In total, the global wine market holds about $1 trillion worth of wine at any given time, most of which is luxury or investment-grade.
The global wine industry is massive, generating $485 billion in annual turnover. Within this market, luxury wines (priced at $30+ per bottle) account for $100 billion per year, while investment-grade wines contribute $10 billion annually.
But here's where it gets interesting: whereas annual turnover is the main driver for many industries, for luxury and investment-grade wines, what matters is the value of the entire asset class at any given time. Think of it this way, the total value is the key factor because it represents the amount of assets that need to be added on-chain, as a result of tokenizing bottles of wine.
To give you a better understanding of this specific segment of the wine industry, luxury wines are typically stored for 3 to 5 years before they're enjoyed. By multiplying the storage time by the annual turnover, this tells us that the size of the luxury wines asset class ranges between $300 and $500 billion. As for investment-grade wines, these are kept in storage from 5 to 30 years, with the average sitting at 15 years, which means their true value as an asset class is close to $150 billion. This brings the total value of both asset classes to $650 billion.
In total, the global wine market holds about $1 trillion worth of wine at any given time, most of which is luxury or investment-grade. These high-value wines represent a significant asset class, one that can be tokenized, traded, or even used as collateral. This perspective shows that the total value of these assets is just as crucial - if not more so - than the annual turnover, highlighting a major market opportunity in the wine industry. A market opportunity that $VIN and the dVIN protocol is strategically capitalizing on.
By adding this asset class on-chain, luxury and investment-grade wines become more accessible to Web2 and Web3 investors that seek to diversify their portfolios with alternative assets. As a result, the market for these wines becomes more liquid, facilitating easier transactions and enabling better price discovery, which further enhances market dynamics and value.
This first step not only enables winemakers to be exposed to on-chain liquidity, but also allows new consumers to access luxury and investment-grade wines.
Additionally, given that this innovation better helps to understand real-time scarcity, it makes secondary sales more transparent. It also creates the opportunity for winemakers to profit from those sales, which can be achieved by programming smart contracts and without the need of middlemen.
As dVIN protocol continues its journey to reach critical mass adoption among winemakers and wine lovers, and as more bottles of wine are added on-chain, this gives rise to solving three major bottlenecks that are costing the industry $30 billion a year, as outlined below.
Imagine a world where the winemaker knows exactly who is drinking their wine, how much is left, and who should be prioritized for future releases. A world where consumer loyalty is recognized and rewarded with guaranteed access to the next exclusive collection.
Through a “Digital Cork” attached to each bottle, consumers claim $VIN provided by the winemaker when they open each bottle. There is a simple mobile action the consumer does to “open” the Digital Cork, send relevant data to the winemaker and claim the $VIN. This in-app experience establishes a direct interaction between winemakers and consumers, eliminating the need for middlemen. The collective data gathered over time will bridge the knowledge gap, empowering winemakers to gain deeper insights into their target audience.
This ability for winemakers to directly purchase consumer data will allow them to understand demographics, have direct consumer feedback and other engagement metrics, which will be beneficial to improve product design and mix go-to-market strategies and enable winemakers to find their true fans.
Customer Acquisition Costs (CAC) in the wine industry average $400 for luxury brands, mostly because there is no effective way for wine brands to advertise. To acquire 25m new customers each year (barely replacement level for the 250m existing consumers), aggregated CAC would be $10B. With $VIN, winemakers pay a fraction of that cost (only and if the consumer claims their $VIN).
Through the use of blockchain technology in association with Decentralized Physical Infrastructure Networks (DePIN) asset tracking and connectivity technology, it’s possible to increase supply chain efficiency and ensure provenance.
By tokenizing each bottle of wine, $VIN allows for a meticulous tracking system from grape to glass, ensuring the authenticity of each product. This tokenization disincentivizes counterfeiting and fraud, and preserves the brand equity of luxury winemakers. By using RFID and decentralized interrogators, bottles can be tracked, and proper shipping and storage conditions incentivized through the use of $VIN. This results in significant efficiencies in the supply chain, as well as the reduction in waste and fraud.
As a result, this model will benefit retailers, restaurants and even some consumers, who will pay a small fee to ensure authenticity and high quality wine.
The use of blockchain technology, particularly Solana, offers a proven solution for inefficient and expensive transactions, through the use of $VIN and stablecoins, mainly due its security, speed and low-cost transactions.
Secondly, once adoption of the protocol reaches critical mass among winemakers and wine lovers, it will be possible to financialize this asset class.
For context, let’s look at wines from the region of La Rioja, Spain. There are rules and regulations in place that determine the criteria to produce Rioja wines. For example, Gran Reserva Rioja (red wine) needs to be aged for at least five years, of which at least two years in oak barrels and at least two years in a bottle. Accordingly, there’s a period of time in which those assets (Rioja wines) cannot be bought or sold. This also means that, at any given time, producers have 5 vintages of Gran Reserva in stock which cannot be traded.
The opportunity lies in registering the value of those assets on-chain (the same way futures operate) so that producers can start using them as collateral for working capital and further increasing the operational efficiency of their business. Similarly, for accounting purposes, this opens the door to being able to register those assets for their real value. This is the top of the iceberg in terms of the benefits of financializing the wine industry.
The growth trajectory of DeFI in Solana, and the support dVIN is receiving for being part of the Giant Unified Market (GUM initiative) launched by Jupiter Exchange, more specifically under the Real-World Assets vertical, are key factors in making this possible
Furthermore, because of the atomization of the wine market, with 30,000 independent winemakers and ten million independent middlemen, more than twenty million inefficient international transactions each year bear a significant cost to the industry
Between counterparty risk, high bank fees, foreign exchange slippage and cross-border settlement delays, nearly $6.10 on each $50 bottle of wine goes to the banking system. In a $100B industry, that’s more than $12B in costs and fees that could be eliminated with on-chain transactions.
The dVIN solution includes, in addition to $VIN, two Non-Fungible Tokens, the Digital Cork NFT and the Tasting Token NFT.
“Soul-bound” Authentic Proof of Experience
When a physical bottle is opened, the owner of that bottle is incentivized to “open” the Digital Cork as well, which burns (destroys) that token and mints (creates) a new, “soul-bound,” non-transferable Tasting Token NFT. Tasting Tokens cannot be sold or traded, and no wallet can hold more than 1 Tasting Token from each bottle.
The Tasting Token has all the same meta-data as the Digital Cork, but is instead an authentic proof-of-experience that the holder has tasted from that unique bottle. The Tasting Token also includes meta data such as the date, time, place and occasion for which the bottle was opened. The owner of the bottle also has the ability to give additional Tasting Tokens (typically up to 12) to friends and family who shared the bottle.
The burning of the Digital Cork and minting of Tasting Tokens produces a treasure trove of important data for winemakers. When Tasting Tokens are minted, the owner also receives an allocation of $VIN.
RWA Digital Twin / Digital Product Passport (EU)
Digital Corks serve as a deed of ownership for a wine bottle and are minted on a 1:1 basis. They are connected to the wine bottle through a unique identifier - like a QR code, and NFC or RFID sticker, or some other method.
The Digital Cork contains all of the details for the specific bottle, including technical information for the wine, winemaker and winery, as well as chain-of-custody and provenance data. The Digital Cork also includes a creative element that the winemaker can use for brand storytelling.
For businesses that sell into the EU market, Digital Product Passports (DPPs) are high on the agenda. The EU has begun to roll out a raft of legislation as part of the Circular Economy Action Plan (CEAP). Within this plan, the Ecodesign for Sustainable Products Regulation (ESPR) dictates that DPPs will be mandatory for all products in specified industries and categories that are sold on the EU market — with certain prioritized industries required to implement DPPs as early as 2030.
DPPs are a tool for collecting and sharing product data throughout a product’s entire lifecycle. A digital twin is commonly associated to the physical product via a data carrier, with the Digital Product Passport being accessible via a smart device application or similar. The data contained within a DPP relates to a product’s lifecycle, components, sustainability and more.
For the luxury wine industry, dVIN Digital Corks act as DPPs to unlock a number of benefits both for stakeholders along the value chain and directly for consumers. From provable sustainability of ingredients and packaging materials; to the ability to trace a bottle (and it’s environmental impact) along the supply chain; to a convenient tool for consumers to authenticate wine, prove and transfer ownership and directly engage with producers.
dVIN’s engineering partner Protokol is a key provider of EU aligned Digital Product Passport solutions for companies of all sizes and stages. Alongside a diverse ecosystem of trusted partners who specialize in everything from regulatory compliance, to product standardization, sustainability, LCAs and more; Protokol and dVIN deliver a holistic Digital Cork/DPP solution for the luxury wine industry that ensures compliance, facilitates circularity, enhances the customer experience and unlocks new opportunities for growth.
When you open a great bottle of wine, it was likely made 10 years ago by someone 10,000 miles away.
dVIN makes the wine asset class more transparent and accessible.
Exploring the complex world of wine can be a daunting task for both consumers and winemakers. The challenges faced by customers in selecting the perfect bottle, coupled with the hurdles winemakers encounter in effectively reaching their audience, are the industry’s most pressing issues. This disconnect between buyers and sellers becomes even more obvious as new generations enter the game, especially given the significant differences between their buyer personas. We are seeing a shift in drinking demographics and behaviors that are unique across generations. Yet without data, winemakers are forced to adopt a one-size-fits-all approach that falls short of effectively engaging their audience.
Acquiring new customers is challenging for winemakers due to the heavily intermediated distribution channels that distance them from the end consumers, preventing direct communication and relationship building. Additionally, the vast selection of wines and brands creates a highly competitive market, making it difficult for individual winemakers to stand out and capture consumer attention.
This task is even harder when taking into consideration that methods to acquire customers are limited and expensive. For example, wineries cannot advertise on social media and mainstream alternatives (TV/Media) are either too expensive or ineffective.
On the consumer side, this fight for consumer attention often leads to consumer paralysis when attempting to learn more about wines.
Another consequence of this lack of consumer data is that, even when wine is sold, it’s impossible to track the real scarcity of any given label and/or vintage. To put this into context, let’s imagine there’s an exceptional edition of 20,000 bottles of wine by a small producer in France. As soon as they are sold and dispatched by the winemaker, it’s no longer possible to understand how many bottles have been consumed and, as a result, the real supply remaining. Now let’s imagine that half of those bottles have been opened. Without access to that real-time information, it’s not possible to determine the real price of that wine in the secondary market.
Chain of custody in the wine industry supply chain lacks transparency, which increases the chances of fraud, counterfeit and improper shipping and storage. In fact, on average, 1 in 10 bottles are stored or transported without proper conditions, which alone is costing the industry $10B on an annual basis. Fraud and counterfeiting issues make the market unattractive and limit the size of the secondary market for wine sales by keeping investors away.
When you open a great bottle of wine, it was likely made 10 years ago by someone 10,000 miles away. Accordingly, and largely driven by at least four intermediaries involved in the trade, the luxury and investment-grade wine industry sees approximately 20 million small cross-border transactions annually. This effect gets compounded whenever bottles are traded in the secondary market.
The reality is that these transactions involve significant counterparty risk, banking fees and foreign exchange slippage. Most importantly, this is an expensive problem for the 30,000 small wineries and over 10 million small middlemen. On an annual basis, it represents $10B in inefficiencies that could be saved by moving the industry on-chain.
