How to apply blockchain in the wine industry?
Are you in the wine industry and want to jump into a promising industry to take your business to the next level? Read on to learn more
Wine continues to be one of the highest-performing alternative investments, often outpacing price increases in resources and classical art.
From the mechanization of the vineyard to greener packaging options and ways to market, the wine industry is slowly opening up to the many changes that the past decade has brought. New technologies have allowed the industry to take a fresh approach to the latest trends and even overcome all the challenges that have arisen.
Why should you care?
As a wine industry, we have come to a point where we need to recognize that technology is changing the way wine is made, sold, and consumed.
Large and small grape growers have the most responsibility for maintaining their brand, but they also have the least control over the supply chain.
A brand and reputation based on craft, quality, and provenance is built up over years and is very expensive. Scammers pose a great danger and can bring down reputations with poor-quality fakes.
With all these problems can help the use of blockchain.
How can we combat counterfeit wine?
The ease of forging certificates is the weakest point in proving a wine’s origin. Scammers have learned to fake any paper certificate very accurately.
Another weakness in the traditional protection system is the need for buyers to check the conformity of the certificate and the bottle themselves.
Some manufacturers have found a solution to this problem with the help of blockchain. It is possible to create a service that allows two clicks of a button to verify the authenticity of a bottle. And most importantly, the distributed registry, which stores all transactions and information about the bottle, is impossible to forge.
What if the data in the system is tampered with?
Blockchain can solve the problem of data tampering and provide a reliable and transparent wine supply chain tracking system. Each entity associated with the production and sale of wine is recorded as a block in the chain and becomes visible to all relevant participants. If any entity in the chain even tries to tamper with the chain, all interrelated participants will be aware of the tampering. Thanks to a universal ledger system that synchronizes with each blockchain entity. Every block of data added is verified by other entities and synchronized in their ledger. The transparency of blockchain data validation makes the system robust. Any change to the ledger is only approved if the transaction is validated by the largest number of entities involved.
In this way, buyers and collectors can understand the history of wine. They can get information about the grape, grape grower, vineyard, winery, cellar, packer/packer, wholesalers, distributors, and even the retail store.
And how do we label all these entities?
Radio Frequency Identification (RFID), Quick Response Code (QR), Electronic Product Code (EPC), etc. can also be used to label wine. Assigning a unique identification to grapes helps identify the exact source. The barcode associated with a batch of grapes produced at a particular vineyard receives a secret barcode and is then uploaded to a universal blockchain ledger. All further grape activity is recorded and stored in the blockchain.
How will it work?
It is the initial link in the sales chain because wine production begins with the vineyards. People who professionally cultivate and harvest grapes are called grape growers. They take care of the plants and control growth parameters (moisture, acidity and soil compaction, temperature, etc.), as well as being responsible for protection from weeds and insects.
These are the people and companies involved in wine production. To ensure traceability, such entities must add data to the blockchain:
Data on suppliers, grape variety; date of receipt of raw materials; description of the condition and quality of the obtained raw materials; data on the conditions of its delivery.
Records of internal procedures such as decantation, fermentation, preservation, and aeration in the production of rosé wine.
Information about temperature, chemical composition, and additives.
Data on storage conditions and production bottling.
Information about yeast and its use.
There is no need to make a detailed description of the wine production process in the system, as it may violate trade secrets — producers of elite wines keep some elements of production secret (this is typical not only for the wine industry).
3 Wholesale Distributor
These are the people or structures responsible for receiving wine from winemakers, blending it, and sending the finished product to a transit cellar or packer. Wholesale distributors contribute to blockchain:
Date of receipt, data on transportation, and storage conditions.
Information on processing, sampling, bulk wine analysis, and date of shipment.
If a mixing process is performed, this is also recorded in the blockchain.
4 Transit Cellar
They are responsible for receiving, storing, shipping, processing, sampling, and analyzing wine in bulk. In essence, the role of the transit cellar is similar to that of the wholesale distributors, the difference being minor details in the logistics chain. Consequently, the data that needs to be entered into the blockchain at this stage is identical to that described in the previous section.
Receive wine from a wholesale distributor or transit cellar and pour it into barrels, kegs, bottles, or bags. At this stage, product identification and labeling are performed. For proper use of blockchain, it is important to ensure consistency of such labeling among the various market participants. This applies to two types of data:
- Directly about products and production: acceptance, storage, processing, sampling, analysis, filling, packaging, and shipment of finished products.
- Information about anti-counterfeiting: types of paper, laser embossing, hot and cold foil stamping, heat-sensitive inks, holograms, hot stamping, and more.
Remedy data is important because consumers will also have access to the blockchain (via the app and QR code). People should be able to match a bottle of wine in the store with what is produced in the factories. Even better, if you can verify individual products here and now. For example, check the authenticity of the hologram with the scanner in your phone or find out if there is a specific store, region, or country in the supply chain.
6 Distributor of finished products
Wine-filled packaging is sent to the retailer or distributor of finished products. The latter is responsible for storing and shipping finished packaged products to retail outlets, as well as managing inventory. To do this, the product is usually repackaged and relabeled in large batches.
What should be reflected in the blockchain:
- Date of receipt, storage conditions, and date of shipment;
- Information about repackaging and relabeling;
- Information about the destination of the goods.
A retailer receives finished goods in bottles, cans, drums, and cartons from a finished goods distributor or wholesaler and sells them to end consumers. The retailer is responsible for posting the goods received, stored, and sold online. Sales must be logged so that the same identification tag cannot be reused.
What other advantages are there?
1. Increasing transparency
For many up-and-coming brands, the value of blockchain lies in the ability to share the information their customers most want to know — in a verifiable and secure way. They want to consolidate the consensus of events from all the people and places that make a bottle unique.
2. Top-level industry standards
Having developed a quality assurance scheme, the group of experts will assess harvests, and quality and confirm wine provenance to ensure wines meet the highest industry standards. They aim to increase trust in Georgian wine. Registering wine on the blockchain improves the producer’s system of protection against counterfeiting, which will reduce counterfeiting in the market and increase brand value.
New technologies can automate compliance, authentication, and payments to preserve the reputation of traditional brands as well as open the global market to new entrants. This is worth raising a glass to.
4. Innovation and new wine experiences
Gamification will foster innovation through new wines.
5. Challenges and opportunities for marketing
The biggest challenge facing the business is to interest a very different range of buyers than most of those who have seen the appeal of NFT in the past. Its target audience is not the young, tech-savvy, speculative buyers of digital imaging; it is the bosses of traditional wineries, who are often slow to adopt digital solutions to their problems.
Examples of use:
- In November 2021, iconic Australian winery Penfolds sold a barrel of its Magill Cellar 3 Cabernet Shiraz 2021 to NFT for $130,000 for 12 sec. 10 hours.
- BitWine, in collaboration with sommelier Loren Weil, has developed a collection of 1,000 digital wines inspired by great real wines. Each of them is a unique work of art. If Facebook founder Mark Zuckerberg is right, and soon we’ll all be living in a metaworld, why not have a cellar full of virtual wines to show off to friends when they come to visit? BitWine sells NFT in blocks of 50 wines from different regions of production — there’s even a $300,000 lot.
- A similar project, Winechain, will be launched by Xavier Garambois, Amazon’s former vice president of EU retail, by the end of 2022. “Our goal is to build a dynamic and interactive relationship between prestigious wineries and demanding consumers. Buyers will have access to rare wines with a guarantee of authenticity — bottles will be stored in the Winechain cellar until they are shipped. Collectors will be able to sell NFTs wines if they wish.
- The Cult Wines platform founded back in 2007, also helps wineries symbolize their wines. In July 2021, for example, they sold a barrique of Château Angélus wine from the 2020 vintage for $100,000 NFT, which also came with digital artwork, an invitation to a tasting, dinner, and harvest.
- Meanwhile, Hello Fam! has partnered with Israeli winery Jezreel Valley — a case of their Genesis Vintage 2021 wine, which can only be purchased via blockchain, it also comes with digital art. The wine will be stored indefinitely in an insured, temperature-controlled room. At any time, the investor will be able to redeem their token and receive the bottles.
Wine logistics using blockchain technology will ensure security and eliminate the risk of counterfeiting. Blockchain records cannot be changed, which allows for the automation of logistics processes.
Do you want to use a blockchain in your wine business? Contact us, and we will develop any blockchain solutions just for your project!
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