NFTs: of what use to food & drink brands?
Opinion
Whether you love them, loathe them or you’re totally baffled by them, we need to talk about NFTs.
Why? Because they’re about so much more than just Madonna’s vagina.
If you haven’t read the news, know that Madonna has just dropped a triptych of NFTs called Mother of Creation, which feature a computer-generated 3D nude image of her giving birth to robot centipedes amongst other things. The collection was a collaboration with Beeple – the guy whose NFT sold at Christie’s for $69 million in March last year (2021).
In part thanks to Madonna, NFTs are likely to attract even more attention in the near future.
(If you’re not sure what NFTs are, read this handy summary before reading on.)
Madonna aside, do NFTs hold any value for food and drink brands? Well, there are 4 potential use cases which seem to be emerging, as….
1. A collectible or artwork that can be bought and sold
Imagine a big brand collaborating with a well-known personality to create and sell a limited collection of NFTs, donating the proceeds to a good cause. The NFTs would essentially act as a CSR and marketing tool, wrapped up into one. The Madonna x Beeple example falls squarely into this category, but perhaps a more relevant case study is Yoplait. Last year, the yoghurt brand teamed up with Olympic bronze medal-winning skateboarder, Sky Brown, to launch an NFT collection including watercolours of her with her medal, with proceeds going to the charity Skateistan.
2. A vehicle for raising investment capital to build a brand
In a similar way to how crowdfunding works, you can raise project finance by selling NFTs without taking on debt or giving away equity – and not being answerable to shareholders. Doing this will carry other risks of course, for example, the fluctuating value of the cryptocurrency you raise. There is also cost associated with this route: in developing the NFTs and in administrating and operating the NFT sale etc.
A real-life example of this use case can be found in Flyfish Club. A members-only private dining club, it raised circa $14 million from the sale of NFTs earlier this year (2022), which act as membership passes to the club. The funds will finance its opening, which is scheduled for Q1/Q2 next year (2023) in New York City. As Michael Wolf observes in The Spoon, the initiative “…signals a potentially game-changing way to start a restaurant.” It’s perhaps a compelling financing option, not just for restaurants, but also for FMCG start-ups to raise money to help them launch. In return, they could, say, offer a percentage off future sales of their products to NFT holders.
3. A way of proving product authenticity or provenance
As a way of proving the authenticity of high-value, collectible goods that are susceptible to fraud, NFTs might have some use. That’s because NFTs are reliant on blockchain technology, which verifies transactions. Earlier this year, The Whisky Barrel, a Fife-based retailer, released a 30-year-old Glen Moray single malt, with the bottles carrying a QR code linking to an NFT. “Using blockchain technology offers our customers a continuously updated, secure record of ownership for each individual bottle, a layer of provenance that’s unrivalled in the Scotch whisky industry,” said MD, Alastair Brown.
4. A marketing tool to engage customers and build loyalty
Earlier this month, Starbucks signposted its intention to use NFTs in exactly this way, setting out its plan to create a series of branded NFT collections. “We believe NFTs have broad potential to create an expanded, shared-ownership model for loyalty, the offering of unique experiences, community building, storytelling, and customer engagement,” it said in a statement. In FMCG, take a look at Monkey Shoulder, which collaborated with BlockBar and Bored Ape Yacht Club, to release a collection of NFTs and limited edition bottles. This use case could also see e.g. restaurant brands issuing NFTs entitling the holder to items on a secret menu or FMCG brands giving holders exclusive access to limited edition products.
Summary
As with any new technology, there are sceptics and there are barriers to the use of NFTs. For example, to buy an NFT, a consumer requires cryptocurrency. There are also environmental concerns around the amount of energy required to mint NFTs on the blockchain (i.e. create them). But as more and more brands invest time, energy and money in them, they’re worth watching with interest as a potential new tool for food and drink brands.
Image credit: Kanchanara (Unsplash)
