973 46-year-old Armagnac cask-finished single malt Scotch whisky. At the time of the launch, Doug Bagley, chief commercial officer for William Grant & Sons, said BlockBar “brings a heightened level of authenticity to our brand via its proprietary NFT platform and creates an elite club of distinguished collectors with whom we’re excited to build long-term relationships.” The 15 bottles of Glenfiddich 1973 Armagnac Cask Finish single malt Scotch whisky sold out in four seconds, Falic says. The bottles were, at press time, available for trading on the BlockBar platform for prices ranging from 0.31 ETH ($845) to 91.45 ETH ($249,000).
Glenfiddich was followed by other luxury spirit brands with unique and rare offerings. On the wine side, Penfolds’ first drop was in November 2021 when it offered a barrel of 2021 Magill Cellar 3 that reportedly sold for $130,000. It’s second release earlier this year was NFTs tied to 300 bottles of 2018 Penfolds Magill Cellar 3 Cabernet-Shiraz. At press time, some of those bottles were listed for trading at prices ranging from 0.24 ETH ($650 a 750-ml. ) to 400 ETH ($1.08 million), although the vast majority of available bottles were listed for less than 15 ETH.
The Dalmore Decades No. 4 Collection was launched by NFT on BlockBar on December 1. The single cache of four bottles at press time was offered on the marketplace at 50 ETH ($136,064). It’s the only set within the Dalmore Decades selection that corresponds to a digital NFT. The collection contains four Decades whiskies (1979, 1980, 1995, 2000), hand-selected by master distiller Richard Paterson, from a single malt that celebrates The Dalmore’s longstanding relationship with Sherry maker González Byass, to the first Scotch created in the new Millennium.
The initial offer also included an opportunity to visit The Dalmore distillery, a tasting of some of the rarest Dalmore whiskies in the warehouse, and a dinner. Kieran Healey-Ryder, head of whiskey discovery for The Dalmore owner Whyte & Mackay, admits to initially being a bit skittish about taking the NFT route rather than the more traditional auction house, ecommerce plat- form, or retail option.
“It felt like it had the potential to be a short-term trend,” Healey-Ryder says. “It felt like it had a potential to be something that happened in China and then went away.” But upon deeper exploration, NFTs emerged as an alternate path to market for those wishing for a frictionless transaction, as opposed to the expectations of service in auction houses or high-end retail. But, he adds, BlockBar offers “an extraordinary set of customer services” to brands.
The Covid-19 pandemic and its impact on traditional ways of doing business helped pushed Whyte & Mackay into trying the NFT approach. The result has been promising, Healey-Ryder says. “We’ve got a really interesting, different type of collector that we’ve not really seen before—it’s a consumer that’s really into finance,” he says. More broadly, “what became really clear is that it isn’t a short-term trend. Actually, now it almost feels to me like the next generation of the internet. It feels like an accessible thing to get into. Somewhere between crypto and NFT, it feels like the market will consolidate and it will become much more mainstream,” he adds.
The Dalmore’s offer of an in-person tasting and tour wasn’t unusual for the BlockBar platform. In fact, Falic says most drops have “money-can’t-buy experiences” attached. The experiences typically are offered to the owner who actually burns the NFT and receives the physical product. That way, only one experience is redeemable per NFT and it’s baked into the price of the NFT on the marketplace for resale. That said, there are still some other experiences that are associated with time of ownership and of benefit to the original buyer. For instance, owners of the Glenfiddich 21-Year-Old Chinese New Year Limited-Edition NFT one week after the drop were gifted an artwork NFT and entered into a raffle to get access to an exclusive online mentoring session with malt master Brian Kinsman.
The experiences serve to further set apart the brand offer on BlockBar. Colombia’s Dictador rum was an early user of BlockBar with the November release of its 1976 Dictador Generations in Lalique bottling as an NFT. The purchase also included a private dinner for two with Master Blender Hernan Parra, a visit to the distillery, and other perks. Meanwhile, Royal Salute’s Scotch’s ultra-luxury drop in February included both the bottle and an experience. The offer was for bottle No. 85 from the lot of only 101 releases in crystal decanters of the Time Series 51-Year-Old 2021 Release, a blend of some of the finest and scarcest hand-selected whiskies, laid down no later than 1970 and sourced across famed and ‘ghost’ distilleries of Scotland.
In addition to the one-off flagon, the NFT for Royal Salute also unlocked an invitation to experience a private tasting with Sandy Hyslop, director of blending, complete with a 5-cl. miniature of the high-aged blend. Lastly, it included an exclusive guided tour of the Strathisla Distillery in Scotland’s iconic Speyside region, a luxury overnight stay and dinner for two, complete with a tasting experience of the wider Royal Salute portfolio of exceptional blends in the Royal Salute Vault, where the Scotch’s most precious expressions are kept.
More drops, many with experiences attached, are keyed up for the coming months. BlockBar.com has exclusively sold wines and spirits since its inception, but Falic is open to exploration. “We do see ourselves remaining in the wine and spirits business but we’ll also be looking for ways to reach wider audiences,” he says. “For example, we just dropped our very first fashion-related NFT, a collaboration between Scotch whisky master Royal Salute and British fashion designer Richard Quinn. We sold a new and ultra-limited-edition Scotch, edition No. 1. It’s a great way for BlockBar to remain focused on the luxury drinks space but also tap into other cultural areas such as fashion.”
Thus far, just a handful of spirits marketers have been tentatively exploring the world of NFTs with BlockBar. Falic says the aim is to “democratize the traditional wines and spirits industry, allowing everyone, anywhere in the world to buy our prod- ucts.” Product offerings range from luxury “one of one” offerings—such as the drop of Hennessy 8 (83.18 ETH or $226,450 a bottle), which included the first and last bottle of the broader release of 250 bottles—to BlockBar’s “crypto whales” portfolio with slightly higher volumes and typically lower price points.
Falic says that BlockBar is “introducing the younger demographic to luxury spirits and the older demographic to NFTs.” More specifically, he says BlockBar targets four consumer groups. First is the collector who doesn’t have a place to store their high-end wine and spirits collection. Second, a person looking to diversify their investment portfolio. Third, the “crypto skeptic,” or person who wants to explore investing in crypto but feels safer having a physical asset backing their purchase, and fourth, the “crypto expert” who has made money through crypto and is looking for interesting ways to spend it.
Drinks marketers are still learning about the unique audience NFTs attract, and Healey-Ryder expects the hesitancy to remain for a while until investing in NFTs becomes more mainstream. But for spirits specifically, the BlockBar platform is intriguing because the NFTs are backed by an authentic product. It’s the authenticity that resonates with collectors of high-end spirits, greatly reducing the chance of forgery. “BlockBar has a good set of processes and policies in place so that even if it is a digitized art token, there’s a physical product somewhere that is well looked after,” he says.
Healey-Ryder says the platform is in the one-to-watch category. “We’re not at the point where it’s an established part of collecting rare anything, let alone rare Scotch,” he says. “But there’s definitely an audience here that’s prepared to invest in high-price items that are one of one. What also appears to be true is that the more unique an NFT is, the more useful it becomes. And it’s additive. It’s not ‘instead’ of anything we’re doing, it appears to be another route to a different type of consumer.”
Falic says there is constant buzz about both previous and new releases on BlockBar, and the number of investors is expanding. “We have many keen members who hold multiple bottles from BlockBar.com,” he says. More “drops” are scheduled in the coming months, Falic adds, bringing an ever-widening selection of luxury wine and spirits brands to a new breed of investors.