To say that people were surprised when Jamie Ritchie announced he was joining a blockchain outfit is an understatement. But Ritchie isn’t fussed by what people think. “You don’t leave Sotheby’s on a whim,” he says. “Not after 32 years.”
He also thinks his new company, BlockBar, is the future of fine wine and rare spirits. He’s been right about the future before.
Could he be right about this?
From horse racing to fine wine
“My father was an insurance broker, mostly in the horse world. Horse racing, show jumping,” he says. His mother’s side of the family produced champion jockeys. None of this rubbed off on him.
“I’m terrified of horses,” says Ritchie.
What he loved was acting. His parents weren’t keen, so Ritchie signed up for law and, to help pay his way, worked in bars and restaurants.
He found that he loved his hospitality work more than the law. London was booming ― Nigel Lawson, Chancellor of the Exchequer, had deregulated the economy and lowered taxes, and the city lit up with money. Today, he says the ethos is more controlled and commercial, while the “late ‘80s in London were a fantastic period,” says Ritchie. “People visibly enjoyed themselves.”
One Friday, he decided to switch to a career in fine wine, maybe as an auctioneer. Two days later he saw an ad for Sotheby’s. Ritchie beat 380 applicants for the job. It was July 1990, and he’d just become an administrator, the lowest of the low in the auction world.
Founded in 1744, Sotheby’s deals in rare and luxury goods, including jewellery, watches, art and antiques. The wine division opened in 1970. “I had six months of good times and learning the business.”
Then came the Gulf War.
A new era in wine auctions
Paper began spilling from Sotheby’s fax machine, as American customers withdrew their bids.
A few days later, the fax machine cranked up again, and new bids poured in. “Opportunists. People we’d never seen before. They purchased very heavily for a couple of years, and then we didn’t see them again.”
The war turned out to be a minor blip in an otherwise golden era. Robert Parker was ascendant in the US, and his recommendations were moving the market. Fine wine went from a consumable to an investment.
And then Sotheby’s began to swirl with rumours that New York might be about to change its wine laws. “Before 1994, wine auctions weren’t permitted in New York State,” said Ritchie.
Ritchie headed for the US.
The year everything changed
The new law said that auctions could take place if the auctioneer had held a retail license for at least ten years, so auction houses needed partners. Christie’s went with Zachys, while Sotheby’s went with Sherry Lehman. “We started our first sale in October 1994.”
Compared to London, New York was raucous. Five hundred or more testosterone-charged New Yorkers packed the auction rooms, determined to outbid each other.
“I was very sceptical, thinking prices couldn’t keep rising,” says Ritchie. “What I hadn’t realised was that the change in regulation meant there was now a resale market for wine. A secondary market had been formed.”
Ritchie turbocharged things by reorganising the auction room; instead of people sitting in neat rows like school children, they could bring other people and sit at a table where food was served. The presence of friends and family led to people showing off.
“The whole US market opened up,” says Ritchie. “From 1994 through to 2008, just before Lehman Brothers collapsed, the American wine market was the least price sensitive in the world.”
European collectors began shipping their wines to the US. Ritchie says he spent every day of this period running from one place to another, “but it was fun.”
The wine market generally moves in tandem with the stock market, so the party came to a screeching halt in September 2008 when Lehman Brothers went bankrupt. For the first time in a generation, New York’s wine dealers found themselves in crisis.
Ritchie was too busy to notice.
A new party kicks off
In February 2008, Hong Kong dropped all tax on wine. Ritchie went to Sotheby’s CEO and asked to set up a Hong Kong office. “He said, ‘sure, let’s go do it’.”
In New York, the secondary wine market was falling “about 40% between September and December 2008.” The first sale in Hong Kong, in April 2009, “went gangbusters. Sotheby’s did $14 million, and the following year we did $55 million.”
A kind of wine mania swept Hong Kong. Auction houses rented shipping containers, filled them with wines, and sent them to Hong Kong. “In New York, we had Mandarin-speaking colleagues with two phones connected to their ears,” says Ritchie. “There was adrenaline.”
Asian buyers had seen the duty fall by 80%, and felt they were getting a big discount every time they bought a wine, regardless of its price. While the rest of the world suffered the fallout of the Global Financial Crisis, prices kept rising in Asia.
The market has now matured and the exuberance has gone. But fine wine is now sold to a global market, and prices will never return to a level that ordinary buyers can afford.
The potential of blockchain
After years of working to get regulatory approval, Ritchie launched Sotheby’s wine retail arm in 2010. Then, during the pandemic, he introduced hybrid auctions, with auctioneers in a studio talking to an online audience. This digital model had an unexpected benefit — it brought tech-savvy young people into an arena that had been the domain of older collectors.
But, eventually, Ritchie felt there wasn’t much left to do.
He’d been in conversation with Dov, Sam and Leon of the Falic family of Florida, who own the Duty Free Americas airport stores. Intrigued by blockchain, they founded BlockBar in 2021.
“There are two elements to it,” says Ritchie. “The blockchain technology enables authentication — provenance — to be more efficient. It’s probably the best that’s available today.”
The idea is that BlockBar will source prestige wines and spirits from producers and sell them directly to consumers, instead of through a middle man.
“I believe the producers want to know three things,” says Ritchie. “They want to know who bought the bottle, who owns the bottle today, and who redeems or consumes the bottle.”
The producer will issue a digital certificate, or NFT, which consumers can buy as proof of ownership. “Once you’ve bought your case, your barrel or your cask, you then have four options. You can store it. You can choose to sell it, you can choose to gift it, and you can choose to redeem it,” explains Ritchie.
The goods are stored in BlockBar’s warehouse in Singapore. “We will be opening up additional warehouses in other locations in France, the UK and so on.”
Normally, a high-end bottle will move many times in its life, from the producer’s cellar to a warehouse in London, for example, and then to an auction house in Switzerland. In the BlockBar model, only the token changes hands. The bottle stays in one place until the final buyer is ready to consume it.
“You can sell your NFT tomorrow night, at three o’clock in the morning, or whenever.” The moment it’s sold, the producer gets 5% of the fee, and BlockBar gets 5%.
If the model works, it will represent a seismic shift in the way luxury items are traded; historically, creators could only sell their work once. Think of Van Gogh, who died penniless. A single painting of his sold at auction in 2022 for $117,180,000, not a cent of which went to Lieuwe van Gogh, his direct descendant.
If that painting had been tokenized, it could have earned a royalty every time it changed hands. In theory, that painting would have earned Van Gogh’s descendants money in perpetuity.
No wonder wine producers like the idea. They also get real-time information about who is buying and trading their wine, and when it’s consumed, giving them a granular understanding of how much of their wine is circulating in the market.
Ritchie says the technology is so new, that it won’t be disruptive to begin with, because producers have existing relationships with importers and distributors that they won’t want to damage. “I think it will be an additional channel that will grow and expand.”
But will it be adopted?
To say that NFTs provoke scepticism is an understatement. According to The Guardian, 95% of the NFTs issued to May 2022, when the market was at its hottest, are now worthless.
Ritchie says BlockBar didn’t come about by “a couple of people sitting in a garage with a good idea and no money,” and that the Falic family have a deep knowledge of fine wines and spirits because of their international duty free business.
“Sam knew a lot about blockchain technology,” says Ritchie. “They saw with the duty free business that there’s a challenge for the higher-quality bottles going through different channels.” He adds that he joined them because he likes them so much. “They’re nice people. They’re smart, they’re young, they’re dynamic.”
Still, a number of fine wine dealers surveyed for this article were dubious.
“I understand the desire to try to tokenize a bottle and leave it in one place,” says Maureen Downey, a noted fine wine expert. “That is a great idea on paper. But people want their wine bottles; they want to touch them, they want to look at them. Hell, they want to open them. This would spread out people's collection such that they have bottles, literally single bottles all over the world. And I just don't understand how that is going to happen.”
Ritchie is sanguine in response, saying that thousands of collectors already have their wines in storage facilities across the world. “In addition, the generation of new collectors who are Millennials and GenZ behave differently — they are technology and digitally savvy and want information with them, wherever they are in the world.”
In any case, he adds, “The value of an NFT on BlockBar is the value of the bottle(s) that can be redeemed — they are asset-backed NFTs where you can understand the value. They are not digitally native NFTs where the values tend to be much more volatile.”
Indeed, some of Bordeaux’s biggest negociants have privately said they are considering digital certificates, recognising that apps and other tech are bringing younger people into fine wine.
BlockBar also has other offerings. “We have added a new app and new features, which include introducing two new pricing models; leaderboard auctions with launched with Garrus from Chateau d'Esclans, and sealed bid auctions which recently launched with a Glenfiddich 1985, 39-Year-Old cask release,” says Ritchie.
BlockBar already works with brands like Penfolds, Perrier-Jouët and Patrón, and will be expanding significantly into wine from September. Ritchie says they’re also adding more cask sales. “American whisky remains the strongest part of the market, illustrated by the Eagle Rare 25 release in June this year that sold for $55,000 — 550% more than the starting price.”
He sounds excited and dynamic when he talks. He’s clearly enjoying his new life in Miami.
The idea might work, or it might not. What is certain is that Ritchie has a good nose for opportunity. He’s been there at every pivotal moment in fine wine in the past 30 years. Maybe it’s not such a surprise that he’s embracing the latest digital technologies — it suggests that a new era is on its way.
