Alcohol is a major counterfeit target, but brands do have a way to fight back as well as getting more sales. Here, Pira International discusses intelligent solutions with a major market player. 

Brand differentiation is the only way brand owners can succeed in today's competitive market, and this is especially true of the alcoholic drinks market. Since the competition is so hot, anything that can put a brand owner ahead is top secret. Intelligent packaging and emerging technologies are some of the best tools a brand owner can use to gain an advantage and attract consumers.

With that in mind, Pira spoke to a leading alcoholic beverage brand owner about its future plans for intelligent packaging and its thoughts on technologies that are currently available and those on the horizon. Following the interview the brand owner did not wish to be named owing to the sensitive nature of the material.

Our unnamed source is an international brand owner that produces a range of drinks, including vodkas, cognacs, whiskies, wines and flavoured alcoholic beverages. The company has offices all over the world and is a major player in the alcoholic beverage industry. The company sells over 200 million bottles a year in nearly 200 countries, and is the one of the largest spirits companies in the world.

Thermochromic, UV and fluorescent inks

The unnamed brand owner discussed the many intelligent technologies available to brand owners, and, based on that discussion, the ones that appear most accessible are thermochromic and fluorescent inks. The source admitted that this technology will most likely be used in its trial brands, such as some cognacs, vodkas and whiskies, rather than some of its more traditional brands, because of the use of shrink sleeves.

The use of shrink sleeves on bottles opens up various promotional possibilities as they can be printed on with thermochromic and ultraviolet (UV) inks. The brand owner we spoke to is currently looking at using thermochromic and UV inks in some of its brands and expects to roll out promotional packs with the ink technology in the next year or so.

"Fluorescent and thermochromic inks are already on the market and easily accessible. These are the cheaper intelligent option at the moment and will be used in the immediate future [by spirits brand owners]," explains the source. UV inks could also prove successful in providing brand differentiation. According to the source: "This technology could be used for both brand protection and to draw attention to our brand's bottles behind bars."

According to the brand owner, thermochromic inks particularly lend themselves to vodkas, as these are often stored in the freezer. Brand owners have to consider when the customer is going to drink their product and how they are going to drink it. "Thermochromic inks creates theatre at home and offers brand differentiation," comments the source. "The inks could either be used in a promotional label that indicates temperature, or as a glitzy gimmick in a competition. Perhaps it could also only activate if vodka is put in the freezer and therefore change the way consumers drink the product."

Thermochromic and UV ink technologies certainly do the job of catching a consumer's eye and are already being utilised by some brand owners. International spirits producer Allied Domecq was planning to use fluorescent shrink sleeves in its Malibu brand of rum. Last year, the company intended to adopt glow-in-the-dark shrink sleeves for its new flavoured range of the rum to help both bartenders and customers locate the drinks in dark bars.

However, the brand has since been acquired by spirits brand owner Pernod Ricard and plans have been put on hold. Our unnamed brand owner says the thermochromic inks could be used on flavoured alcoholic beverages in its range to indicate when bottles are sufficiently chilled and ready to drink. These technologies offer brand differentiation without high costs, something that needs to be taken into consideration.

"The inks don't affect manufacturing processes as they can be integrated into current processes. If a technology can be integrated into production lines it can save money," explains the packaging development manager at the unnamed company. Thermochromic inks change colour to indicate temperature changes and could be utilised to indicate an optimum temperature to drink a beverage. The inks were first used on wine labels to show when wine was at the correct temperature for drinking and are the first example of graphic arts being used in a label as a consumer interactive medium.

Thermochromic inks are the leading method for detecting and indicating temperature change in packaging. The inks are based on dyestuffs and take up minimal space on the packaging. The inks can be printed onto packaging materials and labels by most printing processes including offset, letterpress, gravure, flexo and screen methods. Dutch distiller Toorank used thermochromic ink technology for the launch of its Petrikov Red and Blue range of vodka-based flavoured beverages.

The back label on the bottles used thermochromic inks to create a time temperature indicator (TTI) that bears the message "OK! I'm cool! Drink me now!" This was visible when the bottle contents were chilled to 7-8˚C. The drink was very successful when launched and the company puts this down to the market presence afforded by innovative labelling. However, since then the company received no extra sales, and it stopped using the technology on the bottles.

Table 1. Thermochromic inks: technology transition table to 2008.

Flexible displays

Programmable bottles

Technologies that offer brand differentiation at low cost seem to be the big winners now, but promotional packs look set for take-off in the future. The brand owner believes personalised drinks bottles are likely to take off in gift packs and could be something that it is interested in using in the future. The bottles would enable several flavours of the same drink to be incorporated into one bottle, which would cut production costs. According to our source it is likely to be a niche product that will only be used in certain brands and a small percentage of the business.

US-based innovation company Ipifini has developed a prototype of a programmable container. According to Ipifini, the programmable drink bottle could enable brand owners to introduce new flavours without alienating customers or having the expense of giving out free samples to entice customers. The new flavour would merely need an extra button on the bottle that the customer would be encouraged to try. The programmable drink bottle allows consumers to customise and choose ingredients for their drink.

Table 2. Value of laminar electronics in intelligent and retail packaging: forecast global demand, 2002-08.

Scented packaging could be used by brand owners on packaging of flavoured drinks such as alcopops or flavoured vodkas. The use of scented packaging in lids, closures and on shrink sleeves promotes the product, increases brand awareness and product value, and also increases consumer anticipation. Tactile varnishes that provide different textures on packaging also offer greater depth to packaging and offers brand differentiation. Again, these technologies are likely to be brought out first on promotional packs first to test success before a wider rollout by a brand owner.

Brand protection

Product protection is an issue that every brand owner, and especially those in the alcoholic spirits industry, faces. According to our source, the biggest areas of counterfeiting for our unnamed brand owner are Latin America and Eastern Europe. Companies such as Diageo and Allied Domecq use a chemical marker in drinks that is a sugar that is odourless, colourless and tasteless. A dipstick will change colour when the marker is present. Other brand owners also use special closures to prevent bottles from being refilled. A code is printed onto the closure, which identifies that it is genuine.

Brand owners are also looking ahead to other brand protection technologies such as UV inks, holograms and label encryption to protect its high-end brands. In mid 2004, brand owner Bacardi began using a smart closure supplied by Amcor in its Bacardi Bay alcoholic beverages. The Twist-off closures have a compound channel replacing the full compound, and this results in less product migration and retains the flavour more effectively. As well as protecting their brand, another issue facing brand owners is where and how their product will be sold.

Alcohol with intelligent packaging may prove more successful in airport shops rather than in supermarkets. Customers shopping in duty free or tax-free outlets at airports tend to shop for gifts and bargains, whereas in national supermarkets the brand is competing with the supermarket's own brand and people tend to buy what they have on their list. This makes it all the more important for brand owners to have packaging that catches a consumer's eye.

Future outlook

So what is the future for leading spirit brand owners? The key is brand differentiation, and according to the brand owner in 5-10 years the future for spirits will be electronic packaging using printed batteries: "The future will be self-powered labels using printed batteries - this will make the bottle stand out on supermarket shelves and in bars." This concept has already been explored by the new Muscovy Company for its brand Ivan the Terrible.

Webb Scarlett deVlam developed a prototype for the brand - the label extended to the base and could be plugged in behind a bar to act as a display. Although this remains a concept at this stage, it looks very much a possibility for spirit brand owners in the future. Although radio frequency identification (RFID) seems to be on the agenda for other industries such as the pharmaceutical industry, it is not something that our brand owner is focussing on at this point in time. There are serious read issues with RFID and metal, and 50-60 per cent of its closures are metal.

"We are observing what other companies are doing with RFID. At the moment I cannot see what advantages RFID can offer us over barcodes, especially considering the cost of the technology," says the brand owner. Despite this, the source says the smart shelf concept employed by the Metro Future Store is an interesting one. Smart shelves contain an RFID reader that scans RFID tagged products on the shelf and can notify the back of the store when stocks are running low.

"If we were asked by a supplier such as Metro or Wal-Mart to be involved in a concept like the smart shelves idea, we would definitely consider it. It is important to stay ahead with technology and it is a good reason to innovate," the brand owner comments. Packaging is predicted to be one of the major markets for scaled-down electronics and battery technologies, which will be applied to substrates and integrated into polymers. By 2008, the value of global market for laminar electronics in intelligent retail packaging will be worth €148.8 million, matching the value of RFID technologies.

High-value spirits have high margins and therefore can afford to experiment with intelligent technologies. With the shelves of supermarkets and bars bursting with rows of attractive-looking spirits bottles, brand differentiation is the key to attracting more consumers and intelligent technologies such as UV and thermochromic inks and flexible displays can offer this advantage.

What is clear is that intelligent packaging looks set to grow in the alcoholic spirits sector. A recent Pira survey showed that 70 per cent of European brand managers across a range of industries confirmed they would be using intelligent packaging in some form on their products. With the high value of spirits, and the greater need for brand protection, brand differentiation and added value, the alcoholic spirits industry looks set to be one of the first to test and commercialise new technologies as and when they are developed. The days when a bottle of vodka markets itself could be here sooner than you think.