Is the next big thing for high-end whisky collectors NFTs?
Two entrepreneurs who were behind a $2.3 million record-breaking sale of a 1991 The Macallan cask earlier this month certainly believe so.
The double-size cask, a first-fill sherry butt distilled at The Macallan and currently holding approximately 600 bottles of 30-year-old whisky, was auctioned off. It included “The Angel’s Share,” a digital asset by artist Trevor Jones that is an uncompressed scan of Jones’ oil painting as well as an animated component.
Origin Protocol, a company that drops NFTs, one-of-a-kind digital assets that can be bought or sold on the Ethereum blockchain, and Metacask, a marketplace for whisky cask NFTs, collaborated on the sale. Origin was involved in the $11.7 million sale of the musician 3LAU and the $760,000 Charlie Bit Me video, has worked with controversial YouTube star Jake Paul, and has recently added Paris Hilton as a strategic investor.
The fundamentals of an NFT cask auction, according to Nim Siriwardana, co-founder of Metacask, are similar to those of a traditional cask auction. Private buyers trade casks that are stored on-site at a distillery or under bond elsewhere, and then hold on to them for decades as the value of the actual liquor in the cask appreciates (though, given the angel’s share, there will be less liquid and fewer potential bottles as those years pass). The collector does the bottling, and the bottles are kept, given away, or sold at a traditional auction house like Sotheby’s.
“The owner went to Bonhams and got a valuation for it until we came along and said, ‘Let’s do this NFT,'” Siriwardana explained. “When you purchase this NFT, you become the owner of the cask.” It’s a slightly different concept than with art, where the asset itself is frequently the NFT. The NFT is also the contract that you own the cask in this case.”
According to Siriwardana, Bonhams valued the cask without the artwork at between $1.1 and $1.2 million earlier this year. Metacask started the bidding for this cask at $1.75 million for the digital artwork.
Origin Protocol cofounder Matthew Liu sees a few different benefits of NFTs for high-end consumer goods such as whisky casks, but also high-end handbags or watches.
The first is the ability to show off your purchase to the rest of the world — for those who enjoy doing so.
“You have this prized possession of this rare whisky, which you can now flaunt on a variety of NFT platforms, such as Origin, OpenSea, a blog, or social media.” There’s also a social component. “In the past, this industry hasn’t really embraced technology, and it has the potential to drive a lot more interest in high-ticket options,” Liu said. “When you buy something in the physical world, you can only show it to a few dozen people or put it in a museum or gallery.”
Verification is a less flashy application. The NFT can prove its origin from the original creator and keep track of every transaction in the blockchain.
Brokers keep track of privately-owned whisky casks in the current non-technical system, according to Siriwardana, and can fudge records and double-sell assets. Every cask sold by NFT would have a unique reference number that would include information about how it changed hands, as well as when the whisky in the cask is tested by distilleries or experts.
“[The information] would be in the NFT’s metadata,” Siriwardana explained. “It would be difficult to carry out a double sale type of scam because a broker could easily check this information to ensure they are not selling someone else’s cask.”
William Grant and Sons recently sold 15 bottles of 46-year-old Glenfiddich whisky for $18,000 each, each with its own NFT revolving image of the bottle that serves as a counterfeit-proof certificate of ownership — and a way to brag about the purchase on social media.
Will Peacock, the head of luxury at William Grant and Sons, told Forbes contributor Bernard Marr that NFTs were a way to deepen consumer engagement while also reaching out to new collectors.
However, Liu sees NFTs as a potential revenue source for distillers if they embrace the technology, through royalties every time the NFT changes hands, or as a way for consumers to invest early in a bottle they would not otherwise be able to obtain or afford.
According to a Macallan spokesperson, the Angels’ Share NFT and cask are an independent project with no affiliation with the Macallan. This cask’s whisky will never be bottled as The Macallan Single Malt.
There is also one asset tied to the sale that has yet to be spoken for: Jones’ physical oil painting.
“Trevor has it now in his studio, and I’ve got first dibs on it,” Siriwardana joked. “It depends on my financial situation.” We’ll see if the buyer who purchased the NFT is interested in purchasing the physical piece.”