Lock and load: How closures makers are battling counterfeitersBy Tom Bruce-Gardyne
Gone are the days when closures were simply to seal bottles and stop them leaking. Today they’ve become shock troops in the war against fake spirits.
Behind every successful spirit brand lurks a shadowy trail of dodgy bottles. Some will be complete counterfeits, while others are merely bottles refilled with a cheap alternative. It was ever thus, as countless investigations have revealed over the years. In 1896 an analysis of whisky sold in 30 Glasgow pubs found that only two were selling genuine Scotch. More recently, there have been claims that around a third of spirits sold in China are fake, while in India bottles of Johnnie Walker Black Label are said to have at least seven lives. Empties of the revered brand, which is a virtual currency in parts of the country, are recycled by bottle wallahs until the label finally falls off.
Mathieu Prot, Pernod Ricard’s brand security and anti-counterfeiting director, faces this issue every day and he is only too aware of the ingenuity of the counterfeiters. “I have always been very reticent to express an optimistic statement,” he says. “But probably for the first time I’m becoming more confident because the big game changer is the adoption of the connected bottle, which gives us the means to leverage our consumer base. Through interaction with our consumers we are getting much stronger, so I am starting to believe that this is a war we can win.”
The frontline in this war has moved to closures, with the advent of connected bottles that use short-range wireless connectivity known as near-field communication (NFC), which has many potential applications to excite brand owners. “It is the type of technology that allows people to interact without downloading an app,” says Paolo Boratto, marketing manager at Italian closure producer Tapì. “You just tap your phone onto the capsule or label and you can jump into a video or website – there are a lot of possibilities.” In March, Tapì announced a strategic partnership with Thinfilm Electronics in California. According to the accompanying press release, its Speed Tap tag is “designed to allow brands to open a direct channel to customers for delivering dynamic, real-time experiences throughout the consumer journey”.
The firm’s other device, Opensense, contains “a chip connected to an antenna, which has sense lines that can detect whether a product is in a sealed or open state”, explains Christian Delay, Thinfilm’s chief compliance officer. “It’s about giving consumers confidence in picking an authentic bottle that hasn’t been tampered with.” This is where the anti-counterfeit aspect of NFC kicks in. It works particularly well with luxury spirits compared with other luxury goods. If you buy a Rolex in a street market in Bangkok you know it’s bound to be fake from the price, which will be a fraction of the real thing, and to that extent you are complicit in the fraud. Find a bottle of Chivas Regal in the same market and you might well want some proof it is the genuine article, unless you enjoy playing Russian roulette with your health or intend to give it to someone you don’t particularly like.
This ability to recruit consumers in the war against fake spirits represents “a radical change” according to Prot, although he believes there was no need to do much actual recruiting: “The request came from them. Consumers expressed the willingness in some markets to seek reassurance that they would be getting a perfect experience with our brands.” He describes the change as a shift from a “push” to a “pull” approach. “The ‘push’ was to send foot soldiers everywhere with the hope that they will find the places where counterfeit bottles are being sold,” he says. “It’s extremely resource-intensive and you will never be successful in a very large market like China. Now we’re getting the insight directly from the consumer. We’ll never be able to have an investigator behind each and every bottle, but there will always be a consumer there.
“We’re very proud that in China we’re the first player in the industry to adopt the connected bottle on a wide scale, and the level of engagement with Chinese consumers is extremely high.”
Every tap on a bottle generates data for the brand owner and it’s this aspect that “probably has most impact on our ability to be efficient in fighting the counterfeiters,” Prot adds. “They generate insights that we can collect and analyse, and which give us clues and intelligence as to how counterfeiters are operating in the market. We are then able to create a heat map of the counterfeiting activity.” Rather than a scattergun approach, his team can target specific bars or districts whenever something suspicious crops up.
Meanwhile, the world’s leading cork producer, Amorim, has just launched its Tap Series of bartop cork stoppers fitted with NFC technology [see box]. “We spent over three years to ensure its full compatibility, robustness, functionality and longevity,” explains Hugo Mesquita, sales and marketing director.
And rigorous testing clearly matters: “If you announce fancy technology, but for a technical reason the consumer is not able to get a reading out of the NFC, they’re going to assume it’s a fake, and that can damage the brand.”
In June, Guala Closures announced it had fitted 300,000 bottles of Malibu with the device in the US to support the brand’s Malibu Games 2019 promotion. Guala’s group marketing manager, Violette Montagnese, describes the connected bottle as “a brand tool”. She says: “It was born as a consumer-engagement system, and has other features, such as track-and-trace and certification. It shouldn’t be seen as a purely anti-counterfeiting solution.” The firm’s chief marketing officer, Paolo Ferrari, says: “The main interest from brand owners in NFC is in terms of advertising and promotion.”
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The expense of equipping your brand with NFC closures to combat crime becomes a lot easier to bear if you can raid the marketing budget. This is very much the thinking of Thinfilm’s Delay. He pictures a brand team spending US$100,000-US$300,000 a month on search-engine marketing, and says: “In essence, what they’re saying is ‘hey, I’m going to buy traffic from Google and each click that takes the user to where I want them to go probably costs US$1-US$1.25’. For a fraction of that cost they can attach something onto their product and, so long as they get the right engagement rates, that investment starts to make sense. Typically, right now we see that engagement at between 5%-10%, and we only see that growing.”
Before the advent of such technology, Guala has made its name by developing non-refillable and tamper-evident closures since it was founded in 1954. “It was born as an anti-counterfeiting company,” says Montagnese, and today sells more than 14 billion closures a year to help combat the 12% of global spirits that it estimates are counterfeit or illegal. These physical barriers, inserted down the neck of the bottle, involve valves with a number of plastic or glass balls to ensure the spirit only flows one way. “Since the company started, innovation has been in its DNA,” says Ferrari, who stresses the importance of constant research and development in this never-ending battle. “You have to put a small obstacle in the way of the counterfeiter,” he says. “The counterfeiter will take a year or two to go around it, and at that point you put in another obstacle.”
Labrenta, another Italian producer, has developed an ‘ID cork’ system, in which each cork is stamped with a unique code that can be checked on a website. The company also makes the ‘One Way’ stopper – “a non-refillable and tamper-proof pourer, so it’s impossible that others can put other liquids in it”, says marketing manager Federica Maltauro. Impossible? “Well, it’s very difficult,” she says. “It’s very hard to remove the stem inserted in the bottle neck.”
Mathieu Prot, though, is sceptical about physical barriers. “Generally speaking, it’s something counterfeiters can copy,” he says. “I’m not saying they’re useless, but I don’t believe they are the future.”
Jim Rankin, MD of the British cork and closure manufacturer Rankin Brothers & Sons, has been exploring options to incorporate in his stoppers, including blockchain, the technology behind Bitcoin.
“I don’t think there’ll ever be the ultimate silver bullet, but there’s absolutely no doubt we’re making things harder for the counterfeiters,” he says. He suspects that only the big brand owners are able to afford NFC capsules, given a cost of 20p-30p or more compared with 0.2p for an ordinary stopper. But as with laptops and phones, unit prices are heading south as the technology scales up.
Stoppers with physical barriers work on the bike-lock principle. There’s no such thing as an impregnable lock and all a cyclist can hope for is that their bike is harder to pinch than those nearby.
Such stoppers make life harder for bar owners intent on refilling bottles, whereas NFC closures on their own wouldn’t seem to offer much protection behind the bar, unlike in retail, where consumers are empowered with smartphones. Regarding the on-trade, Mesquita says: “That sort of activity has always happened, and I think it always will, but it’s not where the real danger is if you compare it with the scale of counterfeit spirits in underground factories in Russia, China or Vietnam, which is humongous.”
Prot believes the stream of data emitted by connected bottles will allow his team to crack down on such nefarious activity in bars. He is certainly a believer in the power of NFC technology. When asked if it will eventually be adopted by all international spirits, he says: “Obviously we’d start with high-quality brands, but I think it’s just a matter of time. It is about when, not if.”
Click through to the following page to read manufacturers’ views on closures’ research.
With closures for wine a hot topic, is it a growing area of conversation for spirits? Would the spirits industry benefit from more research into closures?
Federica Maltauro, marketing manager, Labrenta
“Companies must find a way to differentiate, offering a product that somehow stands out from others. Packaging is a great way to get noticed on shelves, and we can definitely see an improvement in how spirits producers are investing in it.
“As attention towards the packaging market increases, the image of closures is going up too. The closure provides the moment between uncorking a bottle and the actual tasting, and spirits producers know this. A closure must be something that is nice to look at, but also suitable for preserving the liquid in the bottle – a tricky issue to balance. A satisfactory visual design does not guarantee the performance of the closure.
“Nowadays closures come under the remit of designers, but the skill is combining the design and the technical side of the cap, to get a result that is good to look at but is functional. Researchers play a fundamental role in this.”
Hugo Mesquita, sales and marketing director, Amorim Top Series
“In the world of spirits, packaging is everything. Studies have said that, for instance, in duty free shops the buying decision of a consumer takes no longer than five seconds. Obviously the more care and attention to detail a distiller puts into his packaging, the more the products stand out on the shelf and the more added value the consumer perceives on the price they pay. Closures are on top of the bottle, the very last element between the consumer and the distiller. The more premium, bespoke and natural it looks, the higher the value perception the consumer will have about the drink itself.
“An ever-growing important factor is the growth of environmental awareness in this area. We see quite a lot of interest from premium and craft producers, but also in emerging markets that are looking to market more premium spirits. Top Series, with its sixth sense approach to new product development, has made it possible for every producer around the world to dream of a fully tailor-made personalised closure for all kinds of spirits, including white spirits.”
Paolo Boratto, marketing manager, Tapì
“All of the interest in closures in the wine world is even stronger in the spirits sector. These are times in which packaging is undergoing a true revolution, being used as a means of communicating the product, the company’s values and much more.
“For that reason, huge investments are required in research and development to come up with cutting-edge solutions, currently centred around sustainability and the famous concept of the three ‘Rs’: reduce, reuse, recycle.
“Closure makers are also setting up special projects to make intelligent use of the concepts expressed by the three ‘Rs’ – these include Abor by Tapì, an innovative concept that aims to become an alternative way of conceiving closure solutions for the world of distillates. Abor aims to create custom closures by re-using spent lees from the distillation process, thus replacing the amount of plastic used with what would otherwise be a waste material from the spirit production process. These points indicate that the trends connected with helping the environment, with new materials and with aesthetics are mainly being set by the spirits market, which has always been more dynamic and creative. Indeed, today it is pulling the wine sector along in its wake, although much more slowly than the trailblazers in the spirits sector had done.”