Blockchain Technology, Fraud Prevention and the Future of Wine

Blockchain wine

Imagine if the wine business could digitally eliminate fraud. Or if winemakers could geolocate precisely when and where their wines are being enjoyed, or whether bottles were tainted or tampered with during shipment?

These are some of the transformative possibilities of technologies like blockchain, says Jeffrey Grosset, founder/owner of Grosset Wines in Clare Valley, Australia.

In its simplest definition, blockchain is a digital ledger of transactions. When a transaction occurs, a record of it is added to every participant’s ledger, or block in the chain, across a network of computer systems. This decentralized form of recordkeeping makes it difficult for individual parties to manipulate the results.

Grosset would like to bring this technology to the wine industry. He’s the co-founder of Entrust/Enseal, a company that pairs proprietary software to hardware.

Jeffrey Grosset
Jeffrey Grosset / Photo via Wine Australia

Entrust, the software, geolocates and time stamps the “birth” of a product on a smartphone. For wine, that’s where the fruit was grown and when it was harvested.

When the wine is bottled, that information transfers electronically to Enseal’s tag-tamper near-field communication (NFC) chip. Enseal also records when the bottle is opened. A quick scan of the cap with a smartphone can tell a distributor, retailer or consumer if their bottle has been tampered.

Grosset implemented its use at Grosset Wines by geolocating fruit harvested earlier this year.

“The key to our system is that Enseal assures the provenance, authenticity and the integrity of every bottle of wine,” he says. “That means it identifies and confirms where the bottle is from, exactly when it was harvested and bottled, and importantly, that that particular bottle has not been opened.”

Enseal has been tested on screwcaps, but it’s expected to be compatible with other closures.

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Why go to such lengths to trace a bottle of wine? Blockchain technology could help producers prevent fraud. According to a recent IBM study, 71% of consumers indicate traceability is important and are willing to pay a premium for brands that provide it.

Grosset says wine fraud is a massive issue. “Some say 20% of premium wine in some markets is fake,” he says. “Others say 50%. The numbers matter less than the fact that reputations can be damaged.”

Other applications can include quality control during production and distribution.

Recently, software company eProvenance launched VinAssure, a network designed to resolve wine supply chain issues using IBM blockchain technology and Hyperledger Fabric. The goal is to “assure wines reach the consumer tasting as the winemaker intended,” says Louise Domenitz, the company’s marketing director.

“Some say 20% of premium wine in some markets is fake. Others say 50%. The numbers matter less than the fact that reputations can be damaged.” —Jeffrey Grosset

According to Domenitz, VinAssure connects supply chain members through a “permissioned, permanent and shared record of data.” It stores information about wine, and it track bottles as they move through distribution.

Producers can share a wealth of information with their consumers. They could provide notes on the vintage or harvest, as well as details on the wine’s progress through distribution channels. The technology can detail who handles the wine during transport and storage, and what temperature conditions that the bottle encountered.

Registering wine in the blockchain enhances a producer’s anti-counterfeit systems, which Domenitz says results in “reducing fakes in the market and building brand value.”

Chateau Ste Michelle
Chateau St Michelle visitor center, Woodinville, WA / Photo by Kevin Cruff

A U.S. wine company that uses VinAssure is Chateau Ste. Michelle. Peter Click, the winery’s vice president of international sales, says it adopted the technology to get wines to consumers in optimal condition.

“We currently use blockchain to measure temperature over time in our export shipments around the world,” says Click. “This technology provides us an accurate picture of temperature inside our containers, from the moment they depart our warehouses until they are opened at the final destination.”

With VinAssure, as wines move through distribution, temperature data is stored in the blockchain along with an eProvenance Score from 0-100. The number indicates if wine quality was preserved or damaged.

Not everyone is on board. Smaller wineries, which often have smaller budgets, staffs and more limited distribution, must prioritize other concerns, says Rick Rainey of Forge Cellars in the Finger Lakes.

“At this moment, for a small winery like us trying to break into the mainstream with dry aromatic white wine, all of our efforts in both time and money are squarely placed on spreading the gospel of the FLX,” he says.

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For bigger producers and luxury brands, counterfeit prevention and quality control are key benefits of blockchain. They help build consumer trust.

Robin Grumman-Vogt, CEO of eProvenance, believes consumers expect transparency.

“While the wine world has historically been opaque due to a complex supply chain, consumers are increasingly looking for verifiable provenance and assurance that the wines they purchase meet their expectations,” says Grumman-Vogt. “From concerns about counterfeit bottles to organic certification to proper handling during transport, consumers are looking for information they can trust.”

Published on May 20, 2021
Topics: Wine Technology