Blockchain used in wine provenance for first time

Effective authentication and tracking of fine wine has been realised after tech firm Everledger used the blockchain to register a bottle of 2001 Margaux.

The blockchain is essentially a digital database of time-stamped records or events, which follows the supply chain and transactions of goods to verify provenance. This is the first time a bottle of wine's provenance has been secured on the blockchain.

Specifically, the bottle was certified and secured on the Chai Wine Vault, which is an authentication and tracking solution developed by Everledger and fine wine expert Maureen Downey, and secured by IBM Blockchain. It was launched in November this year.

Certification and authentication is based on Downey's Chai Method involving the collection of more than 90 data points, high-resolution photography and tracking information, which is then written permanently into the blockchain, with information updated as the bottle changes ownership.

Through blockchain, the Chai Wine Vault essentially generates a "digital identity" for the bottle of wine to verify its legitimacy.

"We hear daily from our industry partners on the threat fraudulent bottles pose to sales, trust and most importantly reputation," said Leoni Runge, head of fine wine at Everledger. "Blockchain enables us to secure the identity of an asset in a way we haven't been able to before. For the fine wine industry this means the opportunity to add a layer of transparency to every stage of a bottle's journey across the supply chain."

The digital authentication and tracking will also increase the value of the bottle of wine, which will be important for sellers and buyers alike. In general, bottles of wine that can be proved authentic are worth 20 to 40 per cent more than bottles without the same known provenance.

Fake fine wine is a growing problem, with estimates that 20 per cent of fine wine sales are counterfeit, accounting for about $3bn. But verifying provenance has been problematic, especially for rare and vintage fine wines, where guaranteeing authenticity can be difficult, while such wines can change ownership frequently and document tampering is a risk. Meanwhile, many of the new introduced technologies used for authentication are believed to be likely counterfeited in the future.

Following the high-profile case of infamous wine fraudster Rudy Kurniawan, who faked thousands of bottles of fine wine over a decade, there has been more emphasis on the need to verify a wine's provenance.

"We're starting to see the industry waking up to the impact of counterfeits in the market but to date there hasn't been a solution that could adequately verify a wine's provenance," said Downey.

"Wine certified on the Chai Wine Vault has a guarantee of authenticity, ensures buyer confidence, and protects the future value of wine assets for centuries to come."

The solution by Everledger, which is more well-known for its use of the blockchain to secure the provenance of diamonds, has been described as an "unprecedented solution" that will revolutionise fine wine authentication and protect the future value of wine investments.

Blockchain can be applied to many industries where tracking and authentication is required and can be an essential tool in fighting fraud and fakes, said Donna Dillenberger, IBM Fellow.

"Our work with blockchain shows the potential to dramatically reduce these losses [from fraudulent activity] by ingraining transparency and security in the system from the ground up. Working with Everledger in tracing the provenance of diamonds, and now wine, shows how the application of this technology can fundamentally change the way consumer goods are exchanged."