Few industries stand to benefit from blockchain technology more than the wine and spirits business.
The promise of blockchain is that of an immutable record of business transactions, distributed among multiple computers so as to prevent tampering with the data. The system looks to be of particular value to industries that are highly regulated and require accurate records for their own purposes as well as those of government agencies. Which is where the business of alcoholic beverages comes in.
International Spirits & Beverage Group, Inc. (ISBG) is a producer and marketer of global wine and spirits brands. (Deploying modern-day tech buzzspeak, it calls itself “a disruptive brand incubator.”) Recently ISBG signed onto the blockchain platform known as Volum, to manage its sales and distribution processes.
Volum claims that its blockchain “ecosystem” is specifically designed for “farmers, manufacturers, distributors, public utilities, governing agencies, financial institutions and IoT [internet of things] data hosts.” The platform promises a means of conducting business securely, including the tracking and tracing of product, and the deployment of “smart contracts.” (A key element in blockchain technology, smart contracts are self-executing instruments that enforce negotiation and performance by the contracting parties.) Users can access all relevant data and functions from a single dashboard.
Volum is only about a year old, according to co-founder Arnaldo Detres, and ISBG is the first company to fully join the platform. Up to now, the entity has been in stealth mode, working out such details as IoT enablers, sensors, and how to serve the specific needs of supply chain and logistics. (Detres has a background in the liquor business, having previously worked with ISBG to develop products.)
The unique challenges of bringing blockchain to wine and spirits revolve mostly around satisfying regulators. “It’s not easy,” says Detres. “You can incorporate certain paperwork and processes in blockchain, but when it comes to external agencies for registration and processing, the transactions can be a little bit tricky.”
Detres says Volum wants to work with regulatory and taxing agencies to ease the paperwork burden. “Everything now is e-mail. You wait in line for licensing and registration, and the human factor makes it slower. We’re trying to see how we can streamline that process within the agencies.”
He’s realistic about the time it could take to convince trade regulators of the benefits of blockchain. “They’re open but very old school in the way they think. For anything related to government, there’s a trial period. It takes time.”
Blockchain technology is still limited in its ability to process multiple transactions on a timely basis, adds Detres. “But right now it’s moving efficiently. We’re going by trial and error.”
Blockchain allows for a better way of keeping and reporting payments and other financial transactions, as well as tracing the movement of product from origin to the end customer, Detres says. Bottling and labeling, which involve careful recordkeeping of lot numbers, are also processes that lend themselves well to management on a blockchain.
Volum is still working on streamlining or eliminating the paperwork involved in importing and exporting, as well as creating a marketplace for suppliers of distilleries, he says. And it’s just beginning to bring carriers and drivers into the loop.
Rather than reinvent the wheel, Volum based its technology on Ethereum, the public, open-source blockchain platform on which anyone can build decentralized applications. At the same time, says Detres, Volum is operating on a partially private blockchain for certain internal transactions and sensitive data. The actual number of nodes on which ISBG-generated transactions and data will be stored has yet to be determined.
ISBG’s initial focus is on ensuring that the contents of Besado, its brand of tequila, can be traced all the way back to agave farmers. It’s essential to be able to validate the product’s quality, history and geographic origin, all details that can be stored on a blockchain, Detres says. ISBG also recently launched a CBD (Cannabidiol)-based product to which the Volum blockchain platform can be applied.
Detres says Volum is aiming for late spring to go live with the blockchain for ISBG’s tequila and CBD products. At the same time, it’s conducting trials with companies in additional industries, including bottle manufacturing, healthcare, construction, import and export, and two more liquor brands.
To be sure, these are early days for blockchain technology, which has yet to prove itself as a workable system for all types of businesses, large and small. Alonzo Pierce, president and chairman of ISBG, said in a statement that the company “is eager to incorporate Volum into our supply chain system and support its technology as a combined method of blockchain and enterprise innovation that will contribute to both customer and revenue growth. We’re excited to experience this accelerated pace of paperwork processing, as well as the tracking and tracing of product distribution we execute internationally.”