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B. G., Opalesque Geneva for New Managers: Even if you're a wine connoisseur, it's not easy to buy wine, collect wine, and invest in wine, says Nicolas Mandiharat, co-founder of WineChain, in a recent webinar.
It's not easy for many reasons. One of the main reasons is not knowing what and where to buy, and at what price. When you understand a stock, you buy it through your broker, but for wine, it is not as simple. And you won't get a good deal buying it at your local retail store.
Authenticity, liquidity, logistics, shipping, accessibility
There is also a problem in that in many countries, there have been counterfeit problems. If the wine does not come straight from the winery, if you don't have a direct allocation, you basically have an authenticity loss. "So depending on how it has been stored and how it has been identified from the source, you're not sure at all of the real value," Mandiharat says. "In certain cases, there is a 30 to 50% difference in price between a bottle which is sure to come from that winery and one that does not. Furthermore, you don't know if it has been through multiple trades. In certain cases, bottles travel around the world three or four times in ten years and have been traded a dozen times. That's a huge problem."
Liquidity can also be a major problem. What can you do once you have too much wine and you want to resell? Do you go to a merchant or an auction house? Globally, merchants will need a 25-30% cut to do their job. Even if you made a profit on the end price, you will be losing a lot on the face value. Especially if you want to sell to the local market at the right price. "The wine market is not a fruit market. It's not a liquidity market," he adds.
And then you have to take care of logistics. If you have a big wine cellar at your home, this is a good thing but what happens if you move? What happens if there is some humidity problem or other and you need to move your wine? Moving wine can cost a fortune in shipping fees. Furthermore, travelling with wine is not the same as keeping it in a proper cellar.
The last point is accessibility. It is very hard to get on the list and have an allocation from small producers. In many countries, it is just impossible to buy certain fine wines. If you must have one of those hard-to-get wines, you may end up paying double the price. And expensive shipping costs.
The answer to an inefficient market
Mandiharat co-founded WineChain 18 months ago as an answer to all these consumer problems. But also as an answer to the winery problems.
Wineries don't get much of the growing value. And wineries in general are frustrated not knowing their consumers or not knowing if their wines went to some speculator, fund, or other. The fine wine market thrives on the supply and demand logic, but it's not an efficient market.
"We came in with a global idea of completely changing the way you own and experience fine wine in the future. We want to create a community of a modern type of collectors who can have their seller in the cloud completely taken care of, who don't have authenticity problems, liquidity problems, shipping problems, or logistics problems, because we will take care of all of that for them," Mandiharat says.
The founders came up with the idea of a platform for wineries so that the wineries could find their direct-to-consumer channel first. Instead of releasing their wines to all sorts of middlemen, they will release them straight to the consumer. And this is done through smart contracts with digital tokens (digital twins of physical models).
Product-pushed industry
The wine industry works as a product-pushed industry, he adds later in the webinar. The wineries sell their wines to importers, negotiators, distributors, etc, who then sell them to other distributors, who in turn sell them to retail or restaurants, who then sell them to you.
But who has your interest at heart? he asks. The wineries do. They produce the best product they can. And they usually do it out of passion. But all these middlemen do not. There might be some professionals who are also passionate about wine. But usually, the industry's interest is to maximize the margin at every level. On WineChain, it's not a product push process because it does not involve multiple intermediaries.
WineChain is a new wine NFT marketplace where the world's most coveted wineries use blockchain technology to sell their wines directly to wine lovers.
Webinar
You can replay Opalesque's recent webinar, Tech Innovation in Fine Wine is Captivating Consumers, Investors, and the World's Leading Winemakers, here: www.opalesque.com/webinar/#pastwebinar
Related articles:
04.Sep.2023 Opalesque Exclusive: Here is a disruptive way to invest in fine wines
24.Oct.2023 The Big Picture: Fine wine market affected by double scarcity and growing demand
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