An NFC-Enabled Anti-Counterfeiting System for Wine Industry

Wine counterfeiting is not a new problem, however, the situation in China has been going worse even after Hong Kong manifested itself as a wine trading and distribution center with abolishing all taxes on wine in 2008. The most basic method, printing a fake label with a subtly misspelled brand name or a slightly different logo in hopes of fooling wine consumers, has been common to other luxury-goods markets prone to counterfeiting. More ambitious counterfeiters might remove an authentic label and place it on a bottle with a similar shape, usually from the same vineyard, which contains a cheaper wine. Savvy buyers could identify if the cork does not match the label, but how many “normal” consumers like us could manage to identify the fake with only eye scanning? NFC facilitates processing of wine products information, making it a promising technology for anti-counterfeiting. The proposed system is aimed at relatively high-end consumer products like wine, and it helps protect genuine wine by maintaining the product pedigree such as the transaction records and the supply chain integrity. As such, consumers can safeguard their stake by authenticating a specific wine with their NFC-enabled smartphones before making payment at retail points. NFC has emerged as a potential tool to combat wine and spirit counterfeiting, undermining international wine trading market and even the global economy hugely. Recently, a number of anti-counterfeiting approaches have been proposed and adopted utilizing different authentication technologies for such purpose. The project presents an NFC-enabled anti-counterfeiting system, and addresses possible implementation issues, such as tag selection, tag programming and encryption, setup of back-end database servers and the design of NFC mobile application. The integrated system is consisted of different component hardware and software, and so the best combination of settings, parameters and deployments should thus be identified. The critical design of the whole NAS is vital not only the key to prevent the supply chain from wine counterfeiting problems accordingly, but also the strong foundation for those later built supply chain systems such as the NFC purchasing system, which is built top of the NAS providing anticounterfeiting functions using merely a smartphone. For the Video Demo of the NAS, please view it at http://youtu.be/qOWPibxESL4. An NFC-Enabled Anti-Counterfeiting System For Wine Industry (NAS) 3 Chapter 1 – Project Backgrounds 1.1 What is NFC-enabled Anti-Counterfeiting System (NAS)? The NFC-enabled Anti-Counterfeiting System (NAS) is an integrated and “open” system tailor-made for winemakers, the supply chain partners and wine consumers, aiming at operating two mobile applications to direct the NFC-enabled smartphone using its NFC technology to connect with the back-end database owned solely by the winemaker through scanning those NFC tags on those wine bottle openings, have already been developed and setup for the purpose of prompting consumers to authenticate bottles of wine at the retailer points. The whole NAS is consisted of FIVE main components, which are 1) the back-end system for wine data management performed by the winemakers, 2) an mobile application, ScanWINE, for tag-reading purpose of wine products at retailer points for wine consumers or partners before accepting a wine, 3) another mobile application, TagWINE, performing tag-writing purpose for wine at wine bottling stage by the winemakers, 4) the NFC tags attached on the bottleneck for those purposes and actions, and 5) the NFC-enabled smartphones or tablets. NAS allows partners or consumers utilizing an Authentic App with their NFC-enabled smartphones to identify wine’s authenticity and integrity anytime and anywhere, providing the authentic wines with sound provenance using the cheap and available technology – NFC, at retailing points. While the winemakers could utilize a Synthetic App with their NFC-enabled handheld devices (or simply their NFC-enabled smartphones) to provide extra security with NFC technology in addition to those existent labeling technologies already being adopted onto the wine bottle for delivering anti-counterfeiting values. NAS has been addressing security of wine from its birth with NFC labels pasted, since it is an open-and-break, recycling-prevented, and clone-prevented system. It offers convenience and simplicity to those wine consumers, partners and winemakers without requiring special tools or sound wine education background to be actually exploited. The NAS is also suitable for all kinds of wine bottle, with specific design of NFC tags working on metallic packaging materials, like foil package, providing multi-lingual verification platforms and promoting connection between original winemakers, partners and consumers. The NAS is designed to be like the frangible label was broken once the wine was uncorked to prevent recycling the bottle. NAS may be the more secured and available solution for different industry players to protect their own interests. The NFC hardware setup costs are low compared with the value of wine products, and hence the expenses of system implementation will be justifiable, as the high prices of wine provides enough incentives for building NAS. 4 Chapter 2 – Rampant Counterfeit Problems in International Wine Trade Chapter 2 – Rampant Counterfeit Problems in International Wine Trade 2.1 The Attraction of Wine to Counterfeiters A variety of news reports and events have already created a situation where wine products have been very attractive for being counterfeited. However, you may ask why wine would be an attractive target, and some have suggested that it is probably because they are valued and priced. Some reviews believed that the recent emergence of those spectacular vintages, like 2000 and 2005 Bordeaux, has already fueled the situation of wine counterfeiting as the market of those extravagant and rare wines and even the wine bottles, has become superheated, making it a hotbed for counterfeiters. As such, the more valued and rare the wine is, the more it could be supposed that winemakers maybe targeted for wine counterfeiting [1]. There are various reasons why wine itself, and its some attributes, making it to be susceptible to be the main target of frauds and counterfeits. For instance, the prices and market values of fine wine have been soaring in recent years owing to the limited supply, diminishing supply of those older vintages and the increasing wealth creating more potential buyers in those developing wine markets and countries such as China, India, etc. [2] The above reasons have already created a vast opportunities for those counterfeiting activities to make money and pose a negative impact on the wine industry and international wine trade. It is not surprising to say that many wine consumers are not really familiar with the knowledge and technique of wine appreciation and recognition. It turns out that there have been other reasons why the wine is attractive for counterfeit, like the difficulty in proving provenance of those vintage wine bottles and the variability of how those old vintages taste. The wine counterfeiting has been getting more aggressive and sophisticated, particularly due to the rising bottle prices rise contributed by the huge demand in the Chinese wine market. With popular empty bottles gathered and even available for sales in China with attractive price, rebottled wine problem with cheap wine and chemicals refilled is rampant in China. For instance, the bottles have been seen copying with the original label, artwork and trademarked name, with slight change on the name and logo of the originals. It has been then different enough not to be a counterfeit but still fool wine consumers. The bottles have always been regarded as originals, since some new or unsuspecting wine consumers and some supply chain partners are not familiar with the real label because of their lack of wine knowledge and, maybe, the inability to read French or English making the situation even worse. Some counterfeiters in China also purchase empty wine bottles with cheaper wine or unknown liquor simply refilled using a syringe, re-cork the bottles, and replace the capsule packaging materials, and sell the bottles as new to market. These types of wine counterfeiting techniques in China are much easier to pass off as the original than bottles produced by cloning the original labels. An NFC-Enabled Anti-Counterfeiting System For Wine Industry (NAS) 5 2.2 Evidence that Wine Counterfeit Market Grows The recent increased publicity on the counterfeited wine has given a large body of evidence that counterfeiting exists on a variety of different levels, and even in a growth throughout the international wine market. Specifically, there is growing evidence of fine wine counterfeit market and even the whole counterfeit industry. Indeed, the US government also estimated the global wine counterfeit industry, with quite different definition on wine counterfeiting, at $5 billion (USD) with a growth rate of 1,700% over the past 10 years in 2008 as well. Similarly, the IACC, in 2012, reported that wine counterfeiting is a $6 billion (USD) a year problem, and it was in fact that the problem has grown over 10,000% in the past two decades, in part fueled by consumer demand and the limited effectiveness of those labeling technologies applied to the wine industry. The following chart demonstrates the estimates on the size of the wine counterfeit market done by the two organizations, and the previous estimates, from 1972, based on the trend as specified by both the organizations. Concerning the wine counterfeiting market, there has been a pile of reported cases of counterfeit wine over recent years all around the world. Some of the more famous cases including 1990 Penfolds Grange, 1994 and 1995 Sassicaia worth over £1 million and fake Rioja estimated at one million bottles under which a famous wine collector, named William Koch, issued lawsuits over the counterfeited wine claiming his magnums of 1921 Chateau Pétrus, valued for about $ 4 million (USD), was filled with cheap California Cabernet [3]. Some even happened that the vintage that was never produced by the original wine producers. Burgundy winemaker Laurent Ponsot discovered that 106 out of 107 bottles of his wine at auction were faked including a sale of Clos Saint Denis 1945 and other old vintages they didn't even begin producing this particular appellation until 1982 [4].