Why Blockchain Will Change the Wine Industry

This is exactly what the wine industry needs

It is not a matter of if, but how and when blockchain changes the wine industry

This article was based off my original blog post at Wines & Dimes on August 24, 2016, but updated for the fast changing world of blockchain.

Unless you have been hiding under a rock, you probably know that blockchain at a minimum has the potential to disrupt various industries, and if only the most modest predictions of blockchain’s revolutionary ability come true, it will change almost everything as we know it.

The key question is really a matter of how and when.

To see the potential for the wine industry, let’s first start with a couple basic facts.

First, unlike foods, wines do not carry ingredient lists or any other information outside of the alcohol % on the label unless a winemaker chooses to add such details, which is very rare. Wines can contain all sorts of additives or even artificial ingredients to achieve a certain taste profile.

Second, unlike most foods or commodity products, the precise location of the vineyards used in a wine can have a profound impact on the price of the wine. Small demarcations of even a few hundred yards can be the difference between a $100+ “Grand Cru” bottle and a $15 “village level” wine.

Third, fine wine has recently become the source of extreme counterfeiting. You can read all about it here, here and here.

Fourth, wine typically changes hands multiple times through a combination of producers, brokers, importers, wholesale distributors, retailers and end consumers. Wine is very sensitive to temperature, so every move in this chain has the potential to influence the quality of the product, especially for fine and collectible wine.

Okay, now that we’re grounded on some of those facts, let’s explore a potential use case with blockchain.

Imagine you are at at the grocery store and looking to purchase a bottle of wine to drink tonight, but you are very sensitive to certain chemicals and prefer a wine that has been produced with organically grown grapes…

…well you have three choices: 1) look to find the word “organic” on the label and hope it is true, 2) Google each wine and try to find research indicating it is organic, or 3) pick a bottle at random and hope for the best.

In all three cases, you may or may not get what you are looking for.

Now let’s suppose one of the bottles has a scannable code and with your smart phone you can instantly find out if the wine is organic based on its record in the blockchain. Not only that, but what if you can also see any other details about the wine such as certifications for biodynamic practices, sustainable farming or the amount of sulphur used at bottling. Which wine would you buy?

That is just one use case, but if you extend this example to fine wine and as a collector, you’re now able to see the exact vineyard location of the grapes, the entire provenance of the wine and assurance that it is not a counterfeit. Which wine would you buy?

Imagine as a wine producer, the ability to track every shipment through the distribution channel and retail network to know with 100% confidence where the wine is at any given point.

Imagine as a wine distributor or retailer, the ability to create “smart contracts” such that as certain promotions and sales occur, discounts or sample credits are automatically calculated and applied to the correct accounts.

Those are just a few of the possible use cases with blockchain, and can all be done more efficiently and effectively compared to any other existing technology.

I expect it will be some time before widespread adoption of blockchain occurs in the wine industry, but those early adopters will have the benefit of defining how the changes will occur rather than being part of the disrupted.