Penfolds & Blockbar Team to Sell Wine NFTs. Interview with Kristy Keyte, Penfolds Chief Marketing Officer, and Sam Falic, Co-founder and President of Blockbar

Transcript

Nick Abrahams:
Hello, everyone, and welcome to this episode of Web3: From Mystery to Main Street. And as you know, what we try to do is to make Web3 relevant to organizations large and small. Today, I am delighted because it is truly one of the great of how Web3 can help a more traditional organization in a truly remarkable way. We’re going to talk about the Penfolds Wine NFT project, and joining me today is Kristy Keyte, who is the Penfolds’ Chief Marketing Officer. Hi, Kristy.

Kristy Keyte:
Hi there, Nick.

Nick Abrahams:
And also, Sam Falic who is the BlockBar founder and president. BlockBar is the Web3 technology company that worked with Penfolds on this amazing project. Sam, thanks for joining us.

Sam Falic:
Thank you for having me, Nick. Really looking forward to it.

Nick Abrahams:
Kristy, first up for you. Amazing project. Could you give us a little bit of the backstory of the Penfolds NFT project?

Kristy Keyte:
Yeah. Penfolds and NFTs, new news, for sure. We’re really excited about this one, and mainly because it’s a new growth platform for us, a new way for us to interact with consumers in a wide new world that we’re still learning about.

Kristy Keyte:
What we’ve done first up is joined forces with Sam at BlockBar. Sam and the guys there have been such great partners for us at our first crack of this. We have done two drops. Our first drop was a barrel of Magill Cellar 3 wine, which is a really exclusive scarce product that we have not available at retail level, not even available at our cellar door. We make 10 of these barrels. So 10 to 15 maybe a year handcrafted by our chief winemaker Peter Gago. We saw this barrel as an NFT. The entire barrel has not been put into bottle yet. So that was our first drop.

Kristy Keyte:
It will be put into to bottle eventually, and that will be broken to 300 NFTs at that point down the track. So we sold that as one NFT. Our second drop was like, how we take what we did first time around and create something a bit different? And we launched into gifting, which Sam’s business at BlockBar created a wonderful gifting platform. So we’ll be the first to have a go at that. And again, using Magill Cellar 3 barrel concept, but this time it had already been bottled. So it was 300 NFTs this time off the bat through the [inaudible 00:02:52] platform, which was an excellent way to do it. And of course these offerings are not only wine, but they’re wine plus experiences. They’re wine plus experiences plus personalization. That’s our first go at it. It’s really exciting.

Nick Abrahams:
It sounds fantastic. I guess what was the genesis of it? Were you on the marketing team sort of sitting around one day sort of sharing your bored apes and thinking we got to get under this. This crypto punk thing is just right for Penfold.

Kristy Keyte:
Yeah. I tell you, NFTs have been floating around the marketing space for a little while now. We’ve probably been thinking about what to do here for the last six months. A lot of what you see out there is more around digital artwork, collectibles, things like that. So we were considering what to do. We have a number of local partnerships and collaborations that we’re considering. And then yeah, we spoke to Sam at BlockBar and worked out actually tying something to a real product was a great first step for us. So that’s where it started. And then it’s more about working with Sam and the team around what is the right offering to put in here, which is where we came up with the barrel concept.

Nick Abrahams:
And Sam, we’ll hear a little bit about how that all worked in just a moment. But just one last one. Kristy, so what happened when you pitched this at the senior leadership team? Were people like, “Oh, Kristy’s been drinking too much of the product”? Or did they embrace it? Did they like the idea?

Kristy Keyte:
You know what? They embraced it. They embraced it. There’s a little bit of, “Can you tell me what an NFT is again?” But most people, they know what it is and Penfolds is innovating. It’s really at the core of what we are about, and we have a positioning and this is born really from our founders Mary and Christopher Penfold back in 1844, who came to Australia for vine cutting and planted it in earth that had never seen a vine cutting. And that is unwavering self-belief. And these guys were pioneers at the time. And then over the years, we continued to push boundaries. Penfolds Grange was a completely new concept to Australia at the time back in 1951, a completely new way of wine making.

Kristy Keyte:
And over the years, we’ve done new and interesting things. We recently moved California wine under Penfold. So 20 ago, someone with the foresight on our wine making team decided to plant vines in California. The first time, a big brand like Penfolds has ever done anything like that. We launch a champagne out of France and did a collaboration there. The first time that’s been done. So when we go to management and talk about doing things for the first time, they are open to it, which is excellent. It’s gone well. More on that later, but it’s gone well and it gives us all confidence.

Nick Abrahams:
It’s fantastic. Those stories are great because with organizations, you really do need to have that openness to innovation. And the way you’re planting in California and involved in France, we may see Penfolds being the first to plant in the metaverse. We might hear a little bit about that. Maybe a couple months’ time. You heard it here first.

Kristy Keyte:
Yeah, that’s right. You’re on to us.

Nick Abrahams:
So Sam, let’s talk about the technology. Someone like you and your organization is critical for Kristy and her team. The teams that take these sorts of chances really do put their jobs on the line in some respects. So it’s wonderful to have a great technology partner. Can you tell us a little bit about the business that you found in BlockBar to what it does and how it works?

Sam Falic:
Yeah, for sure. So the way we describe BlockBar is the world’s first direct to consumer NFT marketplace for wines and spirits. When we looked at the NFT marketplace or the NFT industry as a whole about a year ago, we were looking at an industry that was loading. Yet, it still seemed like it had a lot of obstacles for entry for a lot of regular, everyday consumers. Where ultimately, someone who’s interested in participating in Web3 or buying an NFT, you have to create an exchange, which is not easy. Then you have to somehow link a wallet and then ultimately, you end up logging into a website that you’ve never used before buying art from an artist you’ve never heard of before and paying in crypto where there’s not a lot of customer service or customer support if something goes wrong.

Sam Falic:
So it’s pretty intimidating for an older demographic, a less tech savvy demographic. So from the onset, our goal was to simplify NFTs, make it approachable and attainable for the masses. Our goal was to sell NFTs directly from luxury brands. And we saw such power in the simple technology of non-fungible tokens that we didn’t want it to just be a marketing play. We wanted to utilize the NFT technology to solve an actual problem in an industry and to improve an industry. And really, Kristy is being modest. She was an incredible partner to work with from the start. She understood immediately after the presentation. Her team was amazing to work with. Very efficient. They trusted us along the way, and it yielded incredible results. But I’m not sure if you have any specific questions about the technology or how we use it, but happy to talk about that as well.

Nick Abrahams:
Yeah. Why don’t we drop into that a little bit? I guess firstly, for a lot of people, NFTs are something of a foreign concept. Maybe just a little bit about the NFT technology and then about how does your solution work? What’s the actual proposition when I go and I buy one of these NFTs? How does that work?

Sam Falic:
Yeah, of course. Well, for people who don’t necessarily know what an NFT is, it stands for non-fungible token. At the root of that acronym is the word fungible, which means interchangeable and indistinguishable. So a great example of a fungible physical good that people are familiar with is poker chips. Where if you have one poker chip and I have one poker chip, we can exchange those poker chips. They’re virtually indistinguishable from one another, and that’s what makes it interchangeable. When you think of non-fungible, a great example of a non-fungible physical good would be artwork, for example, the Mona Lisa or real estate. And if you have anything that’s a non-fungible asset, in order to prove its value, you’re going to have to prove that, number one, that it’s authentic. And number two, that you are the rightful owner.

Sam Falic:
So the way you do this with real estate is through deeds and titles. The way you do this in the digital world is through tokens, which means proving authenticity and proving ownership through a public digital ledger called the blockchain. So in very simple terms, an NFT is a unique one of one asset where authenticity and ownership is proven through a public digital ledger called the blockchain.

Sam Falic:
A little bit more about our solution. What BlockBar does is we sell NFTs directly from luxury brands in the spirits and the wine industry. Each NFT is backed by an actual physical product and a consumer has the digital version of the physical product. And at any point, they could resell it on the platform, gift it to loved ones across the world, or at any point exchange the digital version for the physical version. So in very simple terms, someone who has never heard about NFTs or wants to know anything about NFTs, the consumer owns the physical product. BlockBar stores it for them for free, and then we issue them a digital version with acts as proof of authenticity, verification of ownership and the right to have the corresponding asset delivered.

Sam Falic:
So an easy way to think about it is we operate like a traditional e-commerce platform where you hear about a product, you buy it online in BlockBar. You’re able to pay through either cryptocurrency, wire transfer or credit card. Then you have the option of having the physical product shipped to you immediately. But now you have the added bonus of having that product stored for you by professionals in a temperature controlled facility and then you can have it delivered on demand.

Nick Abrahams:
Fantastic. And I imagine having the name Penfolds behind it gives people that trust that, oh, well, the wine will be good and it will be kept at the right temperature, et cetera, until I decide to redeem it. So Kristy, you mentioned the idea of gifting and so forth. Can you give us a sense of how’s the project gone? And also, Sam talked about this. This has been designed for people who aren’t necessarily buying things in crypto or buying NFTs regularly. Can you talk a little bit about the target market and who is it that’s buying these, and how’s it gone?

Kristy Keyte:
Yeah. It’s been a success beyond our expectations, Nick. We sold that barrel [inaudible 00:12:13]. It’s 130,000 USD. It’s not cheap. That sold in under 12 seconds.

Nick Abrahams:
Wow. You can do with those sort of numbers.

Kristy Keyte:
That’s right. And then our second drop of the [inaudible 00:12:30] platform, that sold in under 10 hours, which I believe, Sam, was a new record for that level of drop. So that was a great success as well. This time, it’s 300 NFTs. Those were each separate [inaudible 00:12:52] USD each per bottle. So for that to sell out so quick as well, we’re just blown away. It’s been a success in that respect. When it comes to gifting, it’s really interesting actually. We loved this concept of gifting NFTs because not only is it a new and interesting way to do gifting, but gifting is really important in the world of luxury wine. And in fact, the number one or two reason that consumers get into luxury wine in the first place is because it’s been gifted to them by someone. And they have that moment of trying a beautiful wine and they can’t turn back because it just completely blows them away.

Nick Abrahams:
You’ve got them hooked. Oh, now we’ve figured out what you’re doing.

Kristy Keyte:
That’s right.

Nick Abrahams:
It cost me a lot of money over the years. [inaudible 00:13:45].

Kristy Keyte:
Yeah. As soon as you get that gift, you’re hooked after that.

Nick Abrahams:
I’m not going back to a $15 bottle of wine.

Kristy Keyte:
That’s right. Well, you pick your moment and we’re all for the everyday wine moment, by the way. We’re not all about-

Nick Abrahams:
Of course.

Kristy Keyte:
[inaudible 00:14:01] and drinking that on a Wednesday night. There’s absolutely a role for the $15 wine and we have that in our portfolio. But yeah, luxury wine in particular, which we sort of categorize anything [inaudible 00:14:17] dollars. You start to move into that luxury wine category. So we as a brand, we have aspirations to be a global luxury icon. I argue that we are a wine luxury icon at the minute, but when we talk about being a global luxury icon, we’re talking about aspiration like Mercedes, like Gucci, like Rolex. So it means that your product is more than just a product, it’s an experience and it brings something to the moment. And again, gifting is beautiful for that because Penfolds is known for marking the moment. Weddings, babies, significant birthdays, all of those types of things are perfect for gifting. To cut a long story short, that is why we love this gifting program. It’s excellent.

Kristy Keyte:
And just one other thing, just onto what we were talking about before with blockchain and authenticity. That is really important for us and for the wine industry. And particularly if you’re an investor in wine, because wine over the last few years has really been gaining traction in that space. So being able to have something in the blockchain and provide authenticity is an excellent thing. And Penfolds in particular has had great growth on the secondary market in the last few years. A bottle of 1951 Grange, which is the first vintage Grange recently sold for $150,000.

Nick Abrahams:
Wow.

Kristy Keyte:
That’s Australian dollars for one bottle. I think when I first started on the Grange three years ago, we got very excited because we cracked a hundred thousand dollars for that bottle. In the last three years, it’s gone a hundred. Then we had like 120,000, 130,000 and now recently 150,000. A full set of Grange recently sold for 400,000 dollars. So the concept of using NFTs for trading is a really good one. It actually is. So we’re excited about where that can take the industry and Penfolds.

Nick Abrahams:
That’s amazing. On the trading side, I know it sounds like the gifting was sort of the most important drive, but obviously the trading is becoming significant. I love the vision of Penfold as that true luxury brand. You can sense that’s where it’s absolutely at and heading towards. But just with the trading side of things, I mean, if someone was listening to this now and thinks I wanted to buy an NFT of a Penfold, where could they go? Is it available on open seas or how would they do such a thing if they could?

Sam Falic:
Yeah. So all of our items are listed on blockbar.com, where we have a marketplace where you could filter by category, you could filter by price point. You could see all of the tremendous Penfolds bottles that are available there. We’re also built on Ethereum. So our products are also automatically listed on OpenSea. So consumers are welcome to go and purchase on OpenSea or on blockbar.com. On our website, we have the added bonus of having the ability to pay with Fiat. But for us, we don’t matter where the transaction happens. Again, we’re just happy that we’re working with such a prestigious brand and being able to solve a problem for a lot of these consumers.

Nick Abrahams:
Right. And if people were to buy it, I encourage everyone to go straight to BlockBar and buy out big. But how hard would it be for someone if they bought an NFT to then gift it on? Is that a relatively seamless process?

Sam Falic:
Yeah, it’s extremely seamless. One of the great things about this as Kristy was saying, wine is such a tremendous gift, whether it’s celebrating a wedding or buying it to celebrate a future occasion. But when you’re dealing with wine, storing it on your own is a little bit difficult. And then if you have to worry about shipping it to somebody else overseas or worrying about tax implications, or worry that the physical product may damage along the way, those are things that you don’t necessarily think about until you have the physical product. So one of the great things about this gifting platform is you buy the bottle, it’s sitting in the facility stored by experts, and then you could send it as a gift and it’s as easy as sending an email. So the item could be gifted an exponential number of times, an infinite number of times. It could be resold an infinite of times, but the physical product never actually leaves the facility until it’s ready to be consumed by whoever decides to.

Nick Abrahams:
Fantastic. So for those who are watching in, you could be one of the coolest kids on your block by going straight here and getting an NFT to give. That would be certainly something to talk about. I really encourage that. I just wanted to talk a little bit just about the experiences that you also get with the NFT because I think one of the things that we’ve seen with the sort of club feel or the VIP experience that you get, whether it started with Bored Apes and those sorts of tokens, but can you talk a little bit about what are the special experiences which sort of heighten why people might be interested in the NFT?

Kristy Keyte:
Yeah. We’re at the beginning of this journey [inaudible 00:19:44].

Nick Abrahams:
Sorry, Kristy. We just lost you for one moment there.

Kristy Keyte:
Should I start again?

Nick Abrahams:
Yeah. Maybe just start.

Kristy Keyte:
What is going on with my tech? No good.

Nick Abrahams:
No, you’re good.

Kristy Keyte:
I’m supposed to be all about tech. This is my game.

Nick Abrahams:
You’re good now. Perfect.

Kristy Keyte:
Okay. Awesome. Yeah. Experiences. We offer with the first drop that we did, which was the barrel of wine. We offered a personalized tasting with Peter Gago, our chief winemaker. Now Peter is a bit of a celebrity amongst winemakers, if you like.

Nick Abrahams:
He is.

Kristy Keyte:
So access to him is like [crosstalk 00:20:25].

Nick Abrahams:
It’s fantastic.

Kristy Keyte:
It’s really tricky to get. So we are offering a tasting with Peter to run through the wines and talk about that. If you’re at Magill coming to Australia, we’ll host you, take you to the special Magill Cellar 3 at our home. It’s a money can’t buy experience, that one. We also are offering personalization. So the 300 bottles that came from that barrel, we are offering a special personalized park on that gift box where you can put whatever you want on there. Happy anniversary. It might be a date. It might be your name. Anything like that. That’s a really unique thing to have as well and it’s been really well received. Personalization on the up. People love personalization.

Nick Abrahams:
I could imagine. That’s fantastic. It’s sort of what has been the promise of technology for so long and now here it is.

Kristy Keyte:
Yeah. And look, it’s going to get bigger and better, I think as well, when we start to go further into NFTs metaverse and how having access to an NFT might then unlock another experience or an opportunity for you to get access to another product before everyone else. So those are the things that we’re starting to think about moving forward, which is kind of interesting.

Nick Abrahams:
It’s fantastic. I was speaking to a client the other day who was talking about… They had a particular NFT drop, which would then entitle the buyer to subsequent NFT drop. And it was very interesting because they’d come up with the idea that this was just like buying shares in a company and you had an unaffected dividend stream over life. So it’s very interesting the way we are seeing traditional concepts actually morph as a result of the technology. So I guess just maybe one final one for Sam. What do you see as the future of NFTs? Is this a flash in the pan or is this something that is here to stay?

Sam Falic:
No, I think it’s definitely something that’s here to say. I think that right now there’s a lot of noise about it and there’s people scrambling just because they don’t necessarily understand it. But I think that a couple years down the line, this is going to be a very normal part of everyday life. It’s about onboarding more people into Web3 and making more people understand. And that’s one of the great things that Penfolds did with BlockBar on this. Where traditionally, when you think of high end wine, it’s usually reserved for kind of an older demographic. And when you think of NFTs, it’s kind of reserved for a younger demographic.

Sam Falic:
So one thing that we’re trying to do is bridge the entire age cohorts where gen Z, millennials, boomers all understand the product and all understand the offering. It’s introducing high end wine to gen Z, to the younger demographic, and it’s introducing NFTs to the older demographic in a very digestible and approachable way. So I think that this is just the beginning of NFTs and Web3. I think that there’s a ton of benefits that are going to be utilized by a lot of consumers. For example, when you look at this partnership, Penfolds wasn’t just doing an NFT to do an NFT. They could have done that whenever. This partnership was really about speaking to a younger demographic, solving a problem for the already current existing demographic and really connecting with their consumers where NFTs provide the ability for transparency and provenance and interact directly with consumers. Hats off to Penfolds. Such an amazing brand with such a rich history, but also so on board with innovation. Yeah, I think that this is just the beginning for Penfolds and for many companies entering into the Web3 space.

Nick Abrahams:
Fantastic. It is. And in many respects, it’s a marketer’s dream is at the NFT because it’s a real expansion of that loyalty program.

Sam Falic:
Yes, exactly.

Nick Abrahams:
Really, really tight with them. And I guess one of the things which I’m trying to reinforce to people is that everything in the real world is owned. And at some stage in the digital world, things will be owned and NFTs are the way of proving that ownership. What Penfolds has done here is actually have the melding of the physical good with the NFT technology, which is great.

Sam Falic:
Yeah.

Nick Abrahams:
And now Kristy, just a final one for you, which is what advice would you have to other folks at more traditional organizations who might be thinking of somehow involving themselves in NFTs? Have you got any thoughts?

Kristy Keyte:
Well, one thing. If you’re a marketer out there and you are not thinking about NFTs, then you need to start. We are going to have winners and losers out there over the next few years. I think you’ve got to have a go. So don’t wait. Don’t wait for the perfect time. If we’d waited for the perfect time, we wouldn’t have done anything yet. Dip your toe in the water. Have a go. The thing about NFTs is you must be consumer first because you are going to get some real time feedback here. It’s not like you’re selling into the distribution chain, the distributor sells to the retailer, the retailer puts it on the shelf and you sort of wait for the consumer to kick it off the shelf. That is fast tracked. You’re going direct and you’re going to know whether it’s worked or not pretty quick. You’re going to need to adapt.

Kristy Keyte:
So you’ve got to be agile, but that’s why we’re in marketing, to understand consumer behavior and meet the needs of that consumer. So I think the world is an oyster. Get creative, think differently. We get so excited in our marketing department thinking about NFTs, thinking about [inaudible 00:26:29], because really there’s so much out there. So you got to start. That’s the main thing I think. It’s going to be an interesting ride and improving consumer experiences is a great thing. And it’s going to take your brand to the right place, I think. So that’s my advice, Nick.

Nick Abrahams:
That is sage advice, Kristy. It’s fantastic. Well, also, you and the team have been fearless in this because many folks that I speak to about NFTs or metaverse, there’s a lot of hand ringing going on about, “Oh, we’re not sure.” So congratulations to you both because it’s clearly been a great partnership. I really appreciate you coming on today. We’ve learned loads and I think that final message, which for every marketer that’s listening to this, if you’re not thinking about NFT technology or metaverse, then you should get into it. So thank you for spending time with us today. Thank you very much, Kristy. And thank you very much, Sam. We wish you all the very best with this project and your other projects, which I’m sure will be manifest. And I would encourage everyone to head straight to BlockBar and grab those NFTs and start gifting, trading or drinking.

Sam Falic:
Yes.

Nick Abrahams:
Thanks everyone. Appreciate your time.

Kristy Keyte:
Thank you.

Sam Falic:
Thank you all.