UK blockchain startup Everledger secures first bottle of wine on blockchain

Rage Review : Emerging technology company Everledger and world-renowned wine expert Maureen Downey have collaborated to develop the Chai Wine Vault system to change the tracking records of wine sources in the wine industry. The company became the first organization to use blockchain technology to protect the proof of origin of a bottle of wine. The authenticity of the wine recorded in the Chai Wine Vault system is guaranteed, thereby ensuring the confidence of buyers in purchasing and protecting the appreciation of wine as an asset in the coming centuries.

Translation: Flora

Emerging technology company Everledger is the first organization to secure the provenance of a bottle of wine on a blockchain.

The 2001 Margaux red wine is protected and traceable in the Chai Wine Vault system, a joint initiative between Everledger and world-renowned wine expert Maureen Downey to transform wine provenance tracking within the wine industry.

Leoni Runge

Leoni Runge, Head of Fine Wines at Everledger, said:

“Every day we hear complaints from our business partners about counterfeit wines. Counterfeit wines not only damage wine sales, but also affect trust and even reputation. Blockchain protects the identity of each asset in an unprecedented way. For the fine wine industry, this means that the entire supply process of a bottle of wine is transparent.”

Downey added:

“We have come to realise that counterfeit wines have a significant market impact within the wine industry, but until now, we have not had a solution that can fully verify the provenance of a wine. Wines registered in the Chai Wine Vault system have their authenticity guaranteed, ensuring buyer confidence and protecting the value of wine assets for centuries to come.”

The Chai Wine Vault system issues certificates for wines that have been certified using Maureen Downey’s Chai Method. Downey’s Chai Method includes more than 90 data points, along with high-resolution photographic images and records of the wine’s buyers and storage information. Everledger stores all of this information and creates a permanent digital record of each bottle of wine on the blockchain.

The digital proof of the wine will be passed to different buyers every time the wine changes hands, and the records of ownership and storage information of the wine will be constantly updated. Licensed retailers, warehouses, auction houses and other sales platforms can confirm its origin by querying the digital identity of the wine, which ensures that the value of the wine will appreciate in a few years.

Built on the Linux Foundation’s Hyperledger Fabric, the Chai Wine Vault system is authenticated and secured by IBM Blockchain, ensuring transparency, security and validity of transactions under environmental licensing.

Donna Dillenberger, IBM Fellow, said:

“Billions of dollars in revenue are lost every year to global trade fraud, either due to malicious activity or human record-keeping errors. Blockchain technology has the potential to significantly reduce these losses because it fundamentally ensures transparency and security. Our work with Everledger to track the provenance of diamonds, and now wine, shows how blockchain technology can fundamentally change the way consumers exchange goods.”

As a proven leader in the diamond industry, Everledger has spent the past year focusing on protecting the provenance of diamonds on a blockchain that now holds 1 million encrypted diamond records.

As the provenance of diamonds is threatened by conflict stones and certificate tampering, the wine industry needs to protect the identity and provenance of wine in a secure and transparent way. In the wine industry, nearly 20% of global sales are made by counterfeit wine. Document tampering and fraud issues will continue to affect the entire supply chain from grape to glass bottle.

Until now, authenticators have only been able to spot fake wines, but have not been able to prove a bottle is genuine. Wine authentication was considered impossible due to the risk of clerical tampering and the fact that certificates cannot change with the wine's owner and location.

The Chai Wine Vault system provides the wine industry with a single version of the record of every bottle’s history, and is part of Everledger’s continued contribution to industries where provenance means transparency in global transactions.

Wine is a valuable but fragile asset

Grand Cru wines have proven to be valuable assets that will appreciate in value as long as they are purchased from a trustworthy source.

As a "perishable asset", famous winery wines are the best choice for heirlooms.

Fake wines enter the market and more are produced and sold on the market every day.

Fake wines are often given fake certificates of origin to make them more authentic, and many times people believe these false certificates and buy the fake wines, even reputable merchants.

For now, certified wines are more valuable in the short term, but they must be recertified after every transaction.

Collectors who have purchased rare and famous wines in the last 20 to 15 years are required to have their collection authenticated to ensure that they have invested in something valuable.

Wine has life, but it is fragile. The transportation process and storage history of wine will directly affect its quality and collection life. Therefore, the source is as important as authenticity.

According to auction data of winery direct delivery and imported wines at auction, authentic wine with provable origin is 20-40% more expensive than authentic wine without proof of origin.

Many producers have applied a lot of technology to wine packaging. Once these technologies are circulated, they will be used by counterfeit wine producers in the future to enhance the credibility of counterfeit wine.

The only way to protect wine assets is to develop a solution to the authenticity and provenance of wine that is complex, hierarchical, not replicated by existing technology, and is also unbundlable and infinite. That solution is Everledger’s Chai Wine Vault.

Certified and protected by a blockchain database that cannot be bought or bought, Everledger’s Chai Wine Vault is, and will become, more valuable over decades and generations.

Fake wine: the sad state of the fine wine market

It is almost impossible to accurately calculate the number of fake wines in the world market. However, there are indications that the market value of fake wines currently circulating in the market is as high as more than $1 billion. From 2002 to 2012, Kurniawan made more than $150 million by selling fake wines. This means that in the global wine market, there are more than $550 million worth of fake wines still in the hands of wine collectors, or in the process of being returned or resold. And Kurniawan is just one of the more famous counterfeit wine manufacturers.

Opportunists in Europe, Asia and the United States, seeing the high rewards of counterfeit wine production and sales, and the low risk of prosecution, have joined the counterfeit wine trade, resulting in counterfeit wine manufacturers throughout the global wine market. Our job is no longer to remove the counterfeit wines of Kurniawan, Rodenstock and other well-known counterfeiters, because we find that new counterfeit wine manufacturers are emerging all the time. In fact, after seeing the news on October 7, 2016 that the fraudsters who sold fake wines from Domaine Dugas, Domaine Loumire and Rouget Burgundy were arrested in Marseille, France, a top wine expert in Hong Kong gave collectors advice in an email:

“I suspect this is just the tip of the iceberg. The amount of counterfeit wine coming out of Europe is probably at the level of Rudy Kurniawan.”

Unfortunately, many counterfeit bottles are caught in circulation and returned to the seller due to counterfeit refunds, and are eventually sold as genuine wines to the next unsuspecting buyer.

Wine fraud and counterfeiting have become a costly and widespread problem affecting all buyers and sellers of wine in the global market. Counterfeit wines cost people money, jobs and even lives.

Fake wine accounts for 20% of the global sales market. Data source: Sud Ouest;

According to data from the International Center for Alcohol Policy, 30% of all wine sold is counterfeit. Data source: Wine-Searcher.com;

More than 50% of Lafite red wine sold in China is fake. Data source: New Power, Chairman of the Chinese Academy of Inspection and Immunology;

In 2013 alone, more than 7,000 bottles of Lafite, Mouton Rothschild, Latour and other well-known Bordeaux red wines sold in China reached $32 million. Data source: the Cellar Insider.

75% of Canadian Icewine sold in Asia is fake. Source: Rhys Pender, MW.

Rudy Kurniawan, the convicted counterfeit wine maker, alone produced over $550 million worth of counterfeit wine that is still circulating in the market today. Source: Maureen Downey.

On average, there are at least 2 wine crimes per week involving wine fraud or theft. Source: WineFraud.com.

Everledger’s Chai Wine Vault: The ultimate solution to the wine industry’s age-old problem

So far, the only official report that a rare wine authenticator has been able to fully authenticate a wine is a fake. In the hands of an experienced wine authenticator, a fake 1982 Petrus red can be quickly discovered to be a fake. But proving a bottle of wine is much more difficult. The situation of authenticators, wines, and bottles is changing. In other words, authentication to date has not been able to surpass what came before.

Now, the announcement of Everledger’s Chai Wine Vault system will finally solve this problem.

Wines certified using The Chai Method (TCM) are recorded on the blockchain, creating a permanent digital record of the wine’s origin and history. Maureen Downey, owner/founder of Chai Consulting LLC and a world-renowned authenticator of rare and fine wines, has been working on the program for years.

“Chai Wine Vault’s certification guarantees the wine’s authenticity, assuring buyers of confidence and protecting the value of wine assets for centuries to come.”

Buyers and sellers of rare and fine wines now have a complete solution to confirm the provenance of each bottle.

Everledger

Everledger is a trusted global ledger that tracks and verifies the provenance of valuable wines. Everledger is the authoritative leader in the diamond industry, recording 1 million diamonds on the blockchain. Currently, the company is working to expand the application platform of blockchain technology and solve the problem of counterfeit wine in the famous wine industry by creating a digital wine vault.

Leanne Kemp, Everledger Leanne Kemp is partner and CEO of Everledger, a digital global ledger used to track and protect diamonds and other valuable commodities.

After successfully capitalizing on several startups under her name, Leanne began her career in protecting the global diamond and luxury goods markets.

By leveraging her extensive experience in emerging technologies, commerce, jewellery and insurance, Leanne and Everledger are working together to ensure global transparency by building a digital certification system that will help reduce fraud, black markets and illegal transactions.

Everledger is guiding the market into the world of real blockchain technology applications and has established a set of industry awards, including the 2015 Meffy Award for Fintech Innovation, the 2016 Fintech Finals Best Show Award, the 2016 European Fintech Best Blockchain Company Award, the 2016 Asian Insurance Technology Best Newcomer Award and the Penrose Innovator of the Year Award.

Maureen Downey

Comment by Maureen Downey:

Since I joined the fight against counterfeit alcohol in 2000, I have heard many opinions, some hilarious, some good, but none of them very satisfying.

As time went on and counterfeiting became more sophisticated, collectors, producers and reputable suppliers increasingly called for a program that could confirm the authenticity and reliable provenance of wine.

So far, no technology or solution has succeeded. Wine authentication solutions are not limited to a single transaction of wine. A bottle of wine, each time it is traded, becomes a new entity that needs to be checked and questioned again and again, because there is currently no permanent database about this bottle of wine.

Each time, the available technologies fail to excite me because they either fail to stand the test of time like certification labels that fall off in a damp cellar, or become fodder for counterfeit wines. It is really frustrating that at the very moment when we desperately need wine authentication solutions, RFID solutions can be easily counterfeited within a few years.