Author: Vanessa Grondin, VP Global Food and Beverage – OPTEL GROUP
What are the key benefits of digital traceability on spirits products?
In a 2016 survey conducted by PricewaterhouseCoopers, titled “On the rise of Industry 4.0,” 33% of respondents said that their company had started to digitize their supply chains, and 72% expected to have completed the process by 2020.
By connecting the dots of your supply chain, from grain to barrel, you can trace the raw material from the farm and track the finished products throughout the supply chain, more quickly and efficiently than ever before with the help of enabling technologies such as cloud-based data storage, the Internet of Things, artificial intelligence, radio-frequency identification, and blockchains.
A key benefit of using digital traceability in the fight against food and beverage fraud is unprecedented prevention of product counterfeiting, theft and diversion into grey markets, unauthorized production, and falsified raw materials.
What types of anti-counterfeiting methods can you implement on bottles?
To prevent counterfeiting, we give each bottle a unique identity by giving it a serial number, a unique identifier, a unique QR code or a unique NFC chip. This is done at the manufacturing plant. The bottles are then put into cases, which will go onto a pallet. We create a unique child-parent relationship between the bottles and a given case. The case then has a unique identifier that if scanned, telling you exactly which bottles are in the case. The products are then tracked at the unit level throughout the supply chain, and the inventory is detected in real time.
We have a top-down, bottom-up approach to prevent counterfeiting. We often team up with marketing teams to develop customer-engagement programs that have the added benefit of tackling the counterfeiting issue. The marketing team creates incentives for the customer to identify the purchased bottle via the unique identifier, thereby providing data on the date and location of the customer’s activities. For example, the customer scans a product to redeem a gift, allowing the brand owner to know that a given bottle was purchased in a specific location.
How difficult is it to implement product-based digital traceability on spirits products?
It is not difficult, and many implementing scenarios exist. We have clients who apply preprinted labels that have a unique identifier on each bottle and have a very manual packing process. Other clients have fully automated lines. Unique codes are printed directly on the bottles during production, and our artificial vision systems automate the child-parent relationship.
Where are you seeing the greatest demand for this technology; is it brand driven or consumer driven?
The demand is coming from both brand owners and consumers. Brand owners are losing revenue and brand equity over counterfeited products. On the other hand, consumers want to make sure that the high-end spirit that is purchased really is what it claims to be. Let’s not forget that buying a high-end spirit has a lot to do with the experience of knowing the origin of the product and how it was processed.
Does it add additional costs to the consumer?
Additional costs range from a fraction of a penny to pennies per bottle, depending on the type of material used to identify each bottle. A code printed on a label is cheap compared to an NFC tag. It all depends on the brand’s marketing strategy.
How feasible do you think it is to introduce this anti-counterfeiting technology on a mass scale throughout the spirits industry?
We believe this is the way of the future. As supply chains are becoming more digitized, new sources of data provide commercial opportunities for brand owners to differentiate themselves by connecting with the consumers and giving product data and origin. People want to know the where, what, when and who of their products. We believe it’s just a matter of time before technologies such as ours is adopted on a large scale.
Read this related case study: Turning a Counterfeiting Problem Into a Marketing Engagement Tool