This is why it is referred to as a “non-fungible token.” Typically, the record of the uniqueness of the NFT exists as a cryptographic record on a Blockchain, or distributed ledger, and can readily be viewed by anyone.
Most NFTs will present the same foundational characteristics: uniqueness, transparency, provability of ownership, the immutability of record and asset programmability.
NFT market and most common applications:
It is still hard to provide a reliable amount, but the most common estimate for the global NFT market in 2021 is about $40 billion. And this is just the beginning. The most famous applications and market segments are digital art and collectibles (THE biggest category), gaming (in-game assets), sports, music, photography, metaverse, trading cards, and utility (virtual real estate).
The impact of NFTs on CPG industry
At this stage, we understand the basics of NFTs. Now, let’s try to envision the potentially massive implications for CPG players. Let's take some pragmatic examples at different stages of CPG players’ value chains. We will focus on supply chain and marketing dimensions.
NFT, Supply Chain and Logistics: NFTs applied to the wine industry
A lot of consumer brands are facing authenticity issues with their products. It has a direct impact on brand equity, perception and value. Using NFTs to create unique digital certificates and guarantee the authenticity of a product can be a game-changer. Let’s focus on WiV Technology (www.wiv.io). Using Blockchain technology, WiV has created a novel solution for the logistical and authentication issues plaguing physical real-world assets (wine bottles). They transform cases and bottles of wine in NFTs to create:
The WiV model is brilliant and could be applied to a lot of CPG segments. The luxury industry is already working on solutions.
In addition, NFTs are solving many problems with ownership of goods. International business comes with a massive amount of paperwork to secure ownership all along the supply chain. NFTs’ uniqueness can massively improve and digitalize this process. NFTs will also have a massive impact on the traceability and safety of goods. They are convenient to improve companies’ sustainability roadmaps.
NFT, Marketing and Brand Equity
NFTs are offering new ways of building brand equity and improving customer engagement. Top CPG players are already using NFTs to diversify their communication strategy and consolidate their digital image. In the near future, NFTs will become a new pillar of a consumer brand's marketing mix.
L’Oréal Paris has curated its first NFT series by leading female digitally native artists inspired by the L’Oréal Paris Colour Riche collection, centered on female empowerment.
In May 2021, Coca-Cola’s foray into the fast-growing metaverse was a big hit with fans and the crypto community, with the brand’s first-ever NFT collectibles garnering a winning bid of $575,000 in an online auction, benefiting Special Olympics International.
NFT is also having a massive impact on luxury brands’ marketing strategies. According to Zipmex (www.zipmex.com), Gucci became the first luxury brand to delve into NFTs. The iconic Italian fashion house’s NFT was not styled after fashion goods but rather a film inspired by its “Aria” collection in collaboration with Alessandro Michele. This 4-minute film was sold at Christie’s auction house for $25,000.
NFTs will become a way to directly connect with your brand community. Brands will not be restricted to physical assets. Virtual products will be part of brands’ portfolios and revenue streams. Can you imagine? No more product defects, storage or shipping costs.
Marketing and supply chain are just some examples of the massive universe (or metaverse) of growth opportunities offered by NFTs. Other parts of your value chain could be directly impacted in the near future, including your research and development processes, operations, distribution channels and more.
Frost & Sullivan developed the Strategic Imperative Eight™ framework. We leverage this model to better help our clients understand their growth challenges. Our content and tools will help you identify your growth pain points and feed your growth pipeline.
Do you need help building your NFT roadmap?
Please email nicolas.votano@frost.com or call at +33 4 93 00 61 71