The NFC era in consumer goods has arrived. By making it possible for consumers to connect with brands in a fast, seamless, and secure way, NFC is changing how we interact with brands, and how brands interact with us.
I’ve already written about the many ways that NFC tags are delivering intelligence, connectivity, and value in consumer manufactured goods, and I’ve highlighted retail use cases in the fashion & accessories segment. But there’s another sector of retail that has an especially compelling reason to use NFC, and that’s wine & spirits.
The Special Case of Wine & Spirits
Allied Market Research predicts the global market for premium wines & spirits will grow at a CAGR or 4.8% over the next several years, moving from USD 812 billion in 2015 to USD 1.1 trillion in 2022. Part of what will drive that growth is a worldwide increase in disposable income, along with premiumization of products for higher profit margins.
Strong growth and increasing margins at the high end of the market make premium wine and spirits a target for counterfeiters. Fake wines and spirits, made by unauthorized groups and presented as the real thing, is a lucrative and growing business worldwide. It can be hard to get accurate statistics about the amount of counterfeiting that goes on in the alcohol industry, but reports and analysts, regulatory agencies, and new news outlets paint a grim picture. The total value of counterfeit alcohol production worldwide is estimated at USD 1 billion, with at least 12 percent of all alcoholic beverages in the global market said to be counterfeit. In China, nearly a third of all alcohol is reportedly counterfeit.
Aside from lost sales and potentially damaged reputations, though, there is the very real concern that counterfeit or illegal liquor is often tampered with in some way – be it diluted, substituted, or refilled – and this can lead to damaged health or even death. Tens of thousands of people reportedly die from the consumption of counterfeit or illegal spirits each year.
Facing such high risks, the wine & spirits sector has been eager to adopt technologies that increase safety by combatting counterfeits and assuring product integrity. NFC presents a sound investment in this regard, since it offers several features, including digital authentication, crypto algorithms, and tamper evidence, which help ensure products are genuine and safe to consume.
An Industry First: Connected, Tamper-Evident Closures
At NXP, we’re working with industry experts to create ways to protect people from counterfeit wines and spirits. After more than a year’s intensive research and development, working with GCL Technologies, the Technological Research Center of Guala Closures Group, the market leader in the production of non-refillable security closures, we’ve helped create the first fully integrated, mass-scalable NFC tamper-evident closure.
Not only does the NFC-enabled Guala closure protect brands and enable advanced anti-counterfeiting and tamper-proofing, it lets brand owners have a direct engagement with consumers, pre- and post-sale. With a simple tap, consumers can learn more about a beverage, including its provenance, a novel cocktail recipe, or reviews. Then, after opening the bottle, the dialog can extend to access exclusive VIP offers, loyalty rewards, and more.
The Guala closure is an exciting development, because it protects products while creating deeper customer engagements. This kind of innovation is driving adoption of NFC in the wine & spirits sector, and will accelerate growth in the decade ahead. According to the market-research firm Vandagraf International, by 2026, at least 5.5 billion wine & spirit closures will be NFC enabled to connect automatically with the internet, exchanging data via mobile readers.
NFC Protects While Increasing Engagement
Another challenge for brand owners is the question of how to differentiate and reach consumers in light of tough regulations regarding how wines & spirits are advertised. NFC can help here, too, since it helps connect brands with digitally savvy consumers and engages them in new ways. Consumers are increasingly knowledgeable about their beverage preferences and are keen to personalize the ways they enjoy their purchases. Companies can capitalize on this, with digitized content experiences that inform and engage, whether it’s details about the ingredients used, drink recipes and food pairings, or links to sharing on social media. Here are examples of how brand owners are using NFC to engage consumers – integrating NFC tags into bottle labels on the front, back or over the cap:
A Full Range of Possibilities
As the examples show, NFC is exceptionally versatile and does much more than link consumers to websites. Below are just some of the ways a simple NFC tag can deliver enhanced, protected brand experiences. Embedded in a product or its packaging at the point of manufacture, an NFC tag uses its unique digital identifier to connect the physical item to the cloud, and leverages its online dataset to extend actions.
Consumers or business inspectors can digitally verify a product is genuine, anywhere and at any time, using an NFC phone, to help tackle counterfeit sales. Tags can also be assigned to specific locations and distributors, and can thus be used for channel authentication to identify sales outside authorized markets (grey markets).
NFC tags enhance brand value and build loyalty, by letting the product itself deliver brand content, product specifics, helpful services, and personalized experiences. Consumers can quickly access important details about the product and its provenance, access competitions and sweepstakes, re-order products they like, receive tailored recommendations – storing and serving tips, ideas for cocktail recipes or food pairings – or benefit from loyalty rewards, such as exclusive digital content or events such as VIP wine tasting or exclusive access to trendy bars and clubs.
NFC tags can include tamper evidence to detect whether a product has been opened or interfered with prior to sale, in the supply chain or in retail. Battery-assisted tags with sensors can also monitor and record changes in the ambient environment, such as temperature or humidity, while in transit or in storage, to check for any excursions outside specified limits. This assures the item has been handled properly and its quality is intact.
With the help of connected readers and the cloud, NFC tags can provide data on product location, to check traceability along the distribution chain or identify clusters of counterfeits. Location awareness can also contextualize consumer messages based on where the product is sold or used, and can deliver rich marketing data in real time based on the product at hand.
The Time is Now
NFC is helping the Internet of Things (IoT) become the internet of everyday things, where everyday products use cloud connectivity to deliver new kinds of experiences. NFC is more affordable than ever, and a growing number of innovations in paper, plastics, and other packaging formats are giving brand owners more ways to add NFC to their products. In light of this, analysts predict exceptionally strong growth in NFC packaging, with more than a trillion products using NFC-enabled labels and packaging annually within the next few years.
Another factor to consider, in terms of NFC’s potential growth, is Apple’s recent announcement that iOS 11 will support NFC tag reading on phones. That’s something people have been waiting for, and it’s seen by many as a game-changer for NFC. Support from Apple means that iPhone 7s and newer models will be able to read NFC tags just like Android devices. As a result, most of the two billion people worldwide who own smartphones will also have an NFC reader to interact with NFC tags on products. The news makes NFC an even more valuable investment for brand owners and retailers.
Made possible by NXP NTAG
The use cases for bottle closures and labels, cited above, are made possible by NTAG®, NXP’s advanced portfolio of NFC tags. NXP co-invented NFC and is the leading supplier of semiconductor solutions for digital ID applications. When it comes to using NFC in retail, two of the most relevant NTAG product lines are NTAG 413 DNA, for high-level product authentication, and NTAG 213 Tag Tamper, which includes opening detection for added integrity assurance.
NXP’s NTAG 413 DNA offers AES cryptographic authentication and a new SUN mechanism, which generates a unique authentication code each time the tag is tapped. NTAG DNA enables more advanced product protection, and creates exclusive yet secure user experiences. Consumers simply tap the tag to automatically connect to the web to verify the code, without an onboard app. The added security of NTAG DNA helps brand owners protect against counterfeits or reward consumers, as part of a promotional campaign or a loyalty program, while blocking any attempts to copy, share, or manipulate the URLs associated with reward offers.
NXP’s NTAG 213 Tag Tamper combines a digital ECC signature with tamper evidence, so brand owners can protect product authenticity and integrity while enabling advanced user interactions, based on product status, before and after the sale. Connection to cloud services can support real-time monitoring of product status, to be accessed with a simple tap of any mobile NFC device, no app needed. Brand owners can thus further engage consumers through contextual messages prompted by product status (closed/open).
Just the beginning
As NFC is integrated into more bottle closures and labels, it will protect brands and, at the same time, deliver new value for manufacturers, with increased brand engagement and loyalty. NFC will also bring more engaging experiences to consumers, with new access to brand content, offers, digital services, and personalized value-adds.
To help drive the expansion of IoT-connected products and their packaging, NXP will continue to provide the enabling technologies – like NTAG DNA and NTAG Tag Tamper – that make NFC such a powerful trend in retail.
The wine & spirits segment is just one of the many retails industries benefitting from NFC. We’ll cover other verticals, and other NFC benefits, in upcoming blogs.