Whiskey NFTs Follow Craft Beer on Blockchain
This article was originally published in Blockchain Industry Review - a Crypto Curry Club Magazine published monthly and available in soft copy and the printed version.
An Interview with Featured Contributor, Shane McCarthy,
CEO and Founder of consumer services, Ireland Craft Beverages
Shane McCarthy is the MD and founder of Ireland Craft Beverages, a logistics and sales platform for artisan producers of craft beer, ciders and small independent distilleries. His background is in finance with a smattering of technology and a passion for craft drinks. Two other parts of his business attest to this: the first is Killowen Whiskey Distillery which he bills as Ireland’s smallest distillery; and the second is Downstream Blockchain beer which offers provenance and traceability to its drinkers.
As Shane says:
“Blockchain acts like a secure database for artisans.”
The two sides to his interests converged one Christmas when he returned home to Ireland from his posting in New York. He had been based abroad for a number of years, including a couple of stints in New Zealand and Australia, prior to moving to the States. While working on Wall Street he had many friends working in bars in the city. He was struck by the ‘plastic patty’ look of homogenous of Irish drinks available in New York. The drinks were all dominated by big brands and were very one dimensional.
Here it is worth taking a detour in the last 200 years of Irish whiskey in particular. In the 1800s every parish had its own ale, whiskey and other local spirits. However, the entrance of the major players in the late 1800s, early 1900s had absorbed local offerings and streamlined beer and spirits into a couple of mainstream products, including the notable Jameson, Power and Roe. It had also generated a domination worldwide with some 70% of all whiskey sales being Irish, which was to be reversed during the 20th century.
Irish whiskey, denoted by the extra ‘e,’ is similar to Scotch whiskey with both sharing the raw ingredients of barley, malt and water, although the ingredients in Scotch are often dried over a peat fire creating a smoky flavour. Scotch tends to be distilled twice, Irish whiskey three times; the more distillations the clearer and lighter the spirit.
The advent of Prohibition in the States one hundred years ago in January 1920 nearly ruined the dominant Irish whiskey market which had until then enjoyed top spot in the world and which even out-sold Scotch in England. Prohibition rocked sales negatively, followed by Gladstone’s Spirit Act of 1860 which allowed Scotch distillers to produce a lighter version of whisky that was cheaper to produce. An argument followed over what was actually whiskey – pot still or grain – which was only resolved in the 1908 commission which allowed for blends to be included. The fight was on with Scotch distillers proving to be excellent marketeers and distributors. Another blow to the industry was the Irish independence in 1922 which effectively shut them out of British markets, notably empire locations including Canada and Australia. Combined with an export limit enforced by the new Irish government, things were looking very bleak for Irish whiskey from the 1930s until the 1980s.
Since then, Irish Whiskey has undergone a tremendous renaissance. From just three distilleries there are more than 35 – one of which being Killowen – and whiskey sales have grown from a low of 200,000 cases to more than 12 million in just 40 years. So not only have global sales increased, so too as the number of boutique distilleries blossomed which is what attracted Shane’s attention.
As Shane travelled home in 2014, he reflected on the monopoly of ‘Irish’ drinks abroad.
“This contrasted starkly with the recent proliferation of new craft beers and spirits in Ireland. I got talking with a college friend over Christmas drinks and we came up with the idea of creating a promotional platform for the upcoming craft and artisan products.”
“I loved the new choice and direction for the Irish indigenous drinks industry. This was in 2014 and it was a boom time for new drinks, most notably in the whiskey industry.”
Shane met with a friend, a chartered accountant by profession, who shared a love of distilled spirits. On New Year’s Eve, a mere week into Shane’s Christmas break, they decided to set up an export platform to showcase the growing numbers of crat beers and distilled beverages.
“We were not going to make the drinks, we were going to help them distribute them outside the domestic market.”
This was a learning curve for what would become the Ireland Craft Beers platform – but which in true Irish style included whiskey and gin. The new breweries and distilleries were all startups and knew little of exports, tax, and logistics. Together they muddled through and began to attack the overseas market.
While the platform aimed to help all comers, Shane knew he also wanted to dip his toe directly into the market and so two new ventures followed suit. One was the Killowen whiskey distillery and the other Downstream beer.
“It was natural that we would also incorporate blockchain.”
According to Shane, blockchain in its simplest form is a secure database.
“It allows us to build an audit trail of everything that happens so we can bring trust to the marketplace, give consumers the data they need, the date they need to make choices, from everything from the mineral makeup of the water to the malt, to the hops and to the yeast used."
“We allow consumers to point their camera to the beer can and use the QR code to follow the journey of the beer. Provenance is very important in a world where not everything is as it seems.”
This is a reference to the rising popularity of craft beer and crafty beer, the latter a proscriptive term used by artisan producers to highlight the sneaky practice of large breweries to pretend their latest beer products are artisan. The only way to know for sure is to check the provenance of the beer.
It’s an unfair market according to Shane. Big brands can produce ‘craft’ like beers to confuse consumers; they also have prime real estate on bar counters and in off licence shelves.
“I am not saying these are not good beers, but they are not craft beers and we wanted to be able to differentiate them and support the smaller guys.
“Everyone with a smartphone can verify the beer in front of them and choose to support them as a consequence.”
Reading labels, or using QR codes, is a very much millennial imperative; it replaces the purchase of local beer or spirits from a local shop where the local farmer and distiller or brewer is known to everyone.
“There are other elements that can be tracked on the blockchain such as the carbon footprint of the product.”
Creating the first run of craft beer, downstream beer, was done using a brewery in Meath. Shane hit gold first time out when the entire first production line was bought by a UK online beer platform. This spawned other sales for other new craft beers with leading multiples such as Marks and Spencers. The attraction of a blockchain tracked craft beer ticked a lot of boxes.
“We just grew organically which was amazing – no marketing budget or advertising – just word of mouth.”
Of course, Shane acknowledges that love of technology was not enough, the craft beer was really good and developed by experienced craft brewers.
“Having the pre-orders gave us an opportunity to really develop our products much more quickly – it eliminated much of the financial risk inherent in starting a new brewery.”
Using blockchain technology as a means to secure provenance is a nice-to-have to attract conscious consumers, but it also works as a means to counter fraud. Many bigger brands lose millions through counterfeits and putting their product on the blockchain can reduce that fraud. Or other brands wishing to look at the environment and sustainability can implement blockchain to track and trace their bottles
“We’re not a technology company but we use technology to make our products better. Startups need technology and innovation to make them competitive against existing brands. We use blockchain technology to disrupt industries and bring new products to market faster."