This story is part four of Punch-Drunk in the Metaverse, a new, occasional column from VinePair writer-at-large Dave Infante exploring the ways cryptocurrencies, non-fungible tokens, and Web3 aspirations are changing beverage alcohol — for better and worse.
A decade ago, Joey Rubin tagged along with his friend to a dive bar in Los Angeles’s Eagle Rock neighborhood on a mission that made even a crosstown hike practically to Pasadena seem worth the hassle. Their quarry was an allotment of Pliny the Younger, the cult-favorite triple IPA from Northern California’s Russian River Brewing Company. But when Rubin and his pal arrived on the scene, they found a scene all too familiar to anyone who tried their hand at whale hunting in the early days of craft brewing’s boom: a crowd already queued up to get a glass of the coveted ale.
“We waited in a 45-minute line to receive two tickets that were from Staples, to then go and have two pints of draft beer allocated to this one address,” recalls Rubin, an owner of Los Angeles-based Parade Agency and an early member and head of programming and partnerships for Friends With Benefits (FWB) LA, a Web3 creators collective, in a recent phone interview with VinePair. Today, the experience seems ready-made for a solution he’s worked within the intervening years: non-fungible tokens, or NFTs. “There’s nothing different about that experience than being able to purchase that relationship with the brand and with the allocation and hold it with my sovereign identity. That utility highway is what everyone’s traveling down in craft beer already. This is like the HOV lane,” says Rubin, laughing.
And what a lane it is. In recent years, an internet-abetted evolution toward “drop culture” — purchasing patterns predicated on limited supply, iterative variety, and incessant product releases, or “drops” — has made its mark on the broader American craft beer marketplace. That culture is remarkably well aligned with the NFT ecosystem, where new projects are myriad and artificial scarcity is the name of the game. Big Beer conglomerates like Anheuser-Busch InBev have already rolled out NFT projects to monetize their intellectual property libraries and build digital communities around their IRL products; why wouldn’t nimbler, more creative craft brewers do likewise? That’s a trick question: Some already have, with more on the way this year.
To be clear, not everybody in the craft brewing industry (to say nothing of the general population) is on board with the inevitability of the Web3 future, and existing applications of NFTs in a beer context remain rudimentary, or worse. And there’s always the by-now-standard objections that cryptocurrencies in general and NFTs in particular are “solutions in search of a problem” that destroy the environment, attract scammers, and commodify culture. These are valid criticisms worth scrutinizing in the context of craft beer, and everything else. It’s not clear that craft brewing has problems NFTs can solve for breweries better than less polarizing, existing Web2 software, like ticketing systems and social media platforms. But unlike the false promise of copyrightable cocktail recipes “on-chain,” craft brewing has characteristics that enable it to offset those costs with actual benefits. Namely: a customer base primed for community, thirsty for collectible social signals, and ready to spend on scarcity. It’s an evolving culture into which not every craft brewery is keen to lean, but for those that do, and are willing to tinker with new technology, the HOV… er, NFT lane is wide open.
The Pokémon parallel
If you keep the Web3 discourse at arms length by habit, you may be racking your brain trying to figure out how, exactly, the expensive monkey cartoons could possibly fit into a craft brewery’s business model. Understandable! Colorful, art-based NFT projects like Bored Apes have dominated the popular conversation about tokens because of the eye-popping financial speculation and unbearable social dorkishness they’ve attracted. They are but one application of the underlying “digital receipt” software — and not a particularly useful one at that.
That’s not to say craft beer doesn’t have its share of speculators and dorks. Good God, it does. And there’s probably a case for NFT-as-cash-grab in the craft brewing space, given the overlap between the worst tendencies of both consumer cultures. After all, it doesn’t take Shingy levels of futuristic crystal-balling to see parallels between the frenetic tokenomics of the past 12 months and the conspicuous consumption, manufactured novelty, and the promise of quick profit that have propelled the hype-driven, secondary-market-ready corners of the craft brewing business for the past few years. The behavior is there.
“I think the Venn diagram of hype beer bro and tech bro is not very far apart,” muses Michael Kiser, the founder of Feel Goods, a beverage consulting firm that has explored how NFTs could integrate into product roadmaps. (Disclosure: Kiser is a paying subscriber to Fingers, the reporter’s independent newsletter.) “If you’re the Other Halfs of the world, and you’re selling a bunch of hype hazy IPAs and people are collecting like Pokémons already, you’re halfway to a f*cking NFT as it is.”
He’s got a point. Hardcore beer fans sell premium glassware (often emblazoned with stolen intellectual property, a laissez-faire approach to copyright that ironically plagues NFTs as well) for dozens if not hundreds of dollars. A shadow network of mules and resellers spans the nation, conducting “business” with illegal shipping and 200 percent-plus markups to serve a thirsty cohort of hazy IPA and kettle sour fanatics with beaucoup bucks to blow on the latest beers with the niftiest labels. Social platforms like Untappd have gamified the drinking experience to the point that it’s not uncommon to encounter people who order beers purely to unlock badges on the app.
In so-called “ticker culture,” Don’t Drink Beer’s Alex Kidd told beer journalist Courtney Iseman in a story about Untappd, “the check-ins seem to be a system of accomplishments predicated on consumption over contemplation.” On the Planet of the (Bored) Apes, some NFT buyers practice a similar form of conspicuous social signaling — and they don’t even have to jump through the hoop of actually going to a taproom to do it.
“A good value”
Of course, being a virtual medium, craft breweries could theoretically use NFTs to simply sell art, which they tend to have tons of thanks to the relentless pace of new releases with new labels. (“This is something that every business is going to do,” said Dr. Merav Ozair, a leading blockchain expert and fintech professor at Rutgers Business School, speaking to VinePair in December 2021 about Budweiser’s NFT projects.) But crypto boosters with craft brewing experience see deeper opportunities for tokens than mere profile picture (or “PFP”) projects.
“Not everything has to be a quarter-million dollar ape drawing,” says Jesse Friedman, a marketing entrepreneur with The Internet Computer, a blockchain company, and a co-founder of Almanac Beer Co., a San Francisco-area brewery he left in 2018. “A beer club membership is one of the most interesting applications of an NFT. … You buy that membership for some price, and that gives you the right to purchase, you know, more beer.”
Brewery membership clubs are powerful and popular sales and community-building tools, but none of the highest-profile programs reviewed by VinePair have yet implemented an NFT component (presumably because they find their existing Web2 infrastructure sufficient for the time being). But there are experimental green shoots. In June 2021, Denver Beer Co. auctioned off a lifetime pass for “free” beer at any of its four taprooms as an NFT on the Ethereum blockchain. “We really liked the idea of having some function to it, and not having it be just being a piece of art,” Patrick Crawford, Denver Beer Co.’s co-founder, tells VinePair. Inspired by an NFT-focused episode of “The Daily” (The New York Times’s chart-topping news digest podcast), he and his colleagues developed the concept (four beers per day, forever), commissioned an animation of a spinning gold coin inscribed with “BEER FOR LIFE,” and put it on the popular NFT marketplace OpenSea. A month later, the auction closed, and the token was awarded to a Denver Beer Co. regular for 4.33 wrapped Ethereum (for our purposes, just think of this as the cryptocurrency Ethereum, or ETH) which at the time totalled around $12,000.
“In the course of 10 or 15 years, if you drink a couple of beers a week, that’s a good value!” Crawford says. As for why they didn’t simply opt to run the auction using existing, non-blockchain platforms, he admits that the reason was partly to generate headlines. But the transferability was also a factor, Crawford says, noting that any time the BEER FOR LIFE token changes hands in the future, Denver Beer Co. will automatically receive 5 percent of the sale revenue thanks to ETH’s baked-in “smart contract” functionality. “That’s really cool, and something that we don’t have the infrastructure to create on our own,” he says. Of course, that’s assuming a willing buyer materializes, which isn’t even guaranteed for extremely high-profile tokens — to say nothing of the broader marketplace full of run-of-the-mill projects.
“Web3 = Personal Community”
The immutable, mutually beneficial potential of NFTs and smart contracts thrills Web3 acolytes in part because of how it aligns incentives to build organic fandoms around shared interest in the project (or, in this case, the brewery.) Doug Veliky, the chief strategy officer at Chicago’s Revolution Brewing, says that royalties from NFT resales “are where things start to get more interesting, because then that incentivizes the brewery to want to make these as valuable as possible by continuing to over-deliver on what the holders of the NFT get.”
“It could be a beautiful thing, if all those variables can work out,” he says. Revolution hasn’t implemented any NFT program yet because Veliky believes the brewery “would get absolutely destroyed” by its 35 to 44-year-old core demographic. Smaller, less established breweries with younger fan bases are better positioned to dip their toes in the OpenSea waters without incurring the reactionary wrath of “haters.” Other beverage industry observers with one foot in the Web3 world echo that vision. “You owe it to your brewery to study and acknowledge the dynamic shift underway in the brand/consumer relationship,” says Mark Gallo, a copacking sales manager with California-based Nor-Cal Beverages who has participated in several NFT projects. “It takes zero ETH to pay attention.”
For an example of what it looks like for a beverage company to use NFTs to connect directly with like-minded supporters/customers, consider the case of Leisure Project. The company — which makes adaptogenic soft drinks, not beer — launched earlier this year with an NFT project called Leisure Creatures. The anthropomorphic soda cans are colorful and cute in the way many PFP projects are, but they also bestow upon their holders special privileges, including lifetime employee pricing on Leisure Project’s products and access to the Leisure Project Hydration Club’s server on Discord, a chat software popular with gamers and programmers.
“One of the most difficult aspects of building a lasting brand is building a tight-knit community around the brand,” Leisure Projects co-founder Steven Michaelsen tells VinePair via email. “Community is at the center of everything Web3 and NFTs as the incentives are mutually beneficial for the founding team and the holders of the NFT.” After nearly two years of beverage development, the company primed the pump on its IRL launch by releasing its NFT project in late March 2022. Three hundred seventy people (or, at least, crypto wallets, an infinite number of which can be owned by the same person) have minted 834 Leisure Creatures so far at .08 ETH apiece, generating around $200,000 for Leisure Project and immediately and directly connecting the brand with a core fanbase. “Community connections can provide direct and personal access to a core team at a brand versus a sterile email or contact center,” Michaelsen explains. “Web2 = Transactional and Web3 = Personal Community.”
Could a similar NFT strategy work for a craft brewing brand? It seems at least plausible, for all the reasons laid out above. “NFTs are an art project and a tech project, but they’re a community-building project first and foremost,” says Friedman, and craft breweries have thrived at building communities in the past. He brings up the concept of decentralized autonomous organizations, or DAOs. “You could do something where people join the club, and then they get to vote on what beers get made. They can vote on labels, they can vote on all sorts of different things.”
All the while, the online community grows more vibrant, with shared incentives to make it successful both as a social project and an actual product — and none of the distractions of Web2-based social media platforms. FWB’s Rubin believes NFTs can help breweries cut through the noise. “How many of us can just stay glued to social media to find out the latest news about the things we love? [NFTs are] a way that you can program those relationships,” he says, because they allow the issuer to distribute new information, discounts, and updates directly to holders without platforms mediating the relationship. “You have this frictionless environment where you can program how you interact with that customer for the future.”
It all sounds great, but Eric Hild isn’t convinced. “If people are willing to pay stupid amounts of money, I mean, that’s the society we live in,” says the senior lead brewer, who works at Iowa’s Toppling Goliath Brewing Co. “It’s unfortunate, it doesn’t sit well with me that that’s how it works, but I’m not able to control how other people spend their money.” Though bottle releases and ticketed sales for Toppling Goliath have not always gone smoothly with existing digital infrastructure — “that’s always been a headache” — Hild is dubious that NFTs can offer the brewery a meaningfully better solution. “I try to be open-minded about it, but unfortunately I haven’t seen anyone really try to utilize them in the way they say” they can be used, he says.
Inside and outside craft brewing, this is a common (and often fair) criticism of Web3’s wide-eyed disciples: that their soaring, world-changing visions always seem to be juuuuust over the horizon, and a lot of the stuff they’ve actually got on offer in the here and now is kind of boring, if not outright bad. There are loads of examples of this disconnect, but the most persistent and consequential one is the ongoing conversation about NFTs’ environmental impact. Critics contend that Ethereum is catastrophic for the environment because of the amount of energy each transaction requires; supporters argue that its carbon emissions are negligible when compared to the global financial system and buy carbon offsets to demonstrate commitments to ecological stewardship. And besides, any day now Ethereum will ship that key infrastructural change it’s been promising for years, dramatically reducing its energy use in the process! (Or so they say.)
Whether that matters to craft beer breweries or drinkers who might otherwise get involved in NFT projects is an open question. “I mean, I’d like to think so, but probably not,” sighs Hild, pointing to the inartful and at times hypocritical manner with which some craft breweries have addressed social and political issues over the past few years. “I feel like integrity, at least when it comes to a lot of breweries, has gone out the window.” Kiser of Feel Goods agrees that environmental objections won’t hamstring NFT adoption in the industry. “To me, it sounds perfectly in line with how craft brewers have been walking that line all along, because brewing beer is one of the most ecologically damaging things you could be doing,” he says. “The fact that they basically flipped that on its head into some sort of environmentally friendly message… I mean, they’re in a great position.”
If NFTs’ poor environmental reputation (be it accurate or “overblown,” as crypto scholars like Dr. Ozair claim) won’t derail craft brewing’s embrace of tokens, and these apparently transformative applications for the tech are ready and waiting, and craft beer’s culture and customer base are so well aligned with token-friendly consumer behavior, then why hasn’t it happened yet?
For one thing, despite being over half a dozen years old, NFTs are still in their primetime infancy. People are unfamiliar with the technology: According to a June 2021 survey from Security.org, only 2 percent of U.S. adults had bought and sold an NFT, and a Money Magazine/Morning Consult survey in March 2022 found that 75 percent of Americans still have no idea what NFTs even are. For another, crypto’s mainstream debut in 2021 was hardly flattering. And the user experience leaves plenty to be desired: That viral video of a true believer in El Salvador stumbling his way through an unbearably clunky process of buying a beer with Bitcoin did no favors to blockchains’ cachet with the unconverted, plenty of whom find even the wilds of TikTok too technologically overwhelming to bother.
If they’re going to catch on in the craft beer community (to say nothing of the broader population), NFTs will have to overcome those obstacles. They’ll also have to get a whole lot less consistently scammy and speculative, and a lot more consistently useful and commonplace. On this front, even most of its glass-half-full fans concede there’s still a long way to go. “I wouldn’t advise anyone to put any money into crypto that they’re not willing to lose completely,” says Friedman. Then again, he adds, “If you are investing in bourbon barrel stouts for your retirement plan, I’ve got bigger questions for you than your crypto buying policies.”