🔨

What We’re Building and Why?

Empowering Wine Commerce with Technology

💡
We’re on a mission to enable the wine industry with tools and technologies that add value to the customer experience and the supply chain

Building in public

We’re opening the “doors” to our build process. From the beginnings of our problem discovery and uncovering our the opportunities we find, through to our prototyping and software development. This project is open to your eyes and your feedback.

Product Strategy

Welcome to our product strategy. We’ve summarized the results of our research, identifying our starting point and where we can add value to the wine industry
🗞️
Wine is one of the oldest industries in the world, starting around 6000BC. The last 20 years, wine has seen a digital revolution, starting with trading marketplaces, culminating in boutique crafted, NFT-linked bottles where software and technology adds significant value to the perceived value of a wine. The industry is changing - sellers create value by incorporating authenticity and provenance measures, story telling, vineyard information, meet-the-winemaker wine-tasting, community engagement and a myriad of opportunities to add up to, and sometimes more than 100% of the bottle value as additional revenue, take Penfolds as an example. The wine flavour, aroma, and general quality is, and hopefully always will be table stakes in the success of a wine label. However, we believe technology and blockchain can increase the value and utility of wine assets. Palate is a platform that enables wineries, distributors and end-users with the ability to link a wine bottle to the digital world on the blockchain.

Introduction

NFT's digitally represent ownership and their technology introduces new mechanisms of provenance, ownership, authenticity, business models, trade and supply chain management. The wine industry values many of the above-mentioned characteristics though the industry's largely missing an enabling technology.

NFT's are blockchain technology which represents a significant hurdle for businesses to adopt. Palate's platform will unblock technical hurdles by being compatible with a companies regular tech stack.

Our focus in 2022 will be

  1. learning our target market by prototyping and customer feedback
  1. building the first iterations of our product and receiving feedback
  1. signing our first customers

Goals

Whilst our ambitions are high in the sky, we’re focused on validating our value proposition and debunking our assumptions.

Our key areas of focus for 2022 include

Principles

The following are guiding principles we use to evaluate and priortize Palate's activities in its infancy as a product, these are subject to change when scaling becomes a concern:

How do we make a product with real traction, solving a real problem that will stand the bulls and bears of crypto?

What problems are we looking to solve?

There are a number of problems we’ve personally experienced, having an understanding of blockchain and NFT’s, we thought about ways to solve them:

1️⃣
Wine Futures, also known as En-Primeur is the ability to purchase wine before its bottled and released to the market. Purchasers can buy futures 2 - 3 years before release. We’ve identified a number of interesting problems 1. Purchasers are sent an email confirmation/receipt of purchase and then wait for the release to receive wine. As a purchaser, you can lose the email, you can forget what you bought and which company you bought from, and you don’t easily know the total value of your purchases 2. Purchasers aren’t aware of market updates that effect the price of their purchase. For example, you purchase 2020 vintage and 2021 vintage receives 99 points, the previous vintage will be worth more. Or in the unfortunate scenario there is hail in the vineyard and the vineyard loses their crop, the scarcity of their wine will increase their value 3. Purchasers can’t easily trade their email certificate of ownership 4. Loyal owners/purchasers may or may not be allocated following vintages 5. Vineyards pay for distributors/services to sell their wine, running their own en-primeur sales/releases is often out of their knowledge/skills. Therefore, vineyards don’t realize the full value of their wine and don’t realize profits after their wine is first sold 6. Vineyards can experience events that devastate their yearly revenue such as frosts, storms, scorching heat, excessive rain fires that taint the grape taste, virus’s that kill the vines in their vineyard. Due to global warming, these events are increasingly frequent. Weather derivatives are widely used in adjacent industries yet rarely used in viticulture
2️⃣
Wine purchasing: many wines from the worlds famed wine regions are almost impossible to buy. Investors and traders buy through connections and leave many passionate wine drinkers out of the picture. Furthermore, many of these wines are never drunk For the buyer: how can I buy a bottle of wine and be guaranteed allocation of another bottle next year? For the seller: sometimes the wine is never drunk, sometimes it’s sold and traded. Winemakers want their wine to be enjoyed
3️⃣
Wine provenance and authenticity: merchants, shops and distributors provide a guarantee to customers the wine comes from the vineyard. How true is it? Blockchain provides provenance from the source through the supply chain to the end user. Buying wine from auctions or marketplaces can’t guarantee provenance
4️⃣
Wine trading: wine auction houses in Australia charge up to 20% to sell, 20% to buy as well as a cellaring fee. Blockchain based p2p buying and selling can reduce the price
5️⃣
Wine industry: some winemakers are selling their wine’s as NFT’s currently. Neldner road from Australia’s Barossa Valley sells barrels directly to the public. I believe the graphic devalues the wine, and a huge improvement can be made
6️⃣
Asset liquidity: increasing wine liquidity globally is a positive-sum game. Wine is not similar to an NFT itself. Wine cannot be consumed digitally unless users trade the rights to a wine which is stored in a storage facility

Why now?

By examining the history of wine from 5000 B.C. to now as well as the developments in the last 20 years, the wine industry is now seeing technology delivering value to

Wine History

Carbon dating confirms the first wine production around 5000 B.C. - the wine industry is old, an industry that’s seen slow and gradual progress from first storing wine in Amphora clay pots, to transporting wine in wooden casks around the 2nd century AD, to introducing glass bottles in late 1600’s to the bottle we know having been introduced in the early 1900’s.

Wine Industry

How has the wine industry changed over the years?
  1. Consumption - grapes were grown by the Greeks and Romans, wine was made to be drunk, to get drunk. Without transport, wine was consumed wherever it was grown/produced
  1. Location became important. The Romans, understanding the quality of wine from their homeland, found good quality grapes in Bordeaux around the 1st century, and then a few hundred years later in Burgundy
  1. Brands started in the 1700’s with the famous champagne houses such as Ruinart, Tattinger, Moet et Chandon, and Veuve Clicquot, brands that still dominate the market today
  1. Classifications such as Grand Cru (Burgundy, 12th Century), Grand Cru Classe (Bordeaux, 1855), VDP (Germany, 1910), and (DOC (Italy, 1963), were introduced as quality standards
  1. Packaging bottle weight and label design affecting the quality and price perception
  1. Promotional activities labels, awards, shop or website placement affecting the buyers value perception
  1. Specialisation such as organic and biodynamic, growing/making techniques that respect the environment or wines that are expressions of terroir
  1. Financial Instruments weather derivatives investigated in 2007 to assist icewine producers in Canada (source)
  1. Technology we are now starting to see examples where technology is a factor for wine purchasing

Wine Infrastructure

Here we focus on the internet years
  1. En Primeur, selling wine from grapes in harvest
  1. Wine-searcher, 1999, specialist wine database, the google of wine
  1. Liv ex, 2000, built a raft of wine trading technologies
  1. Cellar Tracker, 2003. stores information about wines and wine collections
  1. Vivino, started in 2010, first to log, track, and review wines drunk. Now acts as a wine recommendation service & shopping aggregator
  1. Ecommerce infrastructure like Shopify created a faster and cheaper go-to-market strategy for all sizes of distributors
  1. WiV technologies, 2018, use blockchain technology to create a secure global asset register and enable a more transparent, sustainable, and decentralised wine investment business
  1. Blockbar, 2021, NFT marketplace for luxury liquor brands, each NFT corresponds to a physical bottle and consumers can exchange a digital version for the physical

Sources:

Lessons learned

💡
Value over vanity!

From the evaluation of companies working with wine and leading technology, there appears to be 2 types of companies:

  1. Companies using technology/NFTs as a marketing tool for buyers in a new market, or buyers with cryptocurrency to spend
  1. Companies using technology/NFTs as a utility to solve an underlying problem in wine-commerce or supply chain

Our strategic focus lies in the latter.

Current Opportunities

During recent wine purchases/wine forays, our team noted the below issues as