Wine goes digital: Potential in the wine sector

A finger pointing into the middle of a digital net
© pixabay, User: geralt

Everyone is talking about digitization. Even though the term digital is used so frequently, it means something different to everyone. It encompasses anything from automation in production areas to the exchanging of information between producers and food retailers which is still done in an analog fashion in many cases. In sales and back office areas, many things are still “done by hand” although they could actually be done digitally. Digitization therefore offers great potential for improvements in this area and can help to make better use of scarce resources.

Qualified staff who should be offering advice and selling things find that much of their working time is taken up with other tasks. The huge amounts of data associated with each wine and each article are the main problem. These data have to be recorded again and again and stored in databases. This starts with the wine-grower’s cellar book where all important production data are recorded and ends with the offers and price lists which are used in retail to sell the wine.

Digital instead of analog: Optimization and greater security

Not only does recording the data for a wine take up valuable working time, it is also fraught with errors. The information collected includes details of the vintage, the origin, a more specific geographical description such as the name of the vineyard, the type of grape, the quality category or the flavor and even the analytical values. It is supplemented by information regarding the history of the product, its production and a variety of other details for retail purposes. In many cases, this information is recorded manually using various media, resulting in unnecessary disruptions. After all, everyone involved in the value creation chain – from wine-growers, the supervisory authorities and analytical laboratories to wholesale and retail distributors and even pubs and restaurants manage their data in digitized form.

The problem? Connectivity

The lack of digital connectivity is the main problem with the system. According to calculations carried out by researchers at Geisenheim University, the disruptions owing to the wine industry’s use of various media when recording data cost around €15 million in Germany alone each year. Not to mention the costs incurred owing to the errors which occur when entering data manually. As in other areas of industry, the individual companies and supervisory authorities tend to be digitized internally. The problem is that there is no consistent standard for digital connectivity when dealing with the outside world.

The best-known standard for the digitized exchanging of goods is defined and maintained by the GS 1 organization. Most people will be familiar with the barcodes or scanner codes on numerous everyday products. Given the complexity of wine, however, this system is not particularly helpful. The data behind the barcodes contain too few specific details in order to manage specific wines efficiently. The digitization that has occurred on a company level to date offers little benefit if information and data need to be shared between various market players. Because many different databases exist and these databases are unable to communicate with each other, exchanging and passing on information quickly becomes impossible. It is as if these databases speak different languages and cannot understand each other as a result.

The solution? A data platform

There are two conceivable ways of solving the problem. Solution number one: everyone involved communicates using a consistent standard. This is highly unrealistic as there are too many different systems and it will be virtually impossible to agree on a common standard. This would also mean that many past investments were lost capital. Solution number two is much more likely to succeed. In this scenario, a platform in the form of an IT program which can be used by all market players would be put in place. As so-called “middleware”, it would allow the neutral exchanging of data and information which could be supplemented at any time.

Everyone involved would be given access via an interface and could send and receive information. With the VLB database and the ISBN code used to identify each book, the German book trade already uses a solution like this. The wine industry faces the same challenge of putting in place a similar system. Many people expect that the competitiveness of the industry will depend to a large extent on the introduction of such a digital system.

Dr. Hermann Pilz

Dr. Hermann Pilz has been in charge of the trade magazine WEINWIRTSCHAFT as chief editor for over 20 years. He loves writing about many different topics of the wine and spirits industry.