DAVID BECK intervient le 29 mars pour une conférence IA ET VIN à l'Institut Universitaire de la Vigne et du Vin Jules Guyot
Three monkeys

Is traceability Taboo in the wine business? NFC — Traceability Part 3

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

Several companies specialized in physical traceability and protection propose the use of patented proprietary smart QR codes…


TRACEABILITY Chapter 1 — Part 3 #QRCode #NFC

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 second 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 wonder if decentralization could be the future of the wine business industry.

I had the pleasure of interviewing 40 leading players in the wine and the tech industries. For this article, I have been discussing with (sorted by alphabetical order):
REPRESENTATIVES
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)

TECH EXPERTS
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


3.3. DYNAMIC SMART QR CODES — Information to Consumers and Localization for Producers (against grey markets and counterfeit)

There are two types of QR codes: static and dynamic.

Static QR codes are generally assigned to one address that doesn’t change. Dynamic (or Smart) QR codes allow code owners to change the destination address of the code (without the need to reprint it) to accommodate new campaigns, websites and more. Basically any context where on-the-go adjustability is beneficial, dynamic QR is a strong option.

Dynamic QR codes can accommodate many different URLs per QR code, creating the ability to localize content for different geographies or customize it for specific personas. Dynamic QR codes are more efficient for organizations that frequently need to change messaging or create new campaigns.

Several companies specialized in physical traceability and protection propose the use of patented proprietary smart QR codes to fight against counterfeiting and grey market of wines (re-exports not foreseen by the producer). The solutions offered are of two kinds depending on the winemaker’s needs:

1. A Smart QR code affixed on the label. When law enforcement or the consumer scans, they receive confirmation of the authenticity

2. A Smart QR code affixed to the screw paste to avoid refilling. When opening, the QR code as it is affixed becomes blocked and therefore unreadable.

USE CASE 4 — U-Label, a QR code platform by the CEEV Comité Vins
CEEV has been on the of pioneers in developing a digital platform (www.u-label.com) enabling companies to publish relevant information about their products in a secure platform, and consumers to have access to it via a QR-code.
The platform allows for the moment the creation of e-labels for wines, aromatise wine products and spirit drinks and is open to any producers, EU and non-EU companies, CEEV associated or not. U-label offers legal expertise, automatic translation in all official languages of the EU, and generates an URL where all the information is published an a QR-code to link the bottle and the e-label.
E-labels generated by U-label includes information on the identification of the product (name and image), list of ingredients, nutrition declaration and responsible consumption messages. Companies can also include other claims regulated by EU laws (varieties, harvest year…) and information on the sustainability of the product like certificates. Marketing information, as requested y the EU legislator should not be included on the e-labels.
Companies can include all the information on their product in 1 language and the platform will automatic translate it into the other 23 official languages of the EU”, says Ignacio Sánchez Recarte.
CEEV has built U-label to be part of a single data environment and avoid error or retyping information. Ignacio Sánchez Recarte want the platform to be part of the “digital sandwich” composed by several layers:
- The regulatory layer, processed by U-label (on the basis of CEEV expertise).
- The technical layer of traceability with, for example, the technology of the company Scribos.
- The recycle information layer, developed by Giunko.
Dr. Sánchez Recarte specifies that other layers will be added to the digital sandwich thanks to the interconnection of other databases.
To do so, it is important all databases “speak the same language”, there the role of standardization done by GS1.

The wine trade unions share the implementation of solutions for small producers. They can place orders independently for different products.

Damien Guille, Global Business Development Director at Scribos

So I had additional information, I could participate to a webminar, I received documentation from our Spanish friends. The FEV, a private organization that represents the Spanish winery industry (the FEV is a member of the CEEV), has produced very didactic documents and videos. They showed the advantages of using the u-label platform. I even received the preferential rates to use u-label if I became a member of the FEV.

There is no obligation to use U-Label (here is an alternative). Wine producers can work with their usual traceability/labeling providers as long as they respect the provision of mandatory information to consumers as stipulated by Regulation (EU) 2021/2117.

With the QR Code, there can be reading problems when the QR Code is folded or if there is not light enough.

Alexandre Mongrenier, President & CEO at WID Group

Several companies specialized in physical traceability and protection propose the use of patented proprietary smart QR codes to fight against counterfeiting and grey market of wines (re-exports not foreseen by the producer). The solutions offered are of two kinds depending on the winemaker’s needs:
1. A Smart QR code affixed on the label. When law enforcement or the consumer scans, they receive confirmation of the authenticity
2. A Smart QR code affixed to the screw paste to avoid refilling. When opening, the QR code as it is affixed becomes blocked and therefore unreadable.But who knows which producer uses which method? No winemaker really communicates on this theme. Let’s imagine that I create a champagne brand: if I affix a smart QR code according to the screw thread, the consumer must know that the only way to be sure that it is a real champagne and not a counterfeit, is to be informed at least on my website.

This is where we get into the endless discussions on the subject. Let’s imagine, I implement this technology starting from the vintage 2000, without saying that the previous vintages are not protected, so potentially the consumers taste a counterfeit. This can therefore blur or at least affect the image of my champagne that I have patiently built up from generation to generation.The festive nature of champagne consumption means that we sometimes open the bottle too quickly when we would have liked some information – a test I had planned to do for the purposes of this article. The smart QR Code is on the cap and not on the label once the bottle is opened, so you can’t scan to read information about the tasted wine. Already the scan rate is very low, but the customer’s engagement possibilities are reduced. Remember that the main objectives of the Syndicate is to preserve the name Champagne (fight against counterfeiting) and to be fiscally compliant by replacing a simple label with a more modern digital tool combining a second function instead of a simple plastic aluminum cap, which covers the cork retained by a wire.

U-Label: maybe it will work. I have doubts when such solutions comes from institutions.

Gilles Brianceau, Director at Inno’Vin

4. IoT — Authentication for Consumers + Geolocation and Sensing for Producers

Devices can be used to track sensory (temperature, humidity, light, moves), to trace grey markets (re-export) and to fight counterfeiting.

NFC offers great potential, especially in the consumer field. Moreover, NFC is one of the key technologies which males the Internet of Things possible and allows objects to communicate with a chip. NFC typically requires a distance of 15cm or less to initiate a connection.

RFID is also at home in the fields of logistics, production and supply chain management as another important technology. RFID tags an be used to store product numbers, names or expiration dates. With the right readers, this information can read out from up to 100 products simultaneously at distances of several meters. However, since these are standard technologies which are available worldwide, using them as verification for brand protection requires them to be combined with visual authenticity features which work at any time without readers and internet connections and can be checked by any relevant user group (customs, retail, consumers).

Daniel Seseña, Consultant at Minsait, working on the digital trends for OIV said:
“I believe that the adoption of digital technologies will be asymmetric in the three key areas (field, plant, distribution) depending on the profile of the company. In smaller companies focused on the value of the product, the adoption of digital technologies will focus on those that favor traceability (guarantee of origin of their product) or quality (prediction of harvests, time of harvest, etc.).
For their part, larger companies will combine the above with technologies that make the production process (maturation and bottling) of their wines more efficient.
Wineries will continue to maintain their classic appearance (tradition), but they will implicitly integrate digitization, incorporating advanced sensory and analytical elements that will enhance control of the quality and efficiency of the entire wine process.”

4.1. IoT Sensorisation for the wine industry — by OIV

The vine and wine sector is looking towards IoT. The technological revolution is in all sectors and it was not going to be left out of something as traditional and avant-garde as the world of wine.

Excerpt from the OIV report on digitalization:

The Internet of Things (hereinafter, IoT) describes the network of physical objects (things) that incorporate sensors, software and other technologies in order to connect and exchange data with other devices and systems over the Internet. These devices range from common household objects to sophisticated industrial tools.

Some of the different components, which a few years ago were too expensive for many small and medium-sized wineries, have now become more affordable, while the systems are easier to install, manage and maintain.

The physical and the digital areas work hand in hand and cooperate with each other:

In recent years, IoT has become one of the most important technologies of the 21st century. Everyday objects can now be connected to the Internet using devices, enabling communication between people, processes and objects through mobile technologies and exploit big data aided by low-cost computing, advanced analytics and cloud. In a hyper-connected world, digital systems can record, monitor and adjust every interaction between connected things.

Advanced solutions that integrate physical (sensors) and logical (IT systems) information to improve the visibility of operations in vineyards and wine production plants:

  • Real-time collection and visualization of key production process metrics
  • Processes
  • Supply chain detail monitoring
  • Warehouses: detection of actual and expected stock-outs using computer vision and based on production orders
  • Transportation: status of shipments from vineyard to winery and from winery to distribution
  • Dashboards and generation of alarms in case of deviations.

The IoT applications can be classified according to their place in the value chain:

Vineyard — Most of the sensors and satellite imagery currently used in vineyards focus on vine quality control and meteorological aspects. There are also many applications thanks to the combination of technologies such as drones and infrared and multispectral images for pest control in the vineyard.

Another application of the IoT is to make the sector more sustainable and regenerative by optimizing water use, eliminating pesticides and measuring soil quality.

Winery — To control all the relevant parameters for a correct winemaking process in real time. What winemakers are demanding nowadays are sensor-based online systems to carry out the evaluation of the fermentation process without needing laboratory facilities.

Sensors can be used in wine cellars to monitor the ageing of wine, including the key factors of temperature, light and humidity, Temperature is particularly important as even the slightest fluctuations can alter the oxidation of the wine and therefore significantly affect the quality.

Many wineries already combine sensor data (humidity, temperature, soil conductivity and vine quality) and satellite imagery to monitor key environmental factors for the harvest in real time.

Distribution — IoT also has considerable advantages when it comes to improving logistics to boost efficiency and reduce costs. Examples include transport management systems to control and optimize all the company’s logistics flows or computer vision solutions to control the incoming flows and in-plant movements of raw material and finished product transporters.

Full traceability of the value chain: visibility on processes, generation of early alarms in case of deviations and traceability of materials (in-process product traceability within the plant, unit traceability of the final product by RFID and quality assurance of wine to customers with blockchain technologies).

There are sensor technologies and methods for monitoring the process with the potential to improve wine quality and reduce costs. Machine vision systems are used in the bottling, capping and labelling process to meet quality standards — as are production order planning systems, systems for integration and control of the number of bottles passing through a production line and machine error control systems.

Sensor systems are already an important part of the digitization process in the vine and wine sector. They will continue to be important after the implementation of other new technologies that rely on collected data — such as artificial intelligence or robotics — and will make the information gathering process even more critical. The main question is how to handle and make all this information useful. Data alone is worthless, unless it can be properly managed and interpreted.

NFC and RFID are both wireless technologies. NFC is a sub-category of RFID. NFC is designed rather for systems requiring a certain level of security (financial transactions, identification, etc). RFID can function within a perimeter of several meters, whilst NFC only works at very close range (making inadvertent use virtually impossible). RFID requires an RFID reader (often expensive), whilst NFC needs only an NFC-enabled smartphone/tablet/PC in order to read the data.

NFC has a technical problem. There is a brake to read with a smartphone anything metallic and liquid, not to mention broken antennas.

Jérôme Pichot CEO at Advanced Track & Trace

4.2. NFC tags — to put an End to the Grey Market

Supply chains inevitably face risks from grey market distribution channels and counterfeit goods and NFC tags are being increasingly used to counter these threats.

It is obtaining supplied of a wine outside the normal distribution framework. Normally, a winery will deal with an exclusive agent in each country and will allocate wines appropriately to their different markets. They might choose to sell more to one versus another, or offer special prices for some markets. In exchange for exclusivity, the agent works hard to sell the wines, and even position them in the right places.

The grey markets is incredibly important. Distributors used to have older wine but then all of a sudden things changed and they are just selling current releases, and they are selling “library wine”, wine that is been aged at the estate, you are buying at an outrageous markup. Obviously the provenance is going to be perfect, but it is a huge markup and if you are a restaurant you have got to make money on your wine list.

Jamie Goodie, wine writer and wine columnist, gave the example of Domaine des Miroirs — the Jura producer. Fine wine merchant Berry Bros & Rudd have listed these wines at £600 a bottle. The UK agent sells them to the trade at around £30 a bottle. Berry Bros & Rudd did not get these wines from the UK agent but viz a third party.

NFC — Near Field Communication is a standard technology that enables data to be exchanged between two chips, in this case, one contained in the mobile phone and the other in the connected product (Very easy to use. No battery needed).

NFC is by definition a technology based on proximity, since actions are only possible when the terminal is placed within a few centimeters of the target. This technical constraint involves a voluntary process by the user, making inadvertent activation virtually impossible.

On the basis of your location, this sends you personal notifications about products situated nearby thanks to beacons. NFC, like a telephone, is used to facilitate a one-to-one, data-oriented communication session between a person and a thing or between two NFC-equipped individuals.

NFC enables the card to be read passively (e.g. by a tag containing an NFC chip), without an energy resource. The chip is recharged by magnetic induction when it comes into contact with the telephone during scanning. The chip could last for at least 20 years without the information stored on it being altered.

The refilling and resale of these bottles has become a common fraud on old vintages and a danger to your reputation. It is therefore necessary to seal your capsules to prevent any attempt at refilling.

There’s a code of silence in the wine industry.

Bill Koch, billionaire wine collector, who led the pursuit against Rudy Kurniawan a.k.a Dr. Conti

USE CASE 5 — Fine wine with integrated capsule with Tamper proof NFC tag
How is it that billionaire wine collector Bill Koch managed to spend $2.1m on 219 bottles of what turned out to be vin de kitchen table? Partly, it is because his priceless Bordeaux and Burgundy vintages had been expertly faked in the kitchen of fraudster Rudy Kurniawan, using genuine empty bottles, original corks and meticulously reprinted labels. And partly, it is because establishing the provenance, let alone price, of an asset that lies unseen for decades remains difficult, if all you have is a few uncorked bottles and reference books of old labels.
From the American end, the pursuit was led by Bill Koch, brother of Charles and David who run Koch Industries and are part of a vast oil and gas dynasty. “I hate being cheated,” he says. “There’s a code of silence in the wine industry — I was not going to take it. With super-fine wines you can taste the love the vintner had in making it, and that to me is almost a religious experience. We collectors like precious things.”
In time, however, discrepancies appeared in the market. Bottles of Clos St Denis from Domaine Ponsot, of vintages between 1945 and 1971, started to turn up. Laurent Ponsot, the head of the house, found this surprising as his family only started making the wine in 1982. He set out to investigate. Laurent Ponsot was essential to Kurniawan’s unraveling. Unlike many in the wine community, he does not take himself too seriously. Above a well-kept grey and black beard, his eyes have a Gallic twinkle. He saves seriousness for the concept of Burgundy. “The fakes are like a piece of dirt on the name of Burgundy,” he says. “I wanted to wash it off.”
In addition to perpetuating a wine tradition of excellence, Laurent Ponsot the winemaker is indeed a technology geek. A pioneer and geek who puts his innovations and research in service of nature. He was the first in the world to publish a wine website in 1989 as well as the creator of the ideal cork after 20 years of research.
Laurent Ponsot was looking for a solution that must be able to detect complex fraudulent methods such as the refilling of the bottle or the use of a fake bottle. Laurent Ponsot choose an Integrated capsule with Tamper proof NFC tag, the result of an exclusive partnership between Selinko (NFC tags producer) and Amcor (packaging company).

80% of the Burgundy allegedly from before 1980 is counterfeit.

Laurent Ponsot, Domaine Ponsot — The Guardian — Sept. 2016

To know that a product carrying an NFC tag is authentic, you must first be sure that the NFC tag itself is genuine, not damaged, and can be trusted.

When a NFC-capable smartphone is held up to the NFC chip on a product, a website will pen and customers will be guided through the authenticity verification process in an intuitive step-by-step manner. The label ID is already transmitted via NFC when the website is opened. The system automatically feature on the brand product and confirm its conformity.

Producers expect good communication from their distributors, not just to market to anyone. We offer a stock, a circulating and a consumed status.

Alexandre Mongrenier, President & CEO at WID Group

USE CASE 6 — if we sell bottles in Madrid and they all end up in New York, there is a problem!
Selosse, Egly-Ouriet and Lamardier-Bernier are, what we say in Champagne, the holy trinity of great producers. They were among the first to elaborate a winegrower’s champagne in the region, inspired by Burgundy. These visionaries have achieved in 10 years the status, with others since, of the most emblematic cult figures of Champagne.
“We have problems of speculation with aberrant prices. We put pressure on our distributors to tell them to be careful, but that’s not enough.” said Guillaume Selosse.
“If a bottle goes to Singapore, Australia, London, and is sold at a very high price, and in the end, it is not good because it has been stores in a wrong way, we are the ones who receive complaints.”
The Selosse family is also embarrassed to see their production sold at a much higher price than the original price. The phenomenon can lead to real stock-outs. “Last year, a buyer emptied the European stocks to resell all our champagnes in London, making the prices soar”, said Anselme Selosse. “It is our responsibility to be able to follow these bottles and to avoid feeding this resale market [secondary market].”
The solution was therefore a small chip hidden under the label. Anselme Selosse and his son chose the NFC solution from WID Group. They started implementing this system in early April 2002 on their 60,000 bottles.
“We reassured our distributors who thought we were going to take over their customer files. We won’t see who bought our bottle, just a serial number” said Guillaume Selosse. “If we sell bottles in Madrid and they all end up in New York at auction, there’s a problem” said Anselme. Resellers who are not careful enough about the profile of their buyers could lose their allowances.
The chip is invisible like a GPS tracker that contains basic information: origin, buyer, location… The chip does not emit a GPS signal permanently, the shelf life of a bottle is too long for a battery to hold. It is only activated when a reader is used on it, like a smartphone.
“We encourage distributors to increase their traceability towards the winemaker. By scanning all the bottles they receive, they show their good will. For consumers, it is more random, that’s why we add important information on the chip such as the date of disgorgement”, said Guillaume Selosse.
“At the beginning, the big names we work with hid this technology a bit, but today it is assumed”, said Alexandre Mongrenier, CEO at WID Group.
The Selosses’ interview was conducted by Maxime Mascoli, a journalist at L’Union.

51 distributors from 37 markets use our NFC mass reader technology

Alexandre Mongrenier, President & CEO at WID Group

We can ask ourselves why the Selosse family uses a NFC chip and not the cloé QR code, developed by the company Advanced Track & Trace together with the Syndicat des Vingerons de Champagne. I obviously asked this question to the directors of both entities. Their answer is obvious.
The Selosse Champagne, due to its status, is one of the first champagnes in the world. The question of the follow-up of the supply chain is a primordial question for its reputation. Smaller winemakers do not have the same problems.
It is true that all winemakers face the problem of grey markets, especially when having exclusive contracts on a geographical area... which 90% of the winemakers do.

VinID: read another case about NFC

Our charter of trust with the distributors allows them to validate the allocations, to benefit from additional allocations.

Alexandre Mongrenier, President & CEO at WID Group

This was the third article of Chapter 1 — Traceability. In the next post, I explain the track and trace technology (geolocation, humidity, temperature, vibrations). Champagne Philipponnat sent a palette to a distributor in Eastern Europe. Next day, it was forwarded to…

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