Digital Twins and Wine: authenticity and performance

David BECK Academic - Economics, Society and Political science - Environment and Technologies (AI, blockchain)

The challenge posed is twofold: to achieve a more environmentally responsible production and simultaneously respond to new market trends with wines of lower alcohol content and rich aromatic profiles.

TRACEABILITY Chapter 1 — Part 6 #DigitalTwins

In this series of articles, I try to understand the implications of topics related to traceability (chapter 1), transparency (chapter 2), and decentralization (chapter 3). These themes may be considered as antonymous with the wine industry.
In the first chapter, I analyze the relationship between wine producers and consumers through traceability. It has been divided in six articles. Here is the fifth article of chapter 1.
In the second chapter, I examine the effects that transparency could have on the wine supply chain. In the last chapter, I consider decentralization for the wine business industry.

I had the pleasure of interviewing 40 leading players in the wine and the tech industries to write this article (sorted by alphabetical order).

Paul Bounaud, Director Community Engagement France / Project Manager Europe Alcoholic Beverages at GS1
Gilles Brianceau, Director at Inno’Vin
Pierre Gernelle, Managing Director at Federation of the Négociants-Producers of Great Burgundy
Eric Lamaille, Head of Business Unit at Champagne Growers Union (Syndicat des Vignerons de Champagne)
Ignacio Sánchez Recarte, Secretary General at Comité Vins, CEEV (European Committee of Wine Enterprises)

Franck Bourrières Sales & Marketing Director at Prooftag
Sylvie Busca Associate Founder at Wine in Block
Stefan Gendreau, Associate Founder at Augmented Reality Wine labels
Gavin Ger, Joint-CEO and Commercial Director at Laava
Damien Guille, Global Business Development Director at Scribos
Maxime Le Coutaller Sales Manager at NutriLabel by ATT
Alexandre Mongrenier, President & CEO at WID Group
Nicolas Moulin, Founder & CEO at La Vie Du Vin
Jémérie Pappo Innovation Manager at Hub One
Jérôme Pichot, CEO at Advanced Track & Trace (ATT)
Niko Polvinen, Co-Founder & CEO at Logmore
Sebastian Schier Managing Director at VinID

7. From Traceability to Performance

Overt or covert? That is the question producers must ponder when considering their options for product authentication and brand protection in the globalized age of wine consumption.

In the same way that many organizations don’t think they are being targeted by cyber criminals, a lot of wineries assume that they are not being targeted by counterfeiters.

Our clients have asked us for traceability tools, while we initially focused on authenticity.

Franck Bourrières Sales & Marketing Director at Prooftag

7.1. From authenticity to traceability

Despite investment from the wine industry and the continued countermeasures taken by individual wineries, the consensus is that wine fraud continues to grow. But because most wine fraud goes undetected or unreported no one knows for sure how big the counterfeit wine market is; the number most often mentioned is that 20% of all wine on the market is counterfeit.

Gunter Schamel’s 2009 white paper for the American Association of Wine Economists proposes that the preponderance of empty super-premium bottles available for sale on a German eBay site is an indicator of a thriving trade in fraudulent refills. “Why would someone pay 100 euros for an empty bottle of 1982 Château Lafite-Rothschild rated 100 Parker points?” asked Schamel, who presented his study in June 2009 at the organization’s third annual conference in Reims, France. His answer? “Probably because it’s worth a lot more once it’s refilled.” Similarly, a 2018 study found that more than one-third of bottles of Scottish whisky on the secondary market were forgeries.

There are so many middlemen that the producer doesn’t know. We created a solution for the middlemen to encourage them to label the bottles.

Sylvie Busca Associate Founder at Wine in Block

The last several years have seen an uptick in wine fraud, likely as a result of two different trends. In the early months of the COVID-19 pandemic, between March and June of 2020, wine and spirit sales, including online orders, increased between 20% and 40% across the United States. In Italy, the growth was even more pronounced, with online wine sales increasing by 149% in the first 10 months of 2020. This growth in online wine sales created more opportunity for wine fraud as many of the traditional means of vetting wine were limited or shut down at the start of the pandemic. The increase in demand for wine also meant that more wine was being purchased through grey market channels. The second reason for the increase in wine fraud is that wine is increasingly seen as an investment.

But high-end wine fraud actually makes up a very small percentage of counterfeit wine. Most of the wine that gets counterfeited is everyday drinking wine. In fact, of the more than 93 million bottles of counterfeit wine Recorded Future was able to track between January of 2020 and June of 2022, fewer than 5,000 were confirmed to be wines that would qualify as luxury wines.

USE CASE 9 - Prooftag: forgery-proof and easy-to-control authentication solutions
Prooftag is the Montauban, France-based producer of an overt counterfeiting deterrent. Its unique "bubble seal" is affixed to an individual bottle along with a distinctive numeric code that, when plugged into a website, yields authentic product statistics about the wine, and a link back to the winery's website.
Scenario A, in which the vintner is merely equipping bottles with unique identification tags, is priced at roughly 1% of the cost of the bottle, meaning each bubble tag costs between 40 and 50 cents per bottle, assuming production volume in the range of 10,000 to 50,000 cases. The raw material is delivered in a reel, and the seals are applied on the winery's existing bottling line. If a winery wants to track its bottles through the distribution chain (Scenario B, if you will), it must purchase customized software and readers, which can cost anywhere from $10,000 to $100,000 to implement, depending on the scale of the operation.
As shown, the Bubble Tag is attached to both the capsule and the wine bottle itself to prevent tampering. If a counterfeiter removes the capsule, the Bubble Tag is destroyed and the wine can immediately be considered suspect.

Type of wine fraud

  1. The most common type of wine fraud observed in our analysis is the attempt to pass off cheaper wine as more expensive wine at scale. These operations tend to be large and, based on available information, almost always involve a winery or employees of a winery who can easily bottle hundreds of thousands or even millions of bottles of counterfeit wine and have access to the necessary equipment to produce the necessary labels. These almost always go unnoticed by consumers and are uncovered and stopped by law enforcement.

For example, in one case a winemaker from the Médoc region of southwest France imported cheap wine from Spain and other areas and passed it off as more expensive Bordeaux wine. In another example, a group of criminals in Italy passed off 80,000 bottles of Sicilian table wine as wine from Tuscany, specifically the Bolgheri Sassicaia DOC. This was truly an international operation with the bottles being produced in Turkey and the labels printed in Bulgaria, including security tags.

Current large-scale wine fraud operations are likelier to concentrate on recent vintages, and sometimes less expensive wines. We’re seeing $40 bottles of Brunello counterfeited.

Maureen Downey,
  1. The second largest type of wine fraud involves winemakers adding disallowed ingredients to their wine. Depending on the region, and local alcohol laws, these ingredients can include sugar, juice, wines from other regions, or even banned chemicals.

An example of this type of fraud is the winemaker in Italy who produced “more than 130,000 cases” of counterfeit wine. The winemaker used cheaper wine, sugar, and water to produce the wine and then labeled the wine Oltrepò Pavese, a protected DOC wine region. In another example several winery employees and a winemaker in New Zealand pleaded guilty to charges of mixing vintages, blending grapes from different regions (while labeling the wine with the more prestigious region), and selling “non-compliant” Sauvignon Blanc.

  1. The final type of wine fraud is counterfeit wine designed to dupe collectors and investors. These cases involve small batches of counterfeit expensive wine and are aimed at wealthier collectors.
Source: Recorded Future

Counterfeiting Wine

Wine thieves often find it surprisingly easy to steal from high-end restaurants, hotels, personal wine cellars, and even directly from wineries.

There are generally two ways counterfeiters create fake wine:

  1. Bottle refill is an easy way to create fake wine.

Old wine bottles are readily available on sites, often with a cork; people also regularly dumpster-dive at nicer restaurants looking for wine bottles, and staff from those same high end restaurants have even been known to save and sell expensive bottles. These same bottle refill techniques are also used to produce counterfeit whiskey and spirits.

Another technique wine thieves use to create counterfeit wine is to use a Coravin or similar tool to siphon wine and replace it with cheaper wine. Coravin is a tool used by wine professionals to sample wine without having to open the bottle. It has a very thin needle that can pass through the capsule (the foil that is often wrapped around the lid of the wine bottle) and the cork, take a sample of wine, and replace the sample with an inert gas. This allows a wine professional to ensure that a bottle of wine is still good without having to open it; you can also use this method to drink a glass of wine from a nice bottle without having to uncork it.

Our NFC tags are placed under the cap or the cork (top of the bottle) to prevent refilling and resale.

Sebastian Schier Managing Director at VinID

There are a number of techniques that counterfeiters use to artificially age wine bottles. One technique involves using coffee grounds or tea leaves to artificially age the labels (this is why wine fraud investigators will often tell people to smell the label — real wine labels should not smell like tea or coffee).

A bottle of 1982 Cheval Blanc from Bordeaux goes for around €1,400 on the secondary market, but a bottle of 1985 Cheval Blanc sells for less than half of that. A counterfeiter could buy a case of the cheaper wine, change the label, and sell it as the 1982 vintage. The counterfeit wine will have the correct bottle and close to the correct label, and it would have all the characteristics of a Cheval Blanc (because it is), though it won’t taste anywhere near as good as a true 1982; in other words, a very hard-to-spot fraud. In the meantime the counterfeiter will likely clear more than €8,000 per case and will repeat this process dozens or hundreds of times a year.

  1. There is a third type of fraud that is not necessarily counterfeit, but should be noted: selling bottles of wine that have been exposed to heat or other extreme temperatures primarily due to natural disasters as pristine (pristine meaning the wine has been stored at the proper temperature and humidity). This is a different type of fraud that is outside the scope of this report, and largely handled by insurance companies.

One big challenge with security tags is that counterfeiters have figured out how to safely remove them and place them on counterfeit bottles without breaking them. Counterfeiters have also been known to target the print shops where these are printed

Whisky producers, on the other hand, possibly spurred by the alarming increase in headlines about counterfeit products being sold, seem to be taking more proactive steps to prevent counterfeiting. Many of these anti-fraud steps mirror those of the wine industry. Whisky producers have adopted anti-fraud measures such as:

  • Laser etching of individual serial numbers on bottles
  • Adding design elements to bottles to make them harder to replicate
  • Embedding images or text on labels that are only viewable under ultraviolet light
  • Adding security tags to capsules
  • Some producers have also explored blockchain-based solutions.

The Domaine Ponsot chose us in addition to Selinko which helps them with the authentication part. Our role is qualitative tracking.

Nicolas Moulin, Founder & CEO at La Vie Du Vin

7.2. From traceability to performance

Measuring the scope of wine fraud is very challenging. Like cyber incidents, cases of wine fraud often go undetected or unreported.

When we think about traceability, likely the first products that come to mind are fresh foods. We all want to know where our food comes from, where it’s been, and that it’s safe. But what about the other goods we consume such as cleaning products, pre-packaged food and beverages, and cosmetics? We use these things frequently but don’t often know where they come from, what they’re really made of, and whether they are authentic.

Traceability lets you keep track of your products

Without robust product data, you could be in the dark about the location of your product as it moves along the supply chain. Traceability, bolstered by product digitization, helps to reveal the opaque sections of your product’s supply chain. When you have real-time reporting of the product journey, you can detect and help prevent product diversion and ensure that your products are only sold in authorized channels.

Use Case 10 - Nutrilabel: Generate the QR code for the nutritional data
Generate the QR code for the nutritional data of your alcoholic drinks.
Advanced Track & Trace (ATT) has launched the Nutrilabel platform. For almost 20 years, ATT has been providing authentication and traceability solutions to its numerous customers (SMEs, multinationals, governments, security printers, international institutions, etc.).
Compatible with international standards (including the mandatory recycling sheet for Italy) the platform allows producers of wines, beers and spirits to provide European consumers with nutritional information about their products in their language.
This information is available through a QR code provided by the platform. Nutrilabel allows producers to manage the information returned by the QR Code.

We have created an easy to use platform for winemakers.

Maxime Le Coutaller, Sales Manager at NutriLabel by ATT

Traceability supports product safety

When your products are authentic, they are safe. Your consumers deserve your real products, and traceability helps you bypass diversion and enable products inspectors, customs agents, and even consumers to easily scan your products to confirm their authenticity. Additionally, traceability ensures product safety even after your items have hit the shelves. If a product is recalled, for example, you can identify the problematic batch and address the issue more surgically rather than doing away with your entire inventory. Furthermore, when you leverage covert digital watermarks for traceability, you also combat counterfeiting by those looking to create bogus goods or tamper with the authentic ones who won’t be able to circumvent watermarks with secure QR codes for advanced, multifactor authentication.

Our solutions allow to track assets (e.g. pallets) in movement or to optimize processes.

Jémérie Pappo Innovation Manager at Hub One

Solutions with blockchain

Thus it becomes a cat-and-mouse game between wineries and wine fraudsters — as wineries improve the security of their wine bottles, the counterfeiters figure out ways around that security. It also doesn’t help that a lot of anti-fraud techniques wind up being “security theater”. Many of the measures designed to stop counterfeiters do not effectively address the way that wine counterfeiters work. They provide more of an illusion of security than actual security.

QR codes do provide a way for tracking a wine and ensuring that the bottle is authentic, but they don’t actually tell the purchaser whether or not the wine inside the bottle is authentic. QR codes are most often little stickers attached to the bottom of the capsule and the top of the neck of the bottle. But one of the ways that we know wine counterfeiters like to replace wine is by using a needle of some type to extract and replace the wine without disturbing the capsule or the cork.

Another problem with the security tags is the longevity of these businesses. Winemakers in Bordeaux, Burgundy, Barolo, Barossa, and Napa all think in terms of decades, as do the people who drink these wines. Will the companies behind QR codes or IoT technology still be around in 30 years to authenticate a great 2010 vintage from Bordeaux?

Fortunately, wine regions all over the world are taking counterfeit wine seriously and are taking steps to prevent it. Research against wine fraud is ever-evolving, with wineries exploring technologies like Blockchain as a means to defeat wine fraud.

USE CASE 11 - VinID solves problem by combining NFC tags with secure
CollectID was created in 2020 to provide traceability solutions in the luxury goods industry, before Sebastian Schier, the founder added a wine dimension to his range with VinID.
Each bottle has it own digital passport including opening detection. An NFC chip printed on a plastic film that is glued to the cork / neck of the bottle. The rupture of the micro electric flow caused by the opening of the bottle automatically signals it as consumed in the data warehouse.
VinID combine blockchain technology and NFC tags to provide secure and transparent product authentication. VinID tags enable supply control and inventory intelligence. It is also possible to track the temperature of the wine storage facility, which also contributes to quality assurance. Every wine bottle deserves a passport to tell its story and pass on its valuable natural and cultural heritage. Use digital twins as the basis for customer relationship management.
Read more about NFC tags and wine

7.2. Digital Twins – to improve the performance

A digital twin is a virtual model designed to accurately reflect a physical object. The object being studied is outfitted with various sensors related to vital areas of functionality. These sensors produce data about different aspects of the physical object’s performance, such as energy output, temperature, weather conditions and more. This data is then relayed to a processing system and applied to the digital copy.

Benefit of Digital Twins Throughout Product Lifecycle

The term ‘digital twin’ has emerged as a buzzword that is becoming more common in business circles, yet it lacks a clear definition. The traditional notion of digital twins focuses mainly on the digital representation of complex physical systems. There is a production plant twin, which could be a representation of the entire manufacturing facility; there is a procurement and supply chain twin, often called a network twin; and, finally, there can also be an infrastructure twin.

One of the biggest areas of value is reducing time to market, development time. It allows for rapid iterations and optimizations of product designs far faster than physically testing every single prototype. More modern notion of digital twins should also consider products and how they interact with the world around them once they are out in market and in the hands of customers.

What’s important is that you link the digital twin with real data sources from the environment and are able to update the twin in real time… meaning that as the product is functioning in service, you are getting live, real-time data on it.

A real-world example might involve a digital twin capturing the moment a product is scanned at a recycling sortation facility, allowing the product’s manufacturer to gain unprecedented insights into the recycling rates of different products. Such intelligence might seed new strategies for consumer education on recyclability or even influence future package design considerations. It’s the collection and reflection of data across the full product lifecycle that really represents the true promise of digital twins.

It is very important to consider the digital twin with respect to your broader digital strategy—considering where it fits in, how you can best use this capability for a competitive advantage in the marketplace. For some companies that focus might be streamlining the production process to get products out to market faster. For others, it may be about amassing consumer engagement data to drive meaningful marketing strategies that build brand loyalty.

Digital twins to optimise energy efficiency and product quality in wineries

The DTWINE project led by the Spanish Institute of Agrochemistry and Food Technology (IATA-CSIC), aims to develop a computer system to simulate and predict the wine fermentation process. In addition, combined with sensors and computational optimisation methods, it will facilitate the work of oenologists in making decisions in the daily operation of wineries.

As part of the digital twins application, DTWINE plans to develop model-based monitoring and predictive control techniques to help winemakers in their work. In this way, the challenge posed by DTWINE is twofold: to achieve a more environmentally responsible production and simultaneously respond to new market trends with wines of lower alcohol content and rich aromatic profiles.

Along these lines, the project has a series of specific objectives:

  • To explore a set of indicators of industrial relevance to obtain more environmentally responsible wines.
  • To formulate digital twins to predict growth and primary and secondary metabolism in fermentation by means of dynamic kinetic models. These digital twins will be trained and validated at laboratory scale, pilot scale and with real plant data.
  • Formulate and solve multi-objective optimal control problems to find the operating conditions that offer the best compromise between energy consumption and wine quality.
  • Implement and validate a sensor network and a model predictive control scheme to ensure optimal online performance.
  • Implement a user-friendly software tool to support and automate the use of digital twins in winery decision making.
  • Demonstrate the capabilities of digital twins to end users to facilitate their exploitation and possible commercialisation.
  • Quantify the impacts of the use of digital twins to assess their short-term benefits (such as improved energy efficiency or quality).
USE CASE 12 - Wine In Block: a link of trust and a tool for dialogue
By integrating NFC chips into wine bottles and cases, Wine in Block makes it possible to store information on traceability, production, transport, authenticity and conservation.
Placed under the label of the bottle and equipped with anti-cloning and anti-pulling systems, this NFC tag contains the NFT of the digital passport of its bottle. With a simple tag with a smartphone, the user can ensure its authenticity and access all the data concerning the bottle (product information, traceability, CSR issues...).
We have therefore developed an autonomous electronic box that not only authenticates the case and its contents but also collects temperature and hygrometry alarms. The alarms detected by the box are recorded in the blockchain. With a simple scan of the case with his smartphone, the user accesses the "digital quality passport" of his wine. He can ensure that the quality of the wine he is about to purchase has been preserved and possibly arbitrate on the value of the wine on the market.

7.3. 0G Network IoT

The Internet of Things (IoT) is a network of interconnected digital endpoints such as connected devices, networks, servers, IoT applications, etc., all communicating. They are IoT devices with the ability to transfer sensor data over a network to the internet. The main challenge within the IoT world remains that of connectivity. Bluetooth is designed for short-range applications, while cellular mobile connectivity and WiFi are prohibitive in charge and power demand for large battery-powered IoT sensors.

For example, connected objects can be used to optimize the sequence of steps in a process and reduce non-productive time. The exploitation of data from IoT sensors also allows, thanks to the modeling of behaviors, to anticipate breakdowns and to launch predictive maintenance operations at the right time.

USE CASE 13 - Hub One: digitalizing your business with IoT
A subsidiary of the ADP group (Paris Airport), Hub One draws on its experience in the airport environment to provide tailor-made solutions to the needs of both large accounts and SMEs.
Their solutions and expertise combine the professions of telecoms operator, mobility and traceability integrator. Hub One will help you design, implement and monitor your IoT system. Based on LoRa technology, the Hub One IoT solution is based on two elements
- Access to the SI IoT platform which integrates data collection, storage and processing, an administration module for IoT sensors as well as a module for visualizing the collected data.
- The supply of IoT sensors, according to your types of use and the specificity of your business.

Low-power WAN (LPWAN) is a wireless wide area network technology that interconnects low-bandwidth, battery-powered devices with low bit rates over long ranges. LPWAN is for sensors and applications required to send small amounts of data over long distances, from varying environments, and only a few times a day. LPWANs operate at a lower cost with greater power efficiency than traditional mobile networks. LPWANs can also support a more significant number of devices over a wide-ranging area but the data sent from devices using LPWANs is less complex.

LPWANs are best suited for applications that require infrequent up-link delivery of small messages. This technology also means cheaper IoT device components, resulting in a lower overall price. It also means a longer battery life, sometimes running into years. LPWANs is used in smart meters, smart lighting, asset tracking, precision agriculture, energy management, and industrial IoT enterprise. The pricing to communicate is mostly cheaper.

There are various networks globally, like WiFi, Bluetooth, wired Ethernet, 4G, 5G, etc. These networks send a lot of data over the internet, consuming considerable amounts of current and necessitating constant connectivity to a power source. There are networks by which a device ‘speaks’ to the internet and devices located at distances. In addition, often, the networks do not need a power source. Instead, a simple battery is sufficient and will last for several years.

Our solution is based on permanent and independent connectivity, the 0G (tomorrow the 5G)

Nicolas Moulin, Founder & CEO at La Vie Du Vin

There are cellular (network used for mobile communication) and non-cellular technologies for transmissions. Cellular technologies transmit on frequencies against a charge. To communicate on, you need to pay (service providers need to buy licenses to be able to use specific frequencies). Non-cellular technologies are networks constructed separately from cellular technologies. Sigfox and LoRa fall into this category. LoRa was the first to provide services in 2009, with Sigfox following in 2010. With Sigfox and LoRa, each country has frequencies where everyone can transmit, subject to limits per hour but free of charge.

Sigfox is the definite winner for logistical applications and remarkably price-sensitive applications. Sigfox topology also offers seamless worldwide connectivity, making it the clear winner for logistics applications.
The LoRa ecosystem is arguably the richest. LoRa is the best when it comes to low power consumption. LoRa has the weakest signal range when compared to the other technologies.
NB-IoT is for simple devices. Rather than roaming assets, NB-IoT best suits primarily static assets, like meters and sensors in a fixed location.

0G network IoT and Beer

One industry where massive IoT is disrupting logistics is in the beverage space.

Beer kegs that effectively track themselves – telling owners where they are and when they need to be refilled – are changing an entire industry.
Even a small micro-brewery might have a fleet of a thousand kegs. At $200 each, that’s a capital outlay of $200,000. So, for large brewers who have 100,000 kegs in their fleet, we’re talking about upwards of $20 million in capital and no real way of identifying where those kegs are or whether they need to be refilled.

While previously RFID (radio frequency ID tags) solutions went some way to addressing the challenge, there was no real way of knowing what the keg was doing between scans. The beer needs to be stored cold and that information needs to be checked regularly, RFID does not have the capability to communicate this kind of data or accuracy.

This was the sixth article of Chapter 1 — Traceability. In the next post, I open Chapter 2 with an explanation of the main phases of digital technology, especially the one that will lead us to Transparency.