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WineChain has been founded by Xavier Garambois, former head of Amazon Europe, Luxury Marketing & Communications expert Guillaume Jourdan, CEO of VitaBella in Paris, and serial entrepreneur Nicolas Mendiharat, CEO of the San Francisco Palate Club.

Nicolas Mendiharat is a repeat founder and CEO with 25 years of experience building tech-enabled startups. He specializes in early-stage consumer markets and marketplaces. After launching the online travel venture Skihorizon. com, which achieved $100m revenues and 300k customers, he decided to focus on one of his passions: wine.

He has since been revolutionizing the industry with 2 ventures-Palate Club & WineChain. WineChain is a digital fine wine marketplace where the world’s most coveted wineries use blockchain technology to sell their wines directly to wine lovers worldwide. Nicolas was critical with WineChain’s $6M+ fundraising round in 2022, including investments from
the Motier family of Galeries Lafayette, the Rouzaud family known for leading wine brands including Champagne Louis Roederer, and Web3 venture capital FABRIC Ventures. Nicolas is also an avid wine collector with a diverse collection of bottles built over the past 20 years.

The Internet. iPhone. Web3. And now, Wine. Yes, tech is disrupting the millennia-old global wine trade, cutting out scores of middlemen. And this is to your advantage as a consumer or investor, because you can now securely access, buy and sell, store or ship the best wines in the world to your home.

“We are at the beginning of a revolution in the trade of fine wines,” writes the REVUE DU VIN DE FRANCE, a monthly magazine which critics describe as “France’s only serious wine magazine”.

Behind this revolution is WineChain, founded by tech and wine geeks such as the former head of Amazon Europe, and financed by the deep pockets of the Motier family of Galeries Lafayette, the Rouzaud family known for leading wine brands including Champagne Louis Roederer, and Web3 venture capital FABRIC Ventures. Many of the world’s leading champagne houses and winemakers are already on the WineChain platform.

WineChain’s mission is to build a direct, secure and sustainable path between the creations of the top winemakers and their end consumers through a secure digital token marketplace. For the first time, the world’s top winegrowers can connect directly with a global community of wine lovers and give access to their best wines and vintages.

By pairing each digital token to a physical bottle or case of wine direct from the winery, which are stored in WineChain’s secure warehouse, WineChain clients not only get access to the finest wineries in the world and a wide range of choices, but also benefit from simplified logistics, frictionless liquidity, all with the ease of the digital era.

Wine as investment

On top of preserving wealth through its intrinsic value, wines have performed well as an asset due to the constantly rising global demand and limited supply. Wine value is fairly uncorrelated to global macroeconomic trends and appreciates with age when stored properly, making it a b option for long-term investment.

The digital token provides authentic proof of ownership, allowing you to either sell the wine within the WineChain marketplace, ship it to your home - or keep it stored with WineChain and watch its value go up.

The fine wine market has outperformed the stock market in recent years (+135% or 11.25 % p.a. between 2010-2022, based on Liv-ex Fine Wine 1000).

This is due to a number of factors, including:

• The increasing popularity of fine wine as an investment asset.
• The limited supply of fine wine, which is driving up prices.
• The high demand for fine wine from China and other emerging markets.
• The positive long term outlook for wine as an investment.

Photo Credit: Vino-Joy.com

A smart way to avoid fraud and provenance scandals

However, wine investment is also sensitive to fraud or suspect quality, with a number of provenance scandals happening just recently. Blockchain and digital token technology helps bridge this exciting asset class to a future where traceability and frictionless liquidity offer greater value and protection to the investor.

WineChain is a wine NFT* marketplace where the world’s most coveted wineries use blockchain technology to sell their wines directly to wine lovers.

To buy wine on WineChain as wiNeFTs, the buyers first need to set up their wallets. Once purchased, WineChain stores the bottles safely. Then investors can either trade the wine on the WineChain marketplace, store the wine for later, or use the platform’s “white glove” shipping services to have the bottles delivered to them. That’s when the NFT gets “burned”.

In this interview, Nicolas Mandiharat, the co-founder of WineChain, explains the ins and outs of collecting wine NFTs. He will expand on the topic and more during an interactive Investor Workshop on 19th October (details below).

Opalesque: Could you explain the relationship between blockchain and wine?

Nicolas Mendiharat: A lot of people are actually confused about why we would use blockchain and are confused between two major things.

A lot of projects have emerged that sought to track and solve the authenticity problem, the storage problems, all the distribution layers problems, etc., by tracking the wines, by registering their movement on the blockchain. With blockchain, you know how the wine circulates, which player is selling to which player, who is going to be a consumer, etc.

I’m not saying the theory is wrong. I’m saying the execution of it would be too long and complicated,as you would need the participation of all the supply chain actors, many of whom don’t want the tracking for various legal, costs and privacy reasons, including the end consumer. You would need to add NFCand other technologies, where there’s no global worldwide standard. This is why all the projects going down that road have failed so far.

It’s not what we do. People don’t want the players, the professionals, or the bottles to be tracked. That has nothing to do with blockchain: blockchain does not involve microchips tracking the movement of bottles. Although this kind of technology exists.

Blockchain is a technology offering a decentralized secured ledger. Before anything else, it’s a new way to organise transactions and ownership, which in our case of application, enables us to solve a lot of the market’s flaws.

Photo Credit: https://www.sommwine.com/3-wine-scandals/

Opalesque: How does it work?

Nicolas Mendiharat: The wines are provided exclusively by the winemakers who guaranteethe perfect provenance and authenticity. The winemakers send the wine sold to customers directly to our logistics centre.

From the moment the wine is sold from the winery, we create a digital twin, which is called a smart contract, and has a certain number of automated rules. It is also called a token. It is registered in the ledger of the blockchain, which means it is immutable.

So you don’t need a notary, a bank, a merchant or anybody who is going to act as legal proof that you own that contract, therefore the wine, while you don’t need to have the physical bottles. The contract is registered on the blockchain linked to your wallet. That contract proves your ownership of the bottles and can be easily traded.

So all this enables the bottles to not move if you have a contract. Why not? Because it’s unique and corresponds to specific bottles of wine that are attached to the contract.

Opalesque: Why use blockchain?

Nicolas Mendiharat: The first thing is the memory. This is the principle of blockchain in itself. The ownership of that smart contract doesn’t depend on even WineChain or other players.

WineChain provides the software and the platform so that the wineries can add the contracts. WineChain also provides the storage and the shipping. If WineChain were to disappear, you would still be the owner of that contract.

Blockchain is a decentralization tool. You are 100% in control of the proof of ownership.

The second reason is the conditions embedded in the smart contract. And more particularly the fact that you can resell the smart contract, and what happens automatically when you do so.

Photo Credit: https://www.sommwine.com/3-wine-scandals/

Opalesque: So you can resell the token?

Nicolas Mendiharat: Right. We store the wine for you and we create a marketplace of all these smart contracts.

That’s something totally new in the market. Today,all the fine wine secondary markets are among professionals who decide the price of the market.It’s an offer-and-demand market, but in the end, it’s not the consumers selling to each other, it’s the pros defining it and the prices while taking nice margins in between.

That changes with WineChain because it is an accessible open marketplace for consumers to buy the wines among themselves through those smart contracts, very easily.

Opalesque: What happens when the token changes hands?

Nicolas Mendiharat: When that smart contract is executed and ownership changes, that happens in real-time using cryptocurrency, and so you can do things that are really hard to do in the real world, more particularly apply royalties for the wineries for instance.

So what that means is that there is, embedded in the smart contract you buy, a percentage of the profits that goes to the winery and to the WineChain. Usually, it’s 15% of the profits.

Opalesque: Why is this new way of investing so important?

Nicolas Mendiharat: It’s important because one of the major flaws in the wine market is that there are so many people involved. And therefore wineries only get a minority piece of their creations, and consumers often pay huge retail margins to get the best wines. We change that by creating a direct relationship between wineries and their collectors. Adding to that point, fine wine prices increase over time. (It is a very good investment usually.)

Let’s say for example that, in 2015, a crate was sold for $1,000 to professionals. That crate had already been sold three times by the middlemen who took their cut. In 2023, that crate is worth $6,000 because the market has been growing a lot. The margin of $5,000 has also gotten across two international transactions across all of the countries, making more than 3% each.

What we do changes the system completely. Even if we take a 15% cut, it reduces the cost of wine distribution dramatically.

Opalesque: What are the main benefits for token owners?

Nicolas Mendiharat: It keeps the authenticity,and perfect storage and at the same time, provides better liquidity for the consumers and investors and provides a better income for winemakers and a direct relationship to their consumers. It enables much better fluidity and cost-effective transactions in the fine wine market.

* NFT stands for ‘non-fungible token’. Non-fungible means that something is unique and can’t be replaced. By contrast, physical money and cryptocurrencies are fungible, which means they can be traded or exchanged for one another. Every NFT contains a digital signature which makes each one unique.