Alcohol industry blockchainization

Alcohol consumption is as old as the humanity itself. There is no way that the civilization will some time in the future give up this habit. and the history had shown us that the different prohibitions are definitely not a solution.

The humanity drank, drink and will continue to consume alcohol in the foreseeable future. Nowadays, the alcohol industry is growing at an undeniably high rate.

This industry includes bar merchants, suppliers, wholesalers, and producers. Due to QYKBAR’s data, the industry grew to an estimated $1.25 trillion in 2016. Considering its current pace, the production is expected to hit the $2 Trillion mark by the year 2025.

The blockchain technology popularity and worldwide adoption grows and has already been implemented in various fields – financial sector mostly, as well as healthcare, logistics, artificial intelligence, new technologies and developments and much more.

Various issues with providers throughout the supply chain exist as well, and it is currently difficult to establish accountability with so many stakeholders involved.

Nowadays, the blockchain tech approach represents a solution for this crisis in the form of smart-contracts that would serve to stabilize this volatile marketplace. Applying blockchain technology and the use of a public ledger that cannot be tampered with, each link in the supply chain would be held accountable. Improved efficiency and greater transparency can be achieved as the result.

Transactions that are currently subject to currency conversions and delays would take place in the specific cryptocurrency, further streamlining the process.

It seems the time has come to use the technology in the production field – particularly the alcohol industry.

Current attempts to bring the market and production together is aimed for solving numerous existing problems of the market and production:

1) The counterfeit problem. According to various studies, 30 to 60% of alcohol nowadays is fake.

2) The issue of product promotion by manufacturers and the decline in the effectiveness of traditional advertising formats.

Fact is, the 1989 year Directive, which is in full force in all countries of the European Union, restricts the way in which information on alcohol is provided. Some states have imposed a total ban on the promotion of alcoholic beverages in Europe, including France, Norway, Russia, and Ukraine.

3) The problem of vast alcohol range choice for consumers. Also, the consumer does not have the opportunity to quickly get acquainted with the variety and prices in different stores.

Considering these problems, specific steps need to be taken to develop the industry and move it on the next circle of production, efficiency, and security.

The unique encoded NFC-tags used for each bottle and specific blockchain tech may help, as the alcohol manufacturers will be able to protect their products from counterfeits and, as a result, increase their product sales and profits of their company.

The mobile application development will be required to be able to verify the authenticity of the products, obtain information from the moment of production until the goods hit the store, aswell as to track availability and prices in the nearest stores.

Blockchain tech can also help the alcohol manufacturers to directly advertise their products at the time of product selection by the end user, showing any information encoded in an NFC-tag (cocktail recipes, ingredients, production method). Moreover, they will be able to create loyalty programs for their customers, use big data to collect information and get targeted at 1,022 metrics, which will increase sales and increase customer loyalty to its brand.

Providing the platform for consumers of alcoholic products reviews, where they could post & read reviews of other users. The artificial intelligence platform will show recommended drinks based on the user’s preferences and experience. Moreover, the consumers can also participate in vendor loyalty programs and receive a reward either in tokens or fiat currencies for writing reviews of alcohol products, depending on the user’s rating and the number of likes of other users.

The industry market size & future

It is estimated, that the current average consumption rate of alcohol per inhabitant of the planet is 6.6 liters of pure alcohol per year, an average of about 60 bottles a year. World consumption number stands on about 450 billion bottles of alcohol per year. The cost of each NFC-tag is 0.06 dollars. The volume of the NFC-label market for alcoholic beverages could be $ 27 billion per year.

Moreover, the recent research indicates that 55% of the inhabitants of the world used alcohol at least once in their lives. The number of potential users of the system is 4.125 billion people. 5 billion people have mobile phones, 80% of them use smartphones that can read the NFC-tag.

There is a global trend both for the use of NFC-tags (the market grows annually) and for protection against counterfeiting, states are obliged to label their products at the legislative level (Bar-codes, QR codes, NFC tags, etc.). IBM company also announced the development of a chip to protect against counterfeit products in the field of drugs, cosmetics and so on.

The identifier itself (NFC-tag) cannot be faked, as it will be produced at the factory and the information will be encrypted in the blockchain. One label can be used in the blockchain only once.

Current existing and future market solutions

There are already blockchain platforms operating in this field. For example, the “Wabi” in China, which focuses on establishing protection from counterfeit products, but it is aimed at the Chinese market exclusively rather than the whole world. IBM is developing a chip and plans a system of protection against counterfeit products in the field of drugs and children’s products. OinSpase conducts a project to protect against the control of the production of QR codes. VeChain (Singapore) solves the problem of counterfeits of luxury goods and product safety for different companies.

The future steps in the vineyard

The world, however, doesn’t escape lightly as verifying authenticity had become as essential as never before – but on a massive scale.

For example, the sales of Pinot Grigio exceeded the amount grown in the 90’s. So what made up the shortfall? Moreover, there had been recent scandals involving Brunello company. Sadly enough, there are plenty of other incidents occured. Fraudsters substitute cheaper inferior wines, cut them with water or use food additives – including even adding such added dangerous chemicals as Diethylene Glycol and Methanol which actually did kill people.

Nowadyas, one of the latest examples regarding alleged fraud involves the large French wine bottler, Raphaël Michel: Carrefour has canceled their supply contracts. The allegation is that part of this scam included passing off as much as 300,000 hectolitres (over 3m cases) of wine classified as cheap Vin de France as far more expensive Côtes du Rhône and Châteauneuf du Pape.

To avoid this, growers could attach an independent DNA fingerprint, Isotopic data, smart sensor data or chemical analysis to the initial Blockchain transaction executed through the specific smart-contract. However, the verification of wine quality, safety and origins are possible from grape to glass.

Moreover, blockchain is being implemented into many projects related to this field – the bars based on the blockchain, the crypto solutions for alcohol logistics, distribution and so on. Well, the future of alchool industry looks bright and sparkle with the blockchain.

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