How Blockchain can Tackle Counterfeiting in the Wine Industry

How Counterfeiting is a Threat?

These days, every niche industry and every premium product brand is struggling with the most common, biggest and the most neglected problem. The problem is counterfeit products – be it shoes, watches, handbags, perfumes, diamond jewelry, or medicine. However very few of them are making efforts to tackle this problem. The ones who are, are making antiquated and capital-intensive moves. This will eventually reduce the will power for implementation and speed of acceptance.

Just to give you an idea and the scale at which this is happening, I will present some figures based on studies carried out by institutions. “According to OECD data on counterfeiting and international trade, the total value of counterfeit and pirated goods was about $1 Trillion in 2013. It is expected to grow to close to $3 trillion in 2022.” There is a lot of industry-specific research readily available for reference, which will blow your mind. Just to make a point, many fashion and brand houses are ridiculing the impact and scale of counterfeit products and their quality. This is eating their business and obviously their reputation in the market.

Now we also need to understand that why and how counterfeit market is growing exponentially? The reason is the “Internet”, take a pause and understand how. As per research carried out in 2016, the world population back then was 7.38 billion, out of which 3.37 billion were internet users. The total number of Internet users’ visits to piracy websites is 191 billion. That means total number of one user’s visits to piracy websites throughout 2016 was 53.33 times. A famous example is that of a sportswear giant in 2017 who decided to sell its product via various marketplaces but decided to pull off from them to control the recurring growth of a fake product with the same store name.

What is in favor of this counterfeit market? Firstly, anonymity and secondly, global platform. The speed at which they are banned on an e-commerce platform is half to which they relaunch themselves with a new name.

Now let’s see, what can help us to resolve this issue? To this, the most promising solution right now is “Blockchain”. How? Customers need transparency. We offer it to them by tracking and tracing their product at every stage of its lifecycle and data regarding the same is immutable. Companies need speed of acceptance, which we can offer via providing blockchain technology as a SaaS. Blockchain’s speed of acceptance is way faster than buying/lending a store, setting up the right infrastructure and spending a ton of capital and then expecting a whole city to come at your doorsteps in these digital times.

Here on, I would like to present a use case which is based on the wine industry, which comes under the supply chain umbrella.

Use Case Based on the Wine Industry

Here is a brief idea about the overall processes involved in wine making:

Wine Making Process:

Wine making, wine makers and its processes are exclusive. No other wine maker follows the same process which his/her competitor is (apart from the most common and essential ones). The reason: They want to be unique and stand out in the world of connoisseurs. The story, the art, and the history behind the wine making is equally important because that too is a decisive factor for the final price of a wine bottle.

• The journey of the wine bottle starts from growing grapes in the vineyard with perfectly controlled environment variables.
• The vigneron is responsible for growing the grapes and taking their care and protecting them from all possible damages. Vigneron based on the type of wine as a product, chooses to grow grapes of a specific kind (breed or variety).
• Further he/she must take care of the soil’s pH, temperature in vineyard, soil type in which the grape crop is going to be raised, fertilizers and pesticides used during the growth cycle to prevent the crop from any damages and the harvesting method.
• A vigneron mentioning details about the viticulture techniques can be a game changer in the wine industry because various viticulture techniques involve different processes and use of fertilizers and pesticides, which eventually leads to different levels of sulphites in the final product (wine bottle). Based on the level of sulphites, the certification body issues the certificate for wine bottle packed by a winery and eventually its price and quality are estimated by oenophiles.
• Each such vigneron after harvesting the grape crop delivers it to the winery / collection centre / cold storage, in batches. Each of this entity carry out certain tests to rectify its quality, breed, sugar level, moisture, pH, temperature, and flavor, to decide its fate.
• Once certain batches of grapes tick the essential boxes, they are segregated and clubbed based on similarity of the properties. Further they are crushed manually or mechanically. Once the grapes are crushed, we get a combination of grape juice + seeds + solids + skin = must.
• Up to this step, the process is same for white and red wine. But if we want to make red wine then we need to keep the grape juice (specifically of red grapes) along with seeds, solids, and skins, to get tannins, flavor, and color. This process and time for which must is allowed to sit is called maceration. While making white wine we won’t macerate.
• After that, pressing is done (can be done mechanically). In this process the grape juice is separated from rest of the seeds, solids, and skin. This grape juice is called free run.
• Now the free run i.e., grape juice is (referred as glucose/sugar) is broken down into alcohol and carbon dioxide with the help of yeast (even called as cultured yeast) – this process is called fermentation. Few wineries choose to not involve yeast in this chemical process and allow it to happen naturally with the help of wild yeast present in the air.
• Now this conversion of glucose/sugar from grape juice into alcohol is controlled and monitored by a wine maker. This process is very important and decisive for every winery and its wine maker because this too decides the wine’s exclusivity. After this, clarification is done. Then, the wine is either directly bottled or allowed to age/mature.
• Now the aging time/maturation time and container in which it is aged/matured is also important, because it affects the taste of the wine. Aging/maturation is done either in stainless steel tanks, bottles, oak barrel, or ceramic tanks.
• Wine makers do conduct various tests during aging time, to check whether the wine is aging in the cellar or not. Few of the tests carried out often are Brix, pH test, titratable acidity, residual sugar, total sulfur, % alcohol, volatile acidity, free or available sulfur.
• Further, it is needed to transport/export the wine in the form of bottles or tanks/barrels. While transporting the wine either by roadways or seaways, it is important to take care of ventilation, light exposure, humidity (to be maintained 60%), vibrations, temperature.

Now let’s turn to the factors prominent for wine makers and buyers across the world.

Factors Prominent for Wine Makers and Buyers Across the Globe

While elaborating the overall process of wine making, one realizes that there are lots of junctures and indicators where its originality is scrutinized, tested, and proved. Here is a bird’s eye view of the overall indicators:

Currently there are many French and Italian wine makers whose customer base is spread across the world. At the same time, the counterfeit market is worth billions of dollars. In such a scenario, it is very important for wine makers as well as for their customers to ship exclusive wine bottles and receive the bottles they pay for, respectively. Most of the wine makers are using wine labels (AOC for France and DOC by Italy) to prove its legitimacy and its point of origin. But they too are prone to getting copied or tampered in the entire process before it reaches in hands of its end customer.

So, we decided to use blockchain tech as a solution to prove the wine bottle’s originality. In this use case, I have tracked and traced the same indicators. When each detail is provided to the end customer along with its time stamp, he/she can immediately scan a QR code and get the entire history of the wine bottle from its origin till it reaches his/her hands.

Now let’s explore how blockchain comes to the rescue.

How will Blockchain Resolve Counterfeit Challenges?

Blockchain will resolve counterfeit challenges using Track and Trace.

We as modern consumers, are eager to experience luxury and fashion trends. But in this entire race, we fall for cheap and fake products which are supplied to us by infinite means and sometimes our curiosity makes us fall for the same.

Previously, brands used to prove their originality by product quality, customer experience and most importantly by their logo, because in most of the cases people buy things, just to get their hands on most valuable, most renowned brands. But these days copying name, tag, logo, labels or make items which look exactly same as of the original ones is not a big task (if it was, then probably the counterfeit market wouldn’t have raised exponentially).

Name: Authentic and Counterfeit bottles of Bienvenues Batard-Montrachet. Can you identify the real one? Photo, courtesy of winefraud.com

In this solution, I decided to involve the tech right from the vineyard where the grape is grown and get details of Vigneron who grows it along with the vineyard’s location. This is because the origin of the raw material is also equally important the way wine bottle is. Further, as a part and procedure of viticulture, a farmer needs to keep a check on pH of the soil. As I mentioned earlier, viticulture technique involved in grape cultivation will decide the quantity of sulphites in a single wine bottle. So, in this entire solution, every Vigneron will be a member of a group where he/she must feed all the details mentioned above whenever he delivers a batch of grapes after harvesting it.

Region wise, groups of farmers will deliver their grape batches to a nearby collection centre. Here, again as a prominent juncture in this process, there will a person or group of people who will have permission to test and scrutinize each batch of grape and feed the data in the block on a blockchain. The data will be about the breed/variety of grape crop as per their perspective, details about the grape’s pH, flavor of grape in a batch, results of Sugar test, date at which the grapes were harvested (because the acidity and sugar levels alter from the time they are plucked).

While consolidating this use case, I came across a fact that grapes from collection center will not always be delivered directly to the winery. There might be situations when batches of grapes will be preserved in cold storage to increase its shelf life and keep sugar levels intact. So, as per actual industrial practices, an entire batch of grapes is stored in small polythene bags of atomic units 500gm, 3kg, 5kg. During entire time which they spend in cold storage, frequent pH and Sugar tests are conducted, Relative humidity and temperature is maintained within a certain range. One might not find these details that important for an end customer, but for winery these details will be important to decide whether stored grapes are good enough to be used in wine making process or not. These details will be extracted and fed by people who will have permission to do so in this network.

After completing all this journey, finally the grapes will reach their destination, that is the winery. Whatever happens, and the time for which it happens is extremely important for a winemaker, buyer and for an oenophile. Here there will be a group of people who will have the permission to feed data in the block on a blockchain. This will mention details such as type of the wine, the time for which the maceration was carried out, fermentation details, alcohol % in a single wine bottle, sulphites (mg/l), Aging/Maturation time, in which container they were stored during the ageing process, lab test and its results, etc.

At each facility and for each step, the details of the predecessor are available to every entity. But as the blockchain thumb rule says, we can only add data/block to the blockchain. We can’t alter it at any point of time and by any means. This assures us about the transparency as well as the fact that no data can be altered, and no false data will be propagated. Eventually we can take steps to eradicate counterfeit market, in whichever industry this tech is deployed.

A single QR code will be displayed on each wine bottle. This QR code will give details about every step it went through, its time stamp, person who fed the data and details about the wine. No other labels, certifications, middle men, shops or any such entity will be required to keep trust on. That’s why blockchain is called as “Trust less” or “No Trust” system. Not because we can’t trust on Blockchain technology, rather we don’t require any middlemen to trust upon.

Now, what does the future look like? Let’s take a look.

Future Prospects

• We can involve IoT devices to feed the data without expecting human intervention. This will eventually automate the overall process.
• We can add more entities, reviews, and suppliers into this overall supply chain. This will make this supply chain look more wholesome and can represent each one of them.
• Legitimacy of data is not scrutinized in blockchain technology. In future development we can think of involving this feature too.
• Data presentation on the platform can be improved.

I’m sure by now you have a fair idea of how blockchain can tackle counterfeiting in the wine industry! Send us a mail with your thoughts about this blog. Also visit us at Nitor Infotech to learn more about our blockchain engineering.