When Pliny the Elder coined the phrase, "In Vino Veritas," he hadn't anticipated cult wines, digital printing or the Internet. Since virtually every product can become a counterfeit victim, something as ubiquitous as wine is no exception. With estimates that counterfeit fraud is sapping $700 billion in all merchandise sales per year, there is growing concern that some of that loss is falling on high-end wines.

According to David Molyneux-Berry, former consultant to Sotheby's wine auction house, the extreme rise in price of ultra-premium wines has led to a startling increase in the fraudulent labeling and sale of counterfeits. With the publication of the book and soon-to-be movie--The Billionaire's Vinegar by Benjamin Wallace--the selling of fake wine at high prices has moved to center stage. Wallace detailed an extreme case where one collector was allegedly bilked out of $156,000 on the purchase of a bottle of Château Lafite, supposedly owned by Thomas Jefferson. The issue is still in litigation.

At a conference in Napa last year, Molyneux-Berry stated, "Years ago, when a bottle of Château Pétrus sold for only three pounds ($7), there was no interest in producing a counterfeit wine; but now with recent vintages selling for $700 a bottle, and older vintages going for over $10,000, the attempt at fraud is increasing.

"In one case, the records show that only five jeroboams were produced, but somehow, 18 such bottles have been purchased at auctions," he added.

In addition to concern over these prized vintages, fraudulent reproductions of present retail brands are also finding their way to the marketplace, particularly in Asia and Eastern Europe. A recent case in South America unearthed a $100 million wine fraud.

With the introduction of high-tech printing equipment, it is now easy to reproduce facsimile labels. The buyer may not know he has purchased a fake until he has tasted the wine--and, perhaps, not even then. The proliferation of this gray market could certainly affect a winery's ability to do business and damage its reputation. When unsuspecting customers pay a high price while receiving lower, ersatz quality, the brand itself can suffer irreparable harm. Since the fake is not put through the same quality and sanitary controls, health issues could lead to legal suits, further damaging the brand's reputation.

With 1,000 wineries dotting California's North Coast, only a handful appeared alarmed by the talents of counterfeit thieves. In researching this issue, a sort of "let-sleeping-dogs-lie" attitude prevails. Many wineries were reluctant to offer data or comments, perhaps not wanting to "advertise" that they, as yet, had no anti-counterfeit system in place.

One Winery's Unique Solution

Harlan Estate winery has developed its own brand security technology. This leading edge winery has, from its 1988 inception, kept its sights on grand cru, first growth status, and crafted a wine label to match its award-winning wine. Approaching a work of art, the winery's off-oval label incorporates a finely etched engraving of a Victorian maiden picking grapes in an idyllic valley.

"We've always been concerned with protecting our wine and have worked from the beginning to uphold the idea of trust and integrity," said Don Weaver, managing director for the Oakville-based winery.

"While there are a few things we include in our label which we won't talk about, there are some visual features that our customers can check on," Weaver added. "On some of our wines we include latent images. I can say, too, that the paper we use has its own reference point, along with the very high texture and print quality we require. And we're very proud of the fact that our labels were created by the same company that helped to establish the U.S. Bureau of Engraving during the Civil War. It actually produced our national currency and postal stamps for a time."

Brand Security Systems

For those not motivated to create their own, several companies offer systems to fight wine counterfeiting. Eastman Kodak uses a covert system, buried somewhere on the bottle. Hewlett-Packard offers an exclusivity process using both covert and overt methods. A French company, Vincent Bobo Enterprises, has a unique system that can be verified simply by turning on your cell phone. New to security protection is Verayo, a company based in San Jose, California. It uses an encoded IC chip.

Traceless System

"At Kodak we've developed a traceless system. It's covert, which means it's not visible to the naked eye," said Dennis Kercher, global account manager for Kodak. "It incorporates ultra-low levels of a trace mineral, which may be in the label, the capsule or the bottle." Kercher would not disclose where the trace mineral is located. "We work with the brand owner because he controls the authentication process."

A special hand-held imaging reader determines a wine's authenticity.

General manager of Kodak Security Solutions Robert Taylor added that Kodak Traceless Imaging Readers are leased to clients for an annual fee. The readers can also be rented when needed. Costs of the entire system depend heavily on volume and can vary from a few cents per bottle up to a dollar, he said.

Bill Knopka, vice-president at Tapp Technologies in Napa, California, said his company works with Kodak in the printing process. "The technology is very easy to implement but difficult to duplicate by a counterfeiter. It's a new tool for wineries that can protect their brands' reputation and allow the customer to have confidence in the label. We think it'll go a long way in stopping fakes.

"The nice thing about the traceless system is you don't need special skills to distinguish the real brand from the fake," Knopka added. "There's no matching up. The greatest chance of fraud comes not so much from dealerships but individuals and Internet sales, and buyers who can't distinguish between a counterfeit and the real thing."

Ann Colgin, proprietor of Colgin Cellars, a high-end "cult wine" that has a waiting list just to get on the membership list, is using the Kodak product. "We looked at a few systems and liked what Kodak was offering," she said. "I also liked it because it doesn't upset the look of our bottle. It's there, but the human eye can't see it. We feel we have an elegant label, and this method retains that image. It's not obtuse."

Beyond that, Colgin was cautious about describing the process her winery is using or how long they have been using it; after all, her wines leave the winery at $275 a bottle and then head for the sky. "I can say that the procedure is changed every year. It's never in the same place. I could tell you more, but then I'd have to kill you," she smiled.

Colgin said she and her husband originally looked into security systems because they collect older wines and were concerned about fakes. "We now use it as a deterrent, added insurance. It makes us feel better, and hopefully it gives comfort to our customers knowing it's there. We've never known of our wines being fraudulently reproduced, but we have a scanning device to verify authenticity if needed."

Another Kodak user is fast-rising Kosta Browne Winery, a Sonoma County-based winery that produces Pinot Noirs from the Russian River and Sonoma Coast. "We decided to be proactive about our wines. We saw demand was growing, and we were doing well at wine auctions," said Chris Costello, one of the proprietors and managing partner. "We thought we should protect this investment, both for ourselves and our customers. It gives us a certain comfort level, too."

Costello was also modest with the details: "It's a traceless process, but where it is on the bottle is left up to the people at Kodak. They've worked out a very good fit for us, and their technology is one where we can use it now and in the future."

Jennifer Lamb, owner of Herb Lamb Vineyards in St. Helena, is also using Kodak. "We introduced it to our brand two years ago and use it exclusively for our Herb Lamb Vineyard Reserve Cabernet Sauvignon," she said. "We've received no complaints; it's just something we wanted to do. Our main concern is to protect our clients and the reputation of our wine." Lamb said she was introduced to the process by one of her clients. "I looked at it and was impressed."

Chuck McMinn, proprietor of Vineyard 29, appropriately located at 2929 State Highway 29, north of St. Helena, was also an early Kodak customer. "Brand security is really about what wine is, its power, its provenance and where it's grown," he said. "And this is a way of authenticating and protecting that."

His label concept, he said, was a challenge that required a different technique. "We have no paper label; it's a silkscreen design, so the traceless component is in the paint used," he said. "One nice feature is you can't scrape my label off and use it again." He said he is employing the system on both his V29 Reserve, which sells for $225 a bottle, and the Aida Vineyard Cabernet, retailing for $175.

Custom Ink Technology

The Hewlett Packard technology evolved out of brand security in the highly complex pharmaceutical industry, where rip-off prescription pills are an ongoing bane. Steven Simske, an HP brand security representative, said the process incorporates their Indigo Ink technology. "We provide custom ink sets and work with local print service providers like MPSDigital Label (formerly John Henry Packaging Group) of Petaluma. Indigo is a fully variable digital press system and is great for small wineries," he said.

"The traditional offset process can be very expensive just for the start-up," Simske added. "The Indigo process is especially useful for last minute work and small runs. Its big advantage is that it can be unique for each label, making counterfeiting difficult."

Dan Welty, a spokesman for MPS, said the HP Indigo process incorporates visual and covert methods. "Our digital technology guarantees exclusivity and brand security. Its features include simulated foil, metallic logos and border designs; consecutive numbering; variable micro-testing; serialization unique to each bottle; variable imaging; and exclusive 2D barcodes."

Welty added that the cost is mainly in the set-up of the system. "The labels don't cost much more than regular labels," he said. "Our earnings come from the consultation fees and the use of our equipment, inks and other products." He added that the set-up fee could be "as little as $200 to $500."

Reflective Holograms

A security system being used in France by such Bordeaux giants as Château Margaux and Château Latour, as well as by Bordeaux wine consultant Michel Rolland, is the Prooftag process developed by Vincent Bobo, whose company is located near Toulouse, France. The company has developed three security solutions: Bubble seal, which Bobo said is the most secure system as consumers can control security themselves with web access; Dataclear seal, controlled only by consumers or experts with specific equipment; and Cryptomatrix, a system integrated into the labels and controlled only by Prooftag. Costs range from less than $.50 per case up to $7.20 case, depending on system, volume and equipment.

Bubble seal is presently being used by Blankiet Estate and Hartwell Vineyards, both in Yountville, California, and is in the process of being adapted by Calistoga's Peter Michael Winery.

According to Linda Hartwell-La Ponza, Hartwell Vineyards' general manager and the Hartwell's daughter, her family discovered that 375-milliter-bottles of their wine were being sold on the East Coast. "We don't produce any half bottles of our wine," she said. "It's amazing: people can just take your label from the Internet. We now encode all our bottles going into distribution with the Prooftag security label."

Hartwell-La Ponza said their winery began using the Prooftag system in 2006 after their consultant recommended it to them. Presently they are applying the Prooftag process on their Hartwell Reserve Cabernet Sauvingon. "It's a reflective hologram," Hartwell-La Ponza said. "Just a tiny, plastic tab filled with bubbles that can't be tampered with. If someone tries to remove it, it breaks apart and the design is destroyed. Each bottle has its own configuration and is recorded on the Internet. You can use your computer or your cell phone and see the unique configuration of each tab for comparison."

According to Tom Day, Prooftag's U.S. representative located in Sonoma, California, the Prooftag system incorporates a three-dimensional plastic bubble, each having its own unique pattern of micro bubbles. "It's only 12 by 53 millimeters, a quarter-inch wide strip," he said. "The bubble tag is not an image but a series of bubbles that are really encapsulated into a resin of several tenths of a millimeter in thickness."

Day said the bubble pattern is stored in a database. Using software called S.O.D.A. and a reference number, users can go online or just dial the number on a cell phone and view results on the screen. "It makes a comparison through similarities rather than differences," he said. "And you can do it right on the spot. It can be used in small quantities or beyond 250,000. It's a pressure-sensitive tag, and it can even be applied by hand."

Claude Blankiet, owner of Blankiet Estate on Yountville's Westside, is also using Prooftag. Originally from Dijon, Burgundy, he said he had long been aware of the growing problem of counterfeits among the premiere crus of Burgundy and Bordeaux. "I've thought about it for a long time," he said. "There's a lot of concern about the problem; but because most of us weren't sure of just what to do, nobody wanted to talk about it. For one thing, we needed to find something that would work without it being cost-prohibitive."

While Hartwell is having it applied by their bottling company, Ryan-McGee Bottling in Napa, Blankiet said he is applying it himself at the winery. "You can put the tag anywhere you want on the bottle," he said. "We apply it where the bottle-neck and the capsule meet." He estimates his cost to be between 50 to 60 cents per bottle, or about one fourth the price he pays for the cork.

Blankiet said he used the Prooftag process because it allowed the consumer to check for authenticity. "I haven't had a problem but was interested in the technology," he said. "Most systems seem to require a special reader, which might be affordable to a winery but not to a consumer. With this method, you can dial in the reference number, and the bubble appears on your screen. You can compare the bubble pattern and tell if it's an authentic bottle or a fake."

Silicon Biometrics

Using silicon biometrics, the Verayo security system incorporates an integrated circuit (IC) microchip to ward off counterfeiters. Their security label uses PUF (physical uncloneable functions) technology, which was developed at Massachusetts Institute of Technology.

The PUF technology is used in conjunction with Radio Frequency Identification (RFID). A wave of current is sent to the chip, which energizes it to create its own unique current path. By measuring this path, you also obtain the chip's unique fingerprint. When applying the chip to a bottle of wine, each will have that unique fingerprint. "Silicon chips may look alike," said Vivek Khandelwal, marketing director of Verayo, "but just like people, every chip is different. Our system exploits those differences that are unique to each integrated circuit." He added that these chip patterns are impossible to counterfeit.

The IC chip is the size of a grain of salt, and each contains an antenna, a minute strand of wire, according to Khandelwal. Using radio frequencies, the information is relayed via a reader in two phases: first, it identifies the chip by its number; then it authenticates it by reading its personal fingerprint.

Radio frequency waves energize the chip; once activated, it identifies itself and then offers its unique fingerprint to verify its validity. Khandelwal said no special readers are required to scan these chips; however, special, company software is necessary. The cost of the tag is between 60 cents per bottle to a dollar per bottle, depending on volume and where the chip is located.

He said these micro ICs can be a visual or nonvisual part of the label, incorporated as a prominent neck strip or as a coin tag on top of the capsule. "In developing our wine security system, we're hoping to stop cons from trying to pass off faux Château Lafite on unsuspecting oenophiles," said Khandelwal.

Verayo was founded in 2005 and is funded by Vinod Khosla, founder of Sun Microsystems. It has been developing security systems for the Department of Defense.

Make Your Label Hard to Fake

In these difficult economic times, HP spokesman Simske believes counterfeiting is especially on the move. "Counterfeiting is a threat not just to the $100-plus wines. There's plenty of profit to be made from counterfeiting $20 bottles as well," he said.

"Fortunately, new labeling technology can frustrate counterfeiters. The most basic approach is to create a label that is elaborate enough to be difficult to fake. A counterfeiter is in search of an easy mark. It's the same principle as installing a car alarm. An accomplished thief could disarm the alarm but would probably spend his efforts on an unprotected vehicle. If you have a static deterrent, you're a sitting duck," Simske said.

With security labeling, winemakers can once again feel secure in the famous phrase coined by Pliny: In Vino Veritas, i.e., "In wine (there is) truth." wbm