Presented by Libation Labs
Winemakers understand sustainability. Turning grapes into fine wine requires a specific set of particular environmental circumstances. Maintaining ecosystem integrity and keeping the soil healthy means higher-quality wine grapes.
“To wine brand owners and grapegrowers, sustainability is a key tenet of running a vineyard,” says Andrew Allison, CEO, and Founder at Libation Labs. “Good sustainability practices allow you to not only increase your bottom line but also increase the top line as well, by giving you a better product. You can see the direct result in the fruit with how well you treat the land and your sustainability practice overall.”
Allison’s company, Cuvée Collective, is launching a wine NFT members club at the end of July, taking a tradition-bound, luxury product into the very modern digital space. But why marry wine and NFTs when a big part of the conversation around blockchain is its questionable environmental impact? The energy-intensive process of blockchain transacting and cryptocurrency mining generates an extraordinary amount of carbon dioxide. In 2020, Bitcoin mining in the U.S. alone produced nearly 40 billion pounds of carbon dioxide. But Allison is tackling the reputational challenge head-on, by building a sustainability strategy into Cuvée Collective’s mission and its NFT minting from the start.
“We’re making wine NFT collections for iconic and collectible wine brands from Napa and Sonoma Valleys,” Allison says. “For them, sustainability is a core value. We want to contribute positively to wine country, ensuring family-owned businesses can stick around for several generations to come. We need to bring that same level of effort and thought around the environmental impact.”
His team is working with Kevin Wilheim, CEO of Sustainable Business Consulting, to scope and create an action plan. The central concern: choosing which blockchain to build the Cuvée Collective business on. After a search for a company that considers and mitigates its carbon emissions, they ultimately partnered with Flow Blockchain by Dapper Labs.
Cuvée Collective is offering a utility NFT, in which members gain access to experiences in Napa Valley: access to private wine allocation, tailored visits to partner wineries, curated events and so on. A Deloitte energy consumption review found that on the Flow blockchain, minting each of those luxury NFTs uses less energy than a Google search or Instagram post. That’s because Flow ensures the validity of its transactions with the proof of stake model, which requires significantly less energy and is less carbon-intensive than the proof of work model, which blockchains like Bitcoin use. Proof of work is a consensus mechanism that asks users to validate cryptocurrency transactions by tackling a complex mathematical problem. Cryptominers throw an enormous amount of computing power into their mining operations, so the carbon footprint of proof of work is enormous and growing.
Proof of stake, in contrast, is basically automated. Miners buy into a chance to be chosen as a validator of the next block of currency, and are rewarded with transaction fees from the block if their stake is chosen, in a random selection.
In addition, Flow’s unique network architecture is also more efficient. Because of this, overall energy use won’t increase significantly, even if activity increases by 100x or more — which means the per-transaction energy footprint decreases over time.
“It’s important for Cuvée Collective to work with a blockchain that has considered sustainability first,” Allison says. “It’s critical to the overall wine brand partnerships that we bring the best Web3 sustainability plan to the table, to make sure that we’re matching the wine brands’ sustainability plans in their vineyards and at their wineries.”
Sustainability was key in their choice, but several other things stood out when tapping Dapper Labs, the owners of Flow, Allison says. For instance, user-friendliness, in a notoriously high-tech space, is important. They saw this in the company’s NFT project, NBA Top Shot. Dapper Labs designed it to be easy to access for people who were completely new to cryptocurrency and NFTs. Sports fans don’t need to know anything about blockchain or crypto investing to use the marketplace.
The parallels there to the general wine consumer audience ring true for Allison. “I don’t believe that the wine consumer in general is likely in Web3 today — it’s still relatively small compared to all the people in the world that do consume wine,” he says. “The Flow blockchain is going to be the easiest, safest, most sustainable place for us to onboard new consumers into Web3 that aren’t there today.”
The ease of on-ramping is another way to address the education curve that many winery owners are facing — the unfamiliarity with Web3 that’s common to the industry. The opportunity feels incredibly new to wine brand owners — and especially intriguing as a way to reach a younger demographic.
Wine clubs, especially for more established brands, are aging out. Reaching the portion of Gen Z that’s come of drinking age, or affluent millennials, is something they still haven’t cracked at scale. But with a curated NFT collection, they not only gain a source of incremental revenue, but also a direct-to-consumer conduit for the demographics that they’re struggling to reach, or haven’t reached yet.
“They’re excited to partner on a new initiative that packages unique opportunities in a way their current customers will understand and new consumers can discover,” Allison says. “And being able to speak to sustainability, and the choices that we’ve made around sustainability is very important to those conversations.”
Gen Z and millennials are particularly aware of how the brands that they interact with impact the environment — and they use their purchasing power as part of their commitment to those values. They want to support businesses that put their money where their executive summary is.
The ultimate goal, Allison says, is to become a carbon negative business. The company will start generating revenue in Q3, with the presale registration closing July 15 and the launch planned for the end of the month, and from there, the goal is to start investing into the carbon offsetting that they aim to have as a key foundation of the business.
“From an aspirational standpoint, we hope to be the place that brings the wine industry into Web3, though we think there’s a lot of education and evangelism that needs to be done,” Allison says. “We need to get rid of the assumption that people don’t care about sustainability, because overall sustainability actually increases business. Sustainability elevates all aspects of your business.”
For more information, visit www.cuveecollective.com.
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