Digital Securities

Fine Wine Tokenized by PhillipCapital as Digital Securities Increasingly Used for Luxury Investments

Updated on December 30, 2022

PhillipCapital, an ‘Asian Financial House' established in 1975, has recently extended its foray in to the world of digital securities by announcing the issuance of what it is calling ‘the En Primeur tokens (EP)'. These are digital securities which are backed by a real world asset – ‘the finest wines of the 2020 Bordeaux EP vintage'.

Details of the Effort

This effort to tokenize a luxury item such as this premium wine involves more than just PhillipCapital. It will also see participation by Alta – a Singaporean private securities exchange set to list the tokens for trading by accredited investors.

Expected to be bottled in 2023, each batch of wine will be comprised of 16 wine labels totaling 36 bottles. While PhillipCapital has not noted how many tokens are set to be issued, it states that each EP token will represent one batch.

PhillipCapital lists the following as a few examples of the vineyards from which the the wine will be sourced.

Lafite Rothschild
Haut Brion
Mouton Rothschild

Notably, investors will have the opportunity to collect the wine itself, or proceeds from it sale, at time of bottling or upon maturation of secured notes in 2026.

Commentary

Upon announcing its most recent tokenization efforts, PhillipCapital Managing Director, Mr. Luke Lim, shared his thoughts. He states,

“Our clients have been looking at alternative investment vehicles to complement their portfolios. Thanks to the emergence of digital asset-backed securities, high-net-worth investors and family offices can add such rare and limited-edition luxury investments to their portfolios. This is part of our efforts to understand the changing needs and preferences of our clients and develop new investment opportunities for our clients.”

Meanwhile, Alta COO, Willie Chang, spoke on how listing such assets can change the way we invest. He states,

“We are excited to welcome the wine token listing to Alta. This project reflects the benefits of blockchain technology in democratising investments, allowing PhillipCapital to tokenise a world-class basket of wine assets, securely and affordably. This listing further strengthens our position as the leading marketplace for tokenised securities of high-end luxury assets”

Luxury Investments

The decision to tokenize a luxury product like these wines marks a growing trend within the digital securities sector, highlighting the ability to bring accessibility and liquidity to asset classes in which these traits have long been lacking.

While there have been examples of other luxury items like art and automobiles tokenized, premium alcohols in particular have become quite popular. The following are a couple examples of this from recent years.

So why has premium alcohol attracted the attention of investors more than many asset classes? PhillipCapital believes this is because,

“Fine wines make interesting investment assets because they are not merely tangible but consumable. Just like its flavour, a wine’s value appreciates with age, making them a suitable medium to long-term investment, especially for favourable vintages that are in high demand by investors and wine enthusiasts.”

A Broad Scope

Although current digital security offerings maintain a heavy focus on luxury products and real estate, do not be fooled in to thinking this is where their potential ends. Digital securities have the ability to upend the way we invest in a broad scope of assets. Whether this be debt products, NFTs, or equity within a company, digital securities can do more than democratize investing by lowering entry thresholds – they can make the entire process more efficient, transparent, and profitable.