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Case Study: Luxury Wine and Spirits

Updated: May 17, 2023

Examination of using LaserMinters for the laser engraving of phygital passports onto glass surfaces, PVC seals and metal enclosures for luxury wine and spirits products.

The counterfeiting of luxury wine and spirits products has recently become a very big business. These illegal activities (as with most luxury counterfeiting activities) are mainly centered around South East Asia and China - but sold to all globally online. Winemakers and distillers alike are losing billions of dollars in potential revenues to highly sophisticated counterfeits that appear nearly identical to the authentic product. Given that the luxury branded product can sell for many thousands of dollars a bottle, this has now become a major problem in the burgeoning wine and spirits market.

One global winemaker has recently estimated that over $20 million of fake wine bottles labelled under their various brands were sold in China alone last year. Given many of the popular wines come packaged in unique custom bottles, the criminals even resort to salvaging used wine bottles from the rubbish of hi-end expensive restaurants. They then clean, repurpose and relabel the bottles and fill them with cheap nasty fake wine. They are effectively selling authentic packaging with a counterfeit product inside. For more standard wine bottle shapes and colors they source identical glass bottles from a bottle manufacturer so they can scale their fake product volumes more easily. Given the recent explosion of wine for the highly aspirational wealthy class in China, large scale counterfeiting represents a huge potential loss for winemakers in this massive market.

Only once a luxury wine bottle is paid for, cellared for years and then finally opened by the customer will the counterfeiting usually be discovered. However, more often than not, the customer is either oblivious to the relative quality of the product or is reluctant to report a possible fake item to the retailer or manufacturer. Even if the poor quality of the fake product is discovered, the customer often believes it is authentic and blames the winery or distillery themselves. Hence counterfeiting can not only be a source of lost revenues for the winemaker or distiller, it can also severely hurt their brand reputation.

Decentryk has analyzed this rapidly growing problem and developed 3 different anti-counterfeiting solutions using its Phygital Passport technology and LaserMinters. These 3 anti-counterfeit solutions for wine and spirits manufacturers are as follows:

  1. 3FA authentication with engraving onto a metal screw cap enclosure or PVC seal using the LaserMinter IR or LaserMinter UV.

  2. 3FA authentication with engraving onto a glass bottle using the LaserMinter UV.

  3. 4FA authentication with engraving different QR codes onto the PVC seal / metal screw cap and the glass bottle using the LaserMinter UV.

(1) 3FA authentication with engraving on metal screw caps and PVC foil seals using LaserMinter IR (Basic, Pro and Plus).

Most premium wine bottles are sealed with a cork during bottling, and then the neck of the bottle is further sealed with heat shrunk PVC based foil. Alternatively, an increasing number of wines now employ an aluminum metal screw cap (or stelvin) which provides for much less leakage and spoiling of the wine product over time. The screw cap seal is replaceable once broken, and is also harder to counterfeit than cork with PVC foil seals - which can be readily removed and then re-corked with a new heat-shrunk foil on top. The bottle sealant situation for premium distilled spirits such as scotch, whiskey, vodka and gin is the reverse of wine. The majority of spirit distillers employ an aluminum metal screw cap seal with their bottles, while to a much lesser degree they use a resealable cork plug with PVC foil enclosure on top. This is due to the fact that drinkers of spirits typically finish a bottle over many days, weeks or months - while the full bottle of wine is usually drunk in a day because it spoils on exposure to air.

Minting a Phygital Passport onto the bottle neck sealant (using 1 physical QR code and 2 digital QR codes) is the ideal anti-counterfeit solution for most wineries and spirit distillers. When a metal screw cap or PVC foil is broken while opening the bottle then it is very easily identified. Replacing the metal cap, cork or PVC foil to look as good as original is possible. However it is much more difficult to replace a seal with a laser engraved QR code specific to that unique bottle. Furthermore, only the actual legal owner of the wine or spirit bottle will also have access to the digital QR code connected to the NFT stored in their digital wallet. And only the creator or owner of the QR code mark can verify the product as authentic via the Phygital App using the SCAN-HASH-VERIFY 3FA protocol.

Below are videos and images of a LaserMinter IR in our application lab applying a laser engraved QR code to (1a) a PVC foil enclosure and (1b) a metal screw cap:

(1a) PVC Foil Enclosure

(1b) Metal Screw Cap

The LaserMinter IR can accurately mark scannable QR codes down to a 5mm x 5mm small area. Note that when marking QR codes on the curved surfaces of bottles, foil or screw caps a bottle roller accessory may be required for rotation to mark accurately and evenly (roller is included in LaserMinter IR Plus and IR Pro bundles). However this depends on the size of the QR code to be marked, the depth of focus of the laser setup, and the radius of curvature of the bottle surface. If the QR mark is small enough (ie: less than 10mm x 10mm area) then there is generally no need for a roller accessory to rotate the bottle neck. The same approach for engraving wine enclosures also works with screw cap and PVC foil enclosures for bottles of distilled spirits. Ultimately, it is the shape and size of the marking area that determines the quality and resolution of the QR code mark. The LaserMinter UV version can also be used for these PVC foil or metal screw cap applications for even greater resolution and potentially a readable QR code area down to 3mm x 3mm. The LaserMinter UV, while being significantly more expensive than the LaserMinter IR, is also the only version that can mark QR codes directly onto the surface of glass bottles. With some user experimentation it is even possible to mark tens of mm under the surface of the glass (ie: sub-surface marking inside the glass volume).

(2) 3FA authentication with engraving directly on glass bottles using LaserMinter UV.

There are several reasons for choosing to laser mark the physical QR code directly on either the surface or sub-surface of a glass bottle. Most of these reasons for glass marking are in fact aesthetic or brand-related in nature. A clear or colored glass product has a unique exclusive luxury look that lends itself to valuable collectible products. Given that (a) the LaserMinter creator software allows you to add any custom text or logo images to the laser engraving, and (b) the LaserMinter can mark up to 70mm x 70mm large areas, there exists huge potential for producing an entirely glass engraved branded, labeled and coded product without any conventional printing or paper labelling involved. Obviously a bottle roller accessory is essential for cylindrical bottles and large area applications. The bottle roller accessory is included with the LaserMinter UV Pro bundle.

We have tested out various QR code sizes and engraving methods on numerous glass materials with the LaserMinter UV Pro bundle. In general the best and clearest engraving results come from marking on the surface of either colored or clear glass down to 5mm x 5mm QR code areas. Ultimately the shape and color of the glass is usually the limiting feature as to the quality and resolution of the mark. An example of a QR code (12mm x 12mm) engraved on the surface of a glass wine bottle is shown below:

Glass bottle engraved with LaserMinter UV

While the LaserMinter UV version for marking glass has significant aesthetic appeal over the IR version for marking metals and PVC, this anti-counterfeit solution is slightly less secure than the IR laser solution for marking the QR code onto metal screw caps or PVC seals (see solution 1). This is because if the metal / PVC sealant has been broken and removed then there is no way of knowing that the sealant and liquid product inside is genuinely authentic. The authentic wine or spirit could have been consumed already, and a fake sealant without a QR code could have been applied to the authentic bottle.

As with every Phygital Passport solution, only the actual legal owner of the wine or spirit bottle will have access to the digital QR code connected to the NFT stored in their digital wallet. And only the creator or owner of the QR code mark can scan the physical QR code and hash it with the digital QR code to verify the product as authentic via the SCAN-HASH-VERIFY 3FA protocol.

(3) 4FA authentication with engraving 2 different physical QR codes on the bottle seal and glass bottle using LaserMinter UV

The LaserMinter software has an additional "ultra-security" option that was initially developed with 4-factor authentication for engraving 2 different physical QR codes onto the engine and chassis of an exotic car. The same optional extra security process can be applied to the PVC seal / metal screw cap and the glass bottle using the LaserMinter UV.

Minting a Phygital Passport onto both the bottle neck sealant and the glass bottle (using 2 physical QR codes and 2 digital QR codes) is the ultimate 4FA anti-counterfeit solution for the most premium of winemakers and spirit distillers. Having a different QR code for the metal / foil sealant to the QR code engraved on the glass bottle ensures 100% that the sealant was manufactured for that specific glass bottle. And both need to be scanned together to ensure product authenticity. The bottle and sealant are authenticated via the Phygital App using the 4FA SCAN - SCAN - HASH - VERIFY protocol option. Note that only the creator of the passport or the legal owner of the bottle can scan both physical QR codes and then hash them both with the NFT linked digital QR code to generate the final phygital QR code required to verify the product on the 3FA Library (which in this case is equivalent to a 4FA Library). Although this solution might be overkill for most luxury wine and spirit products, if a product is worth tens or hundred of thousands of dollars - it might be worth the effort.

Only the LaserMinter UV can engrave on both glass bottle and metal / PVC surfaces.



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