Collectible wine tends to stay on the market for a very long time and that makes it exceptionally difficult to deal with issues of wine fraud.
Nick Bartman has proposed an interesting idea for fighting fraud in an article at JancisRobinson.com. In the article, he proposes leaving a physical imprint on each wine bottle that is unique to the batch of wine being bottled by that specific bottling plant. Because the machinery for creating wine bottles is large and expensive, it supposedly wouldn’t make any sense for a wine fraudster to try and replicate the process.
His anti-fraud proposal rests on a fairly straightforward, though flawed, assertion:
Something that is difficult and costly to replicate today will also be difficult and costly to replicate in the future.
The good news is that technology progress has soundly defeated this reasoning repeatedly across all industries for the last several hundred years. Take the current price of oil as a present-day example. 10 years ago, drilling for shale oil was prohibitively expensive and it seemed like a great idea for OPEC to keep oil above 100 dollars a barrel. But keeping the price high made it cost effective to invest in shale oil technology, and a decade of progress later, shale oil is suddenly profitable at 60 dollars a barrel. Shale oil drilling: cost-prohibitive 10 years ago, cost-effective today.
And so the same will go with the bottling of wine. New technologies will come along for manufacturing wine bottles. Maybe it will be 3D printing, maybe something else. Maybe it will take another 10 or 20 years, maybe a bit longer. Either way, the cost of creating the physical, glass bottle of wine WILL get cheaper over time – you can count on it. Of course, in 10 or 20 years, that collectible wine being sold as futures today will just be reaching peak drinking age.
That’s the biggest challenge with preventing wine fraud. Any anti-fraud solution has to be robust enough to be useful and relevant multiple decades out. If the anti-fraud measure is based on a central computerized database, the wine industry needs to be sure that the company operating the database will be around in 50 years (not very likely). If it’s based on a costly physical process, there’s a significant risk that the process may be cheap enough in 50 years that it’s no longer a deterrent to illegal reproduction.
That doesn’t mean that combating wine fraud is impossible. The industry just needs to embrace new advances in technology and asset tracking. Our preference is for anti-fraud measures that are transparent, considered impossible to break (e.g. digital encryption), and that don’t rely on centralized systems of record. A great example of this is Bitcoin and recent related breakthroughs in asset tracking.
For a great discussion on using Bitcoin to track wine provenance and prevent fraud, see our blog post here.
