May 3rd, 2022 from Movendi International

Big alcohol is rapidly expanding into the metaverse to increase alcohol availability and drive consumption for more profit. In fact, the alcohol industry has already started with virtual liquor stores, NFT product sales, sponsorship, and marketing of virtual events.

More specifically, The Metaverse is Big Alcohol’s next target for marketing and increasing alcohol availability to drive higher consumption and maximize profits. Since it allows users to cross from the physical space to the virtual one, is more engaging than the Internet and might lead companies to increase their sales by driving higher alcohol consumption.

Another way that alcohol companies are planning to use the metaverse is through NFTs. These are non-interchangeable unit of data stored on a blockchain, a form of a digital ledger, that can be sold and traded. Types of NFT data units may be associated with digital files such as photos, videos, and audio. Because each token is uniquely identifiable, NFTs differ from most cryptocurrencies, such as Bitcoin, which are fungible, according to Wikipedia.

Alcohol companies could use NFTs to sell higher-value products such as vintage wines.

What does it mean: companies using NFTs could sell a product through them for a future ownership before the product has even been completed. For instance, a wine that is not aged yet, can already be bought through NFTs. Through this strategy alcohol companies can sell more of heir higher-priced products and maximize profits.

The metaverse is indeed a key step to reach today’s young people while they oppositely approach a health-conscious and sober trend in western societies.

Possibly a major reason behind Big Alcohol’s push into the metaverse is to re-capture the young consumers they are currently losing.

One main problem is that Existing alcohol policy systems in the world are not equipped to handle metaverse alcohol sales, marketing, sponsorships and other aspects. In fact, The metaverse does not have clear ownership like other internet platforms, such as social media sites like Facebook or web hosting providers like Google.

Platforms on the metaverse are mostly built on blockchain technology. These platforms do not operate on a single web server. Instead, content is distributed across numerous computer servers via a peer-to-peer network. This means there is no clear owner or jurisdiction for the metaverse.

A case study from the US:

A case study highlights some of the alcohol policy measures in the U.S. and how metaverse alcohol sales can disrupt these existing rules. 

– In all 50 states it is prohibited to sell unlicensed alcohol products. 

– But how do licesning laws apply when alcohol products are sold via the metaverse through NFTs, which is a digital certification? 

In the U.S. federal and state laws generally divide the production, marketing, and sale of alcohol products into three tiers: 

  1. Producers/importers, 
  2. Distributors/wholesalers, and 
  3. Retailers. 

It is prohibited for entities of one tier to have an interest in another tier. For example, when selling alcohol products, producers/importers must sell to distributors/wholesalers who will then sell to retailers who can sell to customers. Neither producers/importers nor distributors/wholesalers can directly sell to customers.

How would this work on the metaverse when products are being sold virtually via NFTs?

Regarding sponsorship agreements and licensing:

– Big Alcohol can take advantage of this grey area and circumvent these regulations to sponsor virtual events hosted by retail licensees, including professional sports teams. 

– Since there is no guidance on how regulations apply to virtual alcohol products in virtual alcohol stores, they might not even need the normal required certificate.

Lastly, Checking alcohol industry compliance with laws that prohibit the marketing and sale of alcohol products to underage youth is even harder in the metaverse since there is no central authority. There is no one regulating the metaverse and no guidelines. Chances are Big Alcohol will exploit this loophole to market to those who are underage, considering that alcohol companies already do this anyway even with existing laws.

This opens up an important challenge for alcohol policy makers.

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