Counterfeit Wines, A Multi Billion Dollar Problem
Counterfeit wines made headlines in the world of rare wine collecting with two fascinating stories.
The first story is the New Yorker’s “The Jefferson Bottles” about American tycoon Bill Koch who purchased four 1787 Lafitte owned by Thomas Jefferson for $500,000 at auction and later discovered they were fake.
The other story is Vanity Fair’s “A Vintage Crime” about a flamboyant collector, Rudy Kurniawan, who made more than $130 million in sales of high profile counterfeit wines according to the FBI.
This is not only a problem for high-end wine collectors.
Wine Spectator notes that Mid-tier counterfeit wine and spirits are now appearing on the market. Wine fraud is increasing globally especially as the demand for “small production, age worthy” wines grow.
Counterfeiting Growing Along with Our Love of Wine
The Wine Spectator recently reported that the counterfeit wine market in China is a “sizeable underground industry”. The problem is not isolated to China. In 2016, Italian authorities seized 9,000 bottles of fake MOËT. in 2014, they seized 30,000 bottles of counterfeit Brunello, Chianti Classico, and Sagrantino di Montefalco. There are many other examples.
The world drank 2.64 billion cases of wine in 2013 and it’s expected to reach 2.73 billion cases by 2018 (London-based research firm IWSR). How big is the counterfeit problem? It’s hard to estimate but according to some unofficial wine industry estimates, it’s in the order of 20% of all international trade.
Counterfeit wine negatively impacts legitimate industry players. They reduce sales and market share of legitimate producers and dilute their brand.
Authenticating the Real Deal
Wine authenticators traditionally employ many subjective techniques to judge authenticity: the quality of the glass bottle, the length of the cork, the writing on the label and cork, purchase history, etc. This can help, but it’s not foolproof.
In the world of cryptography, if you want to authenticate a device or user, we employ digital signatures. They cannot be spoofed. They are used in every aspect of modern communications including mobile phones, mobile apps, Internet ecommerce, web browsing, and electronic payments.
Near Field Communications (NFC) brings digital signatures to physical objects such as wine in a standard way. NFC tags (similar to Radio Frequency Identity RFID tags) are low cost, paper-thin labels that can be attached to anything and do not need batteries.
Any NFC enabled smartphone can read the label and verify the signature on the tag thereby establishing its authenticity including identifying the signer (such as the winemaker). Any information can be included in the signature such as a link to the winemaker.
Blackseal from TrustPoint Innovation is a platform that manages the lifecycle of digital signatures on NFC tags. Contact us today to learn more about securing the authenticity of your brand.