The digitalisation of the wine sector is in full swing but all too often you get the impression that no one is taking notice of it. The key reasons for that are certainly a lack of understanding of what is out there, how the different technologies work and what they do or can do in the wine industry. The OIV last week hosted a symposium on the subject and it’s a good opportunity to summarise where we are in terms of digitalisation, how we can benefit from it and what will happen next.

 

Digital Trends, Smart Vineyards, and the Transformation of the Wine Sector

The wine industry is often considered to be prone to change. Tradition plays a huge part and farmers are habitually reluctant to consider altering something that has worked so well in the past. One reason to do so could be to improve the way vine are grown, wine is made and how it is sold Make it more efficient, easier, or cheaper or, at best, all of the above. Another is the need to adapt to a changing environment and the selection of the word could not be more accurate. Climate is (or has been) changing and with it the playing field: the weather in terms of higher temperatures and more extreme weather events. With it the soil and the vines that have to withstand the challenges that are caused by climate change: drought, wild fires, frost, hail – you name it. The population is changing and its habits: more considerate about alcohol consumption, sustainability and the ecological impact of the wine industry, e-commerce and price transparency on one hand and wine tourism the other – just a few trends that emphasise the change in how wine is sold. What is clear from it though is that we live in a rapidly changing world and the wine sector needs to adapt to it, too – if you like it or not. So, why not educate yourself a little bit on useful technology and digital trends that will shape the industry in the years to come? Here we go:

 

The state of digitalisation

Before we get into the different technologies in a bit more detail, we should establish the status quo. The OIV conducted a survey to do exactly that. It sent out a number of questions to experts in 18 member states.

To begin with, and slightly contrary to the view expressed above, the experts stated that the current extent of adoption of digital technologies in the wine sector is above average in comparison with other agricultural sectors like coffee, cocoa and olive oil. The survey also found that 68% of all experts considered the impact of digitalisation in the vine and wine sector to be highly or extremely relevant with the latter alone accounting for 40% of responses.

Distribution is the stage of the value chain that is currently considered to be the most digitalised at 50%. It is also the element according to the participants that is going to benefit the most from digitalisation in the next 5 to 10 years (81%) with AI in smart storing the most notable aspect to improve. Nonetheless, the work in the winery (49% respectively 76%) and in the vineyard (38% and 70%) received similar or slightly lower numbers.

In terms of benefits, improved data collection in the form of data on quality, weight, grape acidity, etc. was the pre-dominant response (89%) closely followed by increased traceability (85%), availability of new channels of distribution (79%) and new ways of working (78%).

The degree of development of the key technologies, however, is seen at a relatively low level of maturity at only 40% ranging from 47% with regard to satellite imagery as more developed technology to AI at 30%. According to the respondents there has also been relatively little support in the form of public initiatives to promote digitalisation in the wine sector.

Lastly, the survey determined that the digitalisation of contents and satellite imagery are along blockchain the three technologies that should be prioritised for the digital transformation as they are seen to increase efficiency, productivity and regulatory improvements.

The authors of the OIV report based on these results conclude that the wine sector has entered an age of modern digitalisation though at a low maturity level but with a high rate of growth and potential. To do so a number of challenges have to be overcome as identified as the lack of public initiatives support, the high implementation costs for small producers or the low commitment of end-users.

 

Technology explained

The survey of the experts from various OIV member states provides valuable insights on the current status in terms of development and adoption. It also identifies to an extent what has be done and what needs to be done to promote digitalisation in the wine sector. What has become clear is the need to educate all stakeholders and that’s why we have gone through the OIV reports and summarised the main technological tools, what it is about, where it helps and where we at on the curve of development and adoption, one technology at a time:

1. Internet of Things (IoT) / Sensorization

• What is it about?

IoT or the Internet of Things describes the network of physical objects (things) that incorporate sensors, software and other technologies in order to connect and exchange data with other devices and systems over the Internet. These devices range from common household objects to sophisticated industrial tools.

• Where does it help and what are the benefits?

IoT provides substantial benefits along the entire value chain with sensors potentially collecting all kinds of data such as soil and water conditions, weather forecasts, temperature, sugar and acidity levels in the must and wine and so on: it helps in the vineyard to reduce risks during harvesting; in the winery it helps to control all the relevant parameters for a correct winemaking process and to guarantee a quality product; and during storage and distribution it boosts efficiency and reduces costs.

• At what stage of development and adoption are we?

IoT in general has already achieved a high level of development compared to other technologies. In the vine and wine sector its adoption varies drastically though and depends very much on the specific organisation: whereas it is completely absent from many traditional vineyards and cellars, others are already reaping the benefits of its use. Yet, while a few years ago the sheer cost and time of implementation were uneconomic, different components even for small wineries have now become more affordable and systems are easier to install, manage and maintain, nullifying this argument. Still, the general adoption and where it will be deployed along the value chain will depend very much on the profile of each company.

 

2. Artificial Intelligence (AI)

• What is it about?

AI is a branch of computer science concerned with building smart machines capable of performing tasks that typically require human intelligence. AI is an interdisciplinary science with a wide range of applications and can be classified into different layers depending on its use of machine learning and deep learning, Similar to human brains, AI learns from experience by using advanced algorithms and software to identify patterns or features contained within large amounts of data to make predictions based on such information.

• Where does it help and what are the benefits?

AI, too, is already used in many sectors and parts of our lives. Just like IoT it provides important benefits along the entire value chain: in vineyards, AI software can provide valuable insights into “quantifiable aspects (e.g., size, yield) and other conditions on vineyards and can enable winegrowers to improve many aspects involved in crop monitoring and vineyard management. In the winery, AI helps maximisingtheir productivity and can contribute to more sustainable production through quality process monitoring.And as part of the distribtution, wine marketers use AI to reach the end customer, changing the way consumers buy wine, understanding product preferences and generating disintermediated direct channels to the end customer that will ultimately benefit productivity, for example through processing of wine reviews and recommendations.

• At what stage of development and adoption are we?

Although Artificial Intelligence is already widely deployed in one way or the other, it is still at an early stage of development and adoption in many sectors. The wine sector is no different, making it still early days for AI, but showing its high potential for future growth.

 

3. Robotics

• What is it about?

Robots are basically machines controlled by a computer, used to perform jobs automatically. So far so eays. Robtos can be used from doing basic, monotonous tasks to perform more complicated actions that ease different types of work with different levels of autonomy.

• Where does it help and what are the benefits?

Robots can be used for planting and subsequently monitoring factors such as grape yield, vegetative growth and grape composition in vineyards. Just as well, Pruning, fertilizing vines and the harvesting grapes can be carried out by robotics. In the winery, robots could be used at many stages, mostly though in warehouses for inventory control and movement.

• At what stage of development and adoption are we?

In sectors like the automotive industry, robotics is highly developed and plays a crucial role. In others like the wine sector, it is still at an early stage due to high costs, mentality towards technology, and lack of trained professionals. Still, it is only a question of time until we see more autonomous electric tractors, but don’t expect cyborgs replacing human workers picking grapes anytime soon.

 

4. Satellite Imagery and Geographical Information Systems (GIS)

• What is it about?

Images taken by satellites (or satellite imagery) are used for a wide range of purposes such as cartography, geo-positioning, studying climate change, geographic surveys. Thermal images and infrared images overlaid with the other images can provide a comprehensive picture that yields a vast amount of accurate information on the state of the terrain, crops, and more.

• Where does it help and what are the benefits?

Satellite imagery can produce invaluable insights on the state of vineyards, diseases, ripeness, or soil conditions and together with AI and IoT build predictive models to forecast annual harvests, anticipate severe weather, quickly and accurately detect diseases or pests, and learn from the history of previous years to increase or improve harvests.

• At what stage of development and adoption are we?

Satellite imaging technology is already at an advanced stage of maturity and will become widespread, as will the integration with other different technologies (IoT, artificial intelligence, etc.) and new applications and uses.

 

5. Laser Imaging Detection and Ranging (LiDAR)

• What is it about?

LiDAR is a remote sensing method that can be used to map the structure including height, density and other characteristics of vegetation in a region. The system emits light in the form of a rapidly firing laser, which travels to the ground and reflects off objects such as buildings and tree branches. The reflected light energy then returns to the LiDAR sensor where it is recorded. Think of sonar technology, just with light instead of sound.

• Where does it help and what are the benefits?

LiDAR is used to map the vineyard in 3D and together with other technologies as the technology moves through the vineyard, it analyses the condition of the different areas in terms of fruit quality, and identify the need for fertilizers for precise application making it more efficient and sustainable. It can also help to reduce accidents in the vineyard thanks to a detailed 3D map of the terrain that perfectly maps slopes, holes and other kinds of hazards. More so, it is indispensable for the use of robots and autonomous vehicles since they rely heavily on the information provided by such systems.

• At what stage of development and adoption are we?

LiDAR is already deployed but its use will increase alongside the growing use agricultural robotics. It will also become more accessible in terms of cost and adaptability for drones and tractors.

 

6. Blockchain

• What is it about?

Blockchain is a chain of blocks that contain encrypted information sent in the form of data transactions on the network. It is based on distributed ledger technology (DLT), which means the stored information is distributed across a network rather than a central database. As a result, it does not necessarily require a third-party to certify the information. All information on a blockchain is potentially immutable as as each block contains information from the hash of the previous block and (potentially) only new information can be added. Blockchain technology also works with smart contracts, a computer code that allows a contract to be verified and enforced automatically, making it legally valid without the need for human interaction. This adds a layer of security as it is basically a trustless technology that does not require a trusted party like a bank in the financial system that acts as intermediary between two transacting parties. It is the basis for cryptocurrencies like Bitcoin, which can be used to transfer value between two parties without intermediary, securely and at a fraction of the time required for traditional transactions. While Bitcoin and other cryptocurrencies are fungible tokens, i.e. each Bitcoin is the same as any other Bitcoin, Blockchain technology can also be used to issue a Non-Fungible Token (NFT), i.e. a token that is unique and that can represent a specific asset that is unlike any other like a specific house, a piece of art, or a bottle of wine.

• Where does it help and what are the benefits?

People have been getting excited over Blockchain for some time as it promises a number of exciting opportunities: thanks to its cryptography and the distributed ledger it improves security and privacy as well as trust (since it eliminates the need for it). It reduces costs and at the same time increases speed, visibility, transparency and traceability. For the vine and wine sector that means that products like grapes or individual bottles can be traced almost anywhere in close-to-real-time. It improves trust along the supply chain with transparent data potentially available to all stakeholders up to the consumer. It helps to fight fraud in a sector that has seen large percentages of counterfeit products and high reputational risk. While the OIV report mostly sees an application at the distribution point on the value chain, in reality Blockchain connects all points bringing benefits to the vineyard and winery as well. Just take the speed and ease of automated compliance with legal and regulatory requirements.

• At what stage of development and adoption are we?

The real breakthrough of Blockchain technology is the communication and execution of transactions between machines without the intervention of humans. Blockchain technology will beyond its other benefits of transparency, security and traceability, enable a system that could revolutionize our lives just as the internet did. Still, in many ways it is still early days and adoption of Blockchain technology has not been as quick as has been hoped for by technology enthusiasts.

Its development and adoption have been hindered so far by data privacy and regulatory aspects together with lack of standards and concerns over energy consumption as well as the lack of skilled professionals. These obstacles are substantial and although progress has been made generally, there is a lot of work to be done, not limited to the wine sector. Having said that and simply considering the excitement that surrounds Blockchain technology in the wine sector as well, it has huge potential.

 

7. Electronic Labelling (E-Label)

• What is it about?

An E-Label is a way for manufacturers to provide a greater amount of information than what fits on a traditional wine label. Compliance information is created electronically and displayed on the screen.

• Where does it help and what are the benefits?

Benefits are mostly situated in the distribution along the value chain thanks to improved transparency, security against fraud and increased traceability. Especially with regard to increased transparency for consumers thanks to the implementation of E-Label producers can include more information in their bottles, including media content, through the use of QR codes.

• At what stage of development and adoption are we?

The use of electronic tags is now becoming widespread, but still has room for growth, especially in terms of potential applications and use. Traceability, cross-selling, and compliance, potentially in combination with the use of Blockchain technology, are some of the areas where investment in this technology is being made and more progress is to be expected in the short to medium term.

 

8. Electronic Certificates (E-Certificate)

• What is it about?

An E-Certificate is a set of data that enables (i) the identification of the holder of the certificate, (ii) a secure exchange of information with other persons and institutions, and (iii) the electronic signing of data sent in a way as to allow verification of its integrity and origin.

• Where does it help and what are the benefits?

The benefits are spread throughout the entire production chain in the vine and wine sector, from obtaining raw materials to marketing and exporting the finished product. The main benefits are reducingtime issuing certificates, an improve certificate integrity and security, and that it is environmentally friendly.

• At what stage of development and adoption are we?

There are number of certificates in use in the wine sector, but there are no commonly agreed standards for e-certificates, nor does it have any global certificates to simplify the trade of wine between countries or regions. This needs to be overcome and by doing so the functional, technological and financial modelof e-cerificates as thethree main aspects must first be defined for it to become a cornerstone in the digitalization of the wine sector.

 

9. Smart Storing

• What is it about?

Smart storing or smart warehouses aim to provide efficiency to logistics, helping companies reduce costs and increase product input and output cycles. This is the latest technology used in logistics centres to increase efficiency in processes such as the reception of goods, order preparation and product storage.

• Where does it help and what are the benefits?

Certainly, at the point of order management and distribution with benefits such as the efficiency in order preparation, increased fluidity in logistics processes, and improved safety for employees, storage systems and goods.

 

• At what stage of development and adoption are we?

Generally, smart storing is at an early stage of adoption in all sectors. Having said that certain organisations with a high volume of storage and a large number of product references (think Amazon) are already profiting massively from the use of it. While the implementation in smaller organisations is likely to be more complicated and costly in comparison, it can still produce significant overall benefits.

 

The bottom line

These summaries are just that: a summary of the technologies, how they help and their status quo. For more information, have a look at the OIV report as a starting point, which also provides references for additional information. You can, of course, consult the internet as it is full of information on these topics, or if you want to talk about something specific, connect on Twitter or drop me a line in the contact area.

 

The Future of the Wine Sector

Lastly, a word or two on the future of digitalisation in the wine sector and in particular with a view to the opportunities and challenges that await us.

In respect of opportunities, there are large benefits in terms of efficiency, productivity and transparency to be reaped. Digitalisation will help to create entire new business models but more importantly will help to transform the sector to comply with a need for more sustainability.

The road ahead is a long and winding one though: many of the above technologies come with high implementation costs. The ascertained lack of public support and initiatives especially in the wine industry is not going to help the development and adoption of innovative technologies. Other sectors have shown both how it can be done and the benefits that will come from it. There is without doubt low commitment of end-users and to change that much needs to be done in terms of education and promotion. The lack of international standards does not simplify this endeavour and needs to be addresses as it will otherwise disrupt any initiative that is taken. And lastly, the OIV points out the widespread unawareness regarding the potential of the technological advancements in its report. This is not only true with regard to vintners and farmers but also to technology providers as well that need to be educated about the specifics of a sector that has many peculiarities.

The OIV and its experts have painted a picture of smart vineyards and a more sustainable industry: information provided by drones, sensors and through satellite imagery, analysed by AI brings more informed decision making. It establishes early warning and detection systems in times of more frequent extreme weather events and new diseases. It will improve both sustainable and profitable crop production especially with a view to the collection, use and regeneration of water, an already scarce resource. The same holds true for the consumption of energy and its renewable supply.

Digitalisation is the key to this better wine sector and provides us with the right tools, but much needs to be done yet.

 

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If you were looking for the usual round-up on news, I’m afraid it has been a slow week and I thought the time would be better used by reading up on the technology that is going to change the wine sector forever. As always though, if you have an interesting story to tell or simply want to chat about wine as a guest on the Podcast, connect on Twitter or drop me a line. And if you want to stay in the loop about things happening at the JollyCellarMaster and the world of wine, make sure you sign up to our newsletter.

 

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