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Preventing Counterfeit Goods in the Food, Wine and Spirits Industries

20 February 2023   |   Using NFC
Is NFC 'Smart Packaging' the new way to prevent counterfeit products?

Counterfeiting has long been a well-known problem in the luxury brand industry, with counterfeit handbags, clothing and accessories being sold as the real thing all over the globe. It’s become so prolific that brands have taken extensive steps to help consumers work out which items are genuine and which are fake. Having to dedicate teams of experts to fight against new counterfeiting schemes every single day.

Sadly, counterfeiting has become a growing problem in the wine, spirits, and food industries, causing harm to both legitimate brands and consumers who may unknowingly purchase counterfeit products. Worryingly, fraudulent wine, spirits and food products are not just a threat to the income of large brands, but they also pose a significant health concern too, especially when counterfeit items have been tampered with to make them look more authentic. 

To combat this issue, many companies and organisations have followed the lead of luxury brands and implemented anti-counterfeit solutions to protect their products and consumers. 

In this article, we will delve into the various anti-counterfeit solutions used in the wine, spirit, and food industries, such as the use of ‘smart packaging’ and how this can benefit companies and consumers feel more confident. 

The Cost of Counterfeiting 

There is no doubt that brands are vehemently opposed to counterfeit goods on a number of levels, but one of the most important is the financial cost they are having to deal with. The Europen Business Review stated in 2021 that fraud and counterfeit foods caused £28 billion pounds of loses a year to the global food industry. Advisor wine industry network stated that in 2022 alone, counterfeited wine and spirits cost genuine brands more than £2.5 billion pounds in direct sale income which resulted in an overall reduction of genuine product production by 7%! 

To put this in context, each percentage point of loss equates to around one thousand job losses. In addition, for each lost sale of a genuine product, there is a tax revenue loss for the country too, resulting in less money being fed into the economy for those that really need it. 

New Ways to Prevent Counterfeiting 

One of the new ways companies are protecting their goods from being turned into counterfeit products is through the use of ‘smart packaging’. There are a few ways of doing this from adding QR codes onto the packaging or hiding an authentication NFC tag inside the packaging. Arguably QR codes are not the securest way of preventing counterfeit products as they can be copied. Authentication NFC chips, such as NXP’s NTAG424 or NTAG223/224, generate a new code every time it is scanned which can be verified by a third-party server, making it totally secure. Suppliers are able to feel confident that the tags attached to their products are being managed and verified. Additionally, a quality control system will be in place through the supply chain which will improve the overall customer experience. 

To make these smart labels more secure, NFC ‘Tamper Tags’ can be placed within the labels, which we believe to be one of the best tags for the purposes of smart packaging. These tamper tags can be made in different ways; one of which is manufactured in a way that once applied, it will break apart when an attempt to remove is made, damaging the antenna, therefore destroying the tag. Another way they can be manufactured is with a loop, these tags have an additional loop of wire attached to the antenna. This loop is connected to the chip on the tag and the chip can detect, on scan, whether this loop has been broken or not. Although this concept is still in its infancy there are many innovative examples that food, wine and spirit companies have tried with the NFC authentication ‘smart packaging’ technology. 

Anti-counterfeit solutions for wine and spirits 

There are a number of ways alcohol forgery is done, one of them is through swapping the labels across two separate bottles. Another way is by swapping the contents of the bottle with a much cheaper one. This is potentially dangerous for the consumer as there could be non-certified ingredients or harmful levels of alcohol replaced into these bottles.

To prevent a forger from re-labeling the bottle, companies can place a smart label with a tamper tag on their packaging to detect whether their products have been tampered with. The moment the label detects any form of  tampering tag will no longer scan the same way. Therefore the label will be useless and unable to be transferred onto a counterfeit bottle as it will be recognized as a fake. 

Identiv a supplier of NFC, RFID and cybersecurity whom we have worked with in the past have been working with OTACA Tequila in launching NFC enabled smart packaging. Using the NTAG210u NFC tags on the lids of all their tequila bottles, making OTACA Tequila the first spirits company to fully digitize its product. OTACA’s CEO and founder Anthony Accetta states in Identiv’s article that ‘each purchased bottle maps a journey, inviting a digital touchpoint with product provenance and authentication upon every consumer tag tap’. NFC-enabled authentication allows companies and consumers to have the transparency to build on the customer loyalty through brand awareness. 

Anti-counterfeit solutions for Food 

In 2019, NFCW writes about Kraft Heinz’s cheese slices which have NFC tamper resistant tags. This was used as an innovative marketing campaign for customers to win a gift card. The Kraft Heinz cheese slices used a TT tamper loop tag that allowed them to decipher if the tag had been scanned before or after the tag had been tampered with. This was to ensure that people were not trying to scan the tags prior to purchase just to try and win the prize. This article and marketing technique suggests that Smart labels have been around a lot longer than people realise and can be used in a number of different ways. 

The increase in fraudulent and counterfeit food market as mentioned above is not only detrimental to the global food industry but it also harms manufacturers who receive a significant economic impact, in addition to putting customers heath in serious danger. Some companies are starting to use the NFC tags in food ‘smart labels’ to help combat this issue. One company is Fishpeople, are an American company that uses smart labels to show customers the journey which the fish they are purchasing has embarked on. From where the fish has been caught, on what ship, and on occasions even up to who the captain of that ship was. This simple but effective use of smart labeling allows customers to feel more a part of the process, encouraging customers to put more trust in these companies with their transparency. This use of smart labeling works as both a marketing technique and for authentication. 

NFC Tags provide transparency 

In conclusion, the use of ‘smart’ labels are a relatively new concept when being used to combat fraud and counterfeit foods. There are a few companies who have tried to take this approach have taken a full dive into incorporating their products with these labels. This can be seen with OTACA Tequila who are the first spirits company to fully digitalize all of their products and Fishpeople who show the journey of their product from being caught to the market place. Allowing customers to put trust and confidence in these companies products once again. 

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