High end cognac brand Hennessy has partnered with blockchain platform BlockBar for the sale of Hennessy 8, a limited edition craft blend that has been five years in the making and celebrates Hennessy’s 250 years of history. Through the partnership, consumers will be able to buy a non-fungible token (NFT) equivalent for two of the cognac bottles and redeem it for the physical product or trade it on a secondary marketplace.
Hennessy, part of the LVMH group, has to deal with the same challenge as any luxury name whose value lies in the brand: counterfeiting. With bottles selling for over $1000, it is understandable that the cognac producer values protecting the authenticity of its brand.
The cognac is produced in France, and over 99% is sold in exports. With so many middlemen, supply chains and secondary markets involved, the opportunities for fraud increase, and keeping control over who has the right to sell the product becomes more challenging.
BlockBar’s solution, one of the first direct to consumer NFT solutions in the wine and spirit industry, is taking on part of this challenge. At least for now, the project only applies to two of the Hennessy-8 bottles, of which there are 250 in total. The bottles are stored in a secure facility in Singapore managed by BlockStart and each has a corresponding NFT. The NFT’s can be purchased in a designated marketplace through credit card or cryptocurrency. Consumers can then choose to redeem it for the physical product, keep the NFT and redeem it in the future, or trade it on the marketplace.
The owners of the two NFTs for bottles numbered 1 and 250 will also be invited to visit Hennessy’s estate in France. The two NFTs are available to a single buyer at a price of approximately $226,450 each.
BlockBar launched in October of last year and has already partnered with exclusive spirit brands, including Glenfiddich Scotch whisky and Colombian Dictador Rum.
The solution enhances the scarcity, authenticity and secondary market trading of the items which helps maintain a high brand value. There’s always some risk in dealing with a startup for a luxury brand such as Hennessy. But the flip side is the ability to use NFTs as a promotional tool.
The solution has the potential to be a useful tool for alcoholic beverage collectors and enhance the whole consumer experience of purchasing a bottle.
Meanwhile, blockchain has been used to prove the age of Scotch whisky and for wine bottle closures to prevent counterfeits. In the wine industry, Crurated launched a membership-based wine service using blockchain and the Australian agritech firm Entrust is using Hedera Hashgraph’s solution to verify wine bottle authenticity.