My wine collection runs to half a case of sub-£10 claret — if I don’t count bottles of the undrinkable and unthinkable left in the kitchen at parties — but even I could tell it apart from vin de table. So how is it that billionaire wine collector Bill Koch managed to spend $2.1m on 219 bottles of what turned out to be vin de kitchen table?
Partly, it is because his priceless bordeaux and burgundy vintages had been expertly faked in the kitchen of fraudster Rudy Kurniawan, using genuine empty bottles, original corks and meticulously reprinted labels. And partly, it is because establishing the provenance, let alone price, of an asset that lies unseen for decades remains difficult, if all you have is a few uncorked bottles and reference books of old labels. Until now, that is.
A company called Chainvine is using 21st-century blockchain and “internet of things” (IoT) technology to address a problem that is hundreds of years old — and seems to be getting worse. Since 2005, Koch alone has had to bring three major wine fraud lawsuits, one relating to four bottles that purportedly belonged to Thomas Jefferson, US president from 1801 to 1809, but proved rather younger. “Transparency and authentication of the supply chain has long been an issue in the wine industry, particularly the fine wine market,” says Chainvine co-founder Oliver Oram, “so the community has naturally been very supportive of our initiative.” That initiative, as he puts it, is twofold.
First, Chainvine is partnering with winemakers and merchants to put an IoT device and a QR code on each new bottle. These codes are scanned by the vineyard, which adds the bottles to Chainvine’s blockchain database. When the bottles are first sold, the winemaker marks them as in transit. They are scanned by customs agents and government departments as they move along the supply chain. Then sensors in the IoT devices monitor the bottles’ subsequent locations and the conditions in which they are kept, including temperature and humidity. Once in the hands of a merchant, the bottles are scanned again and logged as part of the merchant’s inventory.
Second, Chainvine can access data on older bottles in existing blockchain-enabled wine databases, as its system will work with any ledger. According to Paul Hammond, chief executive of merchant IG Wines, which trialled the Chainvine system, that means “the same information can also be collated from wines stored in clients’ cellars”.
Importantly, the system allows wines to be marked as drunk, preventing the reuse of bottles or labels to fraudulently “recreate” and resell a rare vintage. “Thanks to the nature of blockchain technology, the provenance trail created is immutable,” says Oram.
Investors as well as drinkers should benefit, thinks Ryan Hanley, managing director of blockchain-powered investment platform TokenMarket. He believes technology could make valuations more accurate. “Investment in wine can be depressed due to concerns around provenance; there are horror stories of fake bottles filled with cheap plonk being sold as grand wines. If potential investors can see where the wine was made, when it was sold, for how much, they are in a much better position to make a decision on the true value.”
However, just like a bottle of Domaine Ponsot Clos Saint-Denis Grand Cru 1945 — the non-existent vintage that proved Kurniawan’s undoing — Chainvine’s database might seem to have the right contents, but it still needs a market in which to operate. “Widespread adoption of such a platform will require participation from multiple players,” admits Oram.
Rival technologies could also limit take-up of the Chainvine system. Hanley points out there is already a similar system called WiV that uses a blockchain ledger to record each time a wine is sold and for how much; investors receive tokens that represent the wine digitally. A whisky equivalent is offered by a company called Oak Group One.
More traditional wine investors than the flamboyant Koch — who has had chandeliers and Roman mosaics added to his Florida cellar — might not even see a need for high-tech reassurance. Philip Moulin, fine wine quality and authentication manager at London-based merchant Berry Bros & Rudd (founded 1698), suggests a ledger of provenance could help when buying rare wines at auction. “Blockchain-based traceability will come into its own with secondary market stock,” he says. But drinkers and collectors who buy directly from merchants probably wouldn’t see any incentive to sign up, he concludes: “If dealing with established merchants, buying directly from source, it is largely irrelevant.”
Still, Chainvine thinks its tracking technology should appeal to anyone seeking “frictionless trade”. English winemakers worrying about their post-Brexit exports should be among those raising a glass to that.
Matthew is reading . . .
bad news for the sellers of private jets, yachts, watches, holiday homes and all else advertised within the pages of the FT Wealth magazine: the net worth of the world’s 265,490 “ultra” rich people fell for the first time in three years in 2018, according to data provider Wealth-X. But only by 1.7 per cent. To a mere $32.3tn.
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