Are NFTs the next big thing for high-end whisky collectors?
Two entrepreneurs that were behind a record-breaking $2.3 million sale of a 1991 The Macallan cask earlier this month certainly think so.
The double-size cask, a first-fill sherry butt distilled at The Macallan, which currently holds about 600 bottles of 30-year-old whisky, was sold at auction. It included a digital asset from artist Trevor Jones called “The Angel’s Share,” which is an uncompressed scan of Jones’ oil painting as well as an animated component.
The sale was a partnership between Origin Protocol, a company that drops NFTs, one-of-a-kind digital assets that a person can buy or sell in the Ethereum blockchain, and Metacask, a marketplace for whisky cask NFTs. Origin was part of the $11.7 million sale for the musician 3LAU and the $760,000 on the Charlie Bit Me video, has worked with controversial YouTube star Jake Paul and recently brought on Paris Hilton as a strategic investor.
Nim Siriwardana, co-founder of Metacask, said the fundamentals of an NFT cask auction are similar to a traditional cask auction. Private buyers trade casks that are stored on site at a distillery or under bond elsewhere, and then depending on how the liquid ages, hold on to it for decades as the value of the actual liquor of the cask appreciates (although, given the angel’s share, there will less liquid and fewer potential bottles as those years go by). Bottling is done by the collector and those bottles are kept or given away, or it’s sold at a traditional auction house like Sotheby’s.
“The owner had gone to Bonhams and received a valuation for it until we can along and said let’s do this NFT,” Siriwardana said. “When you buy this NFT, you are now the owner of the cask. It’s a slightly different concept to what you find with art, where often the asset itself is the NFT. Here the NFT is also the contract that you own the cask.”
Earlier this year, Bonhams had appraised the cask without the artwork between $1.1 and $1.2 million, Siriwardana said. Metacask started off the bidding for this cask with the digital artwork at $1.75 million.
Matthew Liu, the cofounder of Origin Protocol, sees a few different benefits of NFTs for high-end consumer goods like whisky casks, but also high-end handbags or watches.
The first is the ability to show off your purchase to the world — for those that are into that sort of thing.
“You have this very prized possession of this rare whisky that you can now show off on a number of NFT platforms, such as Origin, OpenSea, on a blog or social media. There’s an additional social element. This industry hasn’t really embraced technology in the past, and it could drive a lot more interest in high-ticket options,” Liu said. “When you buy something in the material world, you can only show it off to a couple dozen people or put it in a museum or gallery.”
A less showy application is verification. The NFT can prove the provenance from the original creator, and keep track in the blockchain every time it changes hands.
In the current non-techy system, brokers keep track of privately-owned whisky casks, Siriwardana said, and can fudge records and double-sell assets. Every cask sold by NFT would have a unique reference number that includes information about how it changed hands, but could also include information like when the whisky in the cask is tested by distilleries or experts.
“[The information] would be in the metadata of the NFT itself,” Siriwardana said. “It would be difficult to execute a double sale sort of scam, because it would be easy for a broker to check this information to make sure 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 apiece, each one accompanied by its own NFT revolving image of the bottle that acts as a counterfeit-proof certificate of ownership — and a way to flaunt the purchase on social.
William Grant and Sons’ head of luxury Will Peacock told Forbes contributor Bernard Marr that NFTs were a way to deepen consumer engagement as well as reach new collectors.
But Liu also sees NFTs as providing a potential revenue source for distillers if they embrace the technology, through royalties every time the NFT changes hands, or a way for consumers to invest early in a bottle they couldn’t otherwise obtain or afford.
A spokesperson for The Macallan said the Angels’ Share NFT and cask in an independent project and has no affiliation with the Macallan. The whisky from this cask will never be bottled as The Macallan Single Malt.
There’s also one asset tied to the sale that hasn’t been spoken for: the physical oil painting by Jones.
“Trevor has it now in his studio, and I’ve got dibs on it,” Siriwardana said laughing. “It depends on if I can afford it. We’ll see if the buyer who bought the NFT is interested in acquiring the physical piece.”