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Why Cosmetics Supply Chain Sustainability Is the Industry’s Hottest Topic

The health and beauty industry is under increasing pressure from regulatory bodies and consumers to maintain and demonstrate due diligence in their supply chains. Forward-thinking companies are responding by making cosmetics supply chain sustainability an integral part of their mission statements and consumer engagement activities.

For example, “The Big 3” are prioritizing cosmetics supply chain sustainability. L’Oréal puts environmental and social performance at the heart of its business to drive value.  Estée Lauder’s mission is “to bring the best to everyone we touch and to support the environment in which we live.” And Unilever reports thoroughly on environmental and ethical statistics, including water, energy, greenhouse gases, waste and plastic packaging, sustainable sourcing, and community investment.

So let’s take a look at  sustainability in the cosmetics supply chain. The industry faces a slew of challenges with sustainability, such as environmental and human rights issues, counterfeiting, an evolving regulatory landscape, changes in consumer behavior, and utilizing new technologies, and all affect their decisions and processes.

What is “sustainability”?

Before we get into cosmetics supply chain sustainability, let’s take a step back for a moment and talk about sustainability generally.

Sustainability might seem to be a relatively new concept, but it has been around since the 19th century, when some industries sought to improve working environments and create less pollution. In the 1960s, new laws and organizational bodies were introduced to address pollution in the United States and Europe.

The U.S. Food and Drug Administration (FDA) “is required under the National Environmental Policy Act of 1969 (NEPA) to evaluate all major agency actions to determine if they will have a significant impact on the human environment.” Federal agencies implement NEPA and evaluate the possibility for environmental impacts by condcuting categorical exclusions, environmental assessments, and environmental impact statements.

The European Commission says it “aims to ensure coherence between industrial, environmental, climate and energy policy to create an optimal business environment for sustainable growth, job creation and innovation.”

In 2015, the Association of Southeast Asian Nations (ASEAN) adopted the ASEAN Socio-Cultural Community Blueprint 2025, which “promotes and ensures balanced social development and sustainable environment that meet the needs of the peoples at all times.”

If you read our Global Cosmetics Market white paper, you’ll know why we used the United States, Europe, and Asia as examples: They’re the world’s top cosmetics markets — and their regulators are concerned about sustainability.

What is cosmetics supply chain sustainability?

Cosmetics supply chain sustainability addresses the environmental and human impact of products, from the sourcing and production of raw materials, through to manufacturing, packaging, distribution to the final customer, and post-consumer activities.

Increasingly, there are calls for cosmetics supply chain sustainability standards to be made mandatory. The European Parliament in March passed a resolution to tackle environmental and human rights in EU supply chains. This new Supply Chain Act will require organizations to integrate sustainability into corporate governance and management systems, and frame business decisions in terms of human rights, climate, and environmental impact.

The United States is yet to follow suit, but consumer groups are letting the government know they want tighter standards for the raw materials used in cosmetics.

Even without government mandates, organizations that want to burnish their environmental credentials would do well start with their supply chains. In a January 2021 report called Net Zero Challenge: The Supply Chain Opportunity, the World Economic Forum states that companies wanting to improve their environmental and social performance can look to their supply chains to make cost-effective improvements.

Environmentally responsible production: the rise of “Clean Beauty”

Much of the drive toward sustainability is coming from consumers, who want to know that ingredients are pure (or at the very least safe) and have been ethically sourced. For example, 62 percent of Generation Z consumers (born in the late 1990s) prefer to buy from sustainable brands, and 73 percent will pay more for sustainable products.

In the United States, where the Food and Drug Administration (FDA) from being used in cosmetics, there is mounting pressure for stricter regulations. For example, environmental and consumer advocate groups such as the Environmental Working Group (EWG) believe more chemicals should banned, like in the EU, where 1,300+ substances are prohibited from being used in cosmetics.

This is part of larger “Clean Beauty” movement that advocates for safe, clean ingredients and transparency in product labeling. According to a

Clean Beauty is also concerned with ethical sourcing of ingredients. Consumers want reassurance that their cosmetics are not linked to issues such as deforestation, pollution, and animal or child cruelty. The primary problem here is that a wide variety of cosmetic products use a few “core” ingredients, many of which pose unique challenges for achieving sustainability in the cosmetics supply chain. They are difficult to obtain sustainably and ethically, and child labor, poor working conditions, and illegal mining are common.

For example, a 2016 report from the Amsterdam-based nonprofit Centre for Research on Multinational Corporations (SOMO) found that more than 20,000 children are forced to work in mica mines while their families live in severe poverty. Similarly, palm oil, the global market for which is expected to reach $57.2 billion by 2026, has a history of human rights problems. Palm oil is used for moisturizing or texture effects.

As more companies stake their reputations on being sustainable and consumers become more aware and demanding, it’s certain that the call for cosmetics supply chain sustainability will only get stronger.

How can we achieve cosmetics supply chain sustainability?

As we’ve seen, cosmetics companies operate in a challenging environment where many groups — including consumers, perhaps their most important audience — are calling for them to achieve sustainability in their supply chains.

To be successful, they must be able to adapt to changes in the market as technology, product development, and consumer sentiment shape the industry. Whether it’s faster production methods, demand for new products, or desire for ethical and sustainable options, companies must be able to change with the market if they want to survive and succeed.

The key takeaway is that cosmetics supply chain sustainability is not a pipe dream. Technology and solutions exist right now to help companies evaluate their operations and identify strengths, weaknesses, and pain points and take corrective action. These include supply chain digitalization, cloud-based data systems, and real-time monitoring. For instance, a 2021 report by Gartner said that digitalization is a key enabler of agility because it supports a more transparent, automated, intelligent, and orchestrated end-to-end supply chain.

Final thoughts

Sustainability. Consumers want it. More and more regulators are demanding it. It’s good for the planet. It’s good for people. It’s a business best practice.

Is it difficult to attain sustainability? Yes and no. It is a process. It has a lot of moving parts that may require tough decisions. But if a company has the will to be sustainable, it can develop strategies, chart a course, and get to work … and reap the benefits.

Technology is essential for sustainability. rfxcel and Antares Vision Group are committed to helping companies meet their sustainability goals and empowering them to protect product, profit, people, and planet.

Our Traceability System enables you to see and follow everything in your supply chain in real time from virtually anywhere in the world. It makes every product a “digital asset” with a certified, sharable provenance that proves to consumers and regulators that your sustainability initiatives are real and working as intended. Its intuitive, scalable solutions can be used individually or as a complete platform to shepherd sustainability initiatives to completion and create end-to-end traceability, transparency, and visibility.

Contact us today to see how it works. And be sure to check out our other resources about the cosmetics industry, sustainability, and traceability:

What Is the Healthcare Value Chain and Why Is It Important?

In the healthcare sector, delayed, lost, and damaged products can cause grave danger, as patients might not receive the medicines they need on time and many items are susceptible to fluctuations in environmental conditions. That’s why it’s crucial to have a reliable and robust healthcare value chain.

Let’s examine the critical role that the healthcare value chain plays. Our technologies and solutions help pharmaceutical companies, hospitals, and other healthcare stakeholders streamline and manage their entire supply chain, from procurement to distribution.

Understanding the healthcare value chain

Most may believe that the value chain and supply chain are synonymous. However, they are two different terms describing different aspects of supply logistics. The supply chain refers to the movement of goods from suppliers to customers; the value chain encompasses all activities involved in creating and delivering a product or service.

In other words, the supply chain is more about the physical movement of goods and the value chain adds value to a product, including production, marketing, and customer support after the sale. So, the healthcare value chain allows medical institutions to provide patients with the best possible care by ensuring they have the supplies and treatments they need when they need them.

What happens in a healthcare value chain?

Understanding the activities involved in the healthcare value chain is the first step in managing and streamlining its processes. We’re talking about logistics, operations, marketing and sales, and service.

Inbound logistics. The value chain is not a product-driven process, so explaining inbound logistics can be challenging. Generally, inbound logistics in a value chain refers to the quality of inventory and the management of that inventory. Value-driven inbound logistics ensures that all inventory is accounted for and is of the highest quality. This includes checking that items are not expired or damaged and meet all necessary requirements (e.g., internal quality control, standard operating procedures).

Operations. The operations stage of the healthcare value chain is where the actual product or service is produced. In this value-driven scenario, product operations and/or manufacturing aim to reduce waste and create efficiencies. This might involve automating processes, changing production methods, and improving the quality of raw materials. In healthcare, the goal of operations might be to streamline the manufacturing of drugs or medical devices.

Outbound logistics. Like inbound logistics, outbound logistics in a value chain should strive to ensure that a product or service reaches the customer in the best possible condition and in a timely manner. In healthcare, this means making sure that patients receive their supplies and treatments when they need them, as well as ensuring products are safe and legitimate.

It’s also important to note that outbound logistics isn’t just about the distribution of supplies outside a warehouse. It also concerns how medical institutions distribute supplies internally. This is important to consider when managing a hospital or other medical facility.

Marketing and sales. Marketing and sales in the healthcare value chain focus on creating demand for a product or service. Traditionally, this includes advertising, promotions, and other marketing initiatives. In a value-driven context, marketing and sales are strategically designed to go beyond a one-time sale to create long-term relationships with customers. There are numerous ways to do this, ranging from creating educational materials for patients and promoting online services to partnering with insurance providers.

Service. The service stage of the healthcare value chain is where post-sales activities occur, such as continuing customer support, repairs, and maintenance. Value-driven service helps maintain customer satisfaction with the product or service and helps ensure their needs are being met. Customer loyalty programs, follow-up communications, and offering extended warranties are common examples.

The healthcare value chain in numbers

Now that we’ve summarized the different stages of the healthcare value chain, let’s look at some numbers that help illustrate why these processes are so vital to the healthcare industry.

One 2019 report found that clinicians devote about 17 percent of their time to logistics and storage management activities. This affects their productivity and the quality of care they can provide.

The report also found that more than 4,500 different medical devices and products are recalled every year — and 10 percent of these have the potential to cause harm or death. One study published by the well-known consulting outfit McKinsey & Company reported that the “costs of a single non-routine quality event, like a major recall, have been as high as $600 [million] in medical device companies.”

The long-term business benefits of an effective healthcare value chain

An effective healthcare value chain creates benefits beyond improving quality of care and securing patient safety and satisfaction. It creates business benefits, including:

Improved profitability. An effective healthcare value chain can boost a bottom line by improving supply systems, reducing waste, and creating efficiencies across healthcare systems.

Promoting innovation. Less waste and more efficient systems mean savvy companies can devote more resources to R&D that can lead to innovation in all realms, including the development of new treatments or therapies and better manufacturing and distribution schemes.

Helping meet business goals. An effective healthcare value chain contributes to business success by reducing waste, increasing efficiencies, and promoting innovation. It also helps businesses connect with customers and build brand loyalty.

Final thoughts

What’s the main takeaway from this overview of the healthcare value chain? Establishing an agile and robust value chain is essential to success in the healthcare industry — in every industry.

We’ve specialized in creating software solutions for the healthcare value chain (and the healthcare supply chain) for almost 20 years. Our No. 1 priority is to help businesses optimize their operations and improve the quality of the products they manufacture and deliver to consumers.

For the healthcare and pharmaceutical industries, this means providing a digital traceability platform that helps ensure your devices and medications are safe, are transported following proper protocols (e.g., routes and environmental parameters), are delivered on time, and meet all regulatory requirements. It means real-time data and visibility into every aspect of your operations from virtually any location in the world.

rfxcel and Antares Vision Group understand the healthcare value chain, its complexities, and how to optimize it for patient security, customer satisfaction, and business success. Contact us today to schedule a short demo of our solutions. Our experts will answer your questions and show you why major global healthcare and pharmaceutical companies rely on our technology to secure and improve their operations.

 

 

Uzbekistan Pharma Serialization Update: September 1 Deadline & More

We’ve been following the Uzbekistan pharma serialization rollout as part of our ongoing survey of global pharmaceutical regulations and compliance.

As we wrote in mid-February 2022, the country’s State Tax Committee “extend[ed] the timeframe for the phased introduction of mandatory digital markings” of pharmaceutical products. That announcement, however, didn’t stipulate a new deadline.

So, what’s the latest with Uzbekistan pharma serialization? Let’s take a look.

Uzbekistan pharma serialization and Resolution No. 149

On April 2 of this year, Uzbekistan’s Cabinet of Ministers adopted Resolution No. 149, “On the introduction of a system of mandatory digital labeling of medicines and medical devices.” This established the following labeling deadlines for medicinal products and medical devices:

      • September 1, 2022: products produced with secondary (external) packaging (except for orphan drugs)
      • November 1, 2022: products produced with primary (internal) packaging (provided there is no secondary packaging) and medical agricultural products (except for orphan drugs)
      • March 1, 2023: products and medical products to treat orphan diseases as designated by the Ministry of Health
      • March 1, 2023: drugs included in the register of drugs with foreign registrations, the results of which are recognized in Uzbekistan
      • February 1, 2025: medical products on a list approved by tax authorities and the Ministry of Health

Additionally, there seems to be a grace period for the mandatory labeling in two circumstances:

      • Products that were produced domestically within 90 days of these deadlines do not have to be labeled and may be circulated.
      • Products that were imported within 180 days of these deadlines do not have to be labeled and may be circulated.

More about the labeling requirements

The Uzbekistan traceability system is called ASL BELGISI. It’s managed by CRPT Turon, the equivalent of Russia’s Center for Research in Perspective Technologies (CRPT), which manages Russia’s National Track and Trace Digital System (Chestny ZNAK).

The regulations currently apply to five product categories other than medicines and medical devices: tobacco; alcohol, including wine and wine products; beer and brewing products; appliances; and water and soft drinks.

Products in every regulated industry must be labeled with DataMatrix codes that include four data points:

      • A 14-digit product code (i.e., Global Trade Item Number, or GTIN)
      • A 13-character randomized serial number generated by CRPT Turon or a supply chain participant
      • A four-character verification key generated by CRPT Turon
      • A 44-character verification code (i.e., crypto code) generated by CRPT Turon

To learn more about Uzbekistan pharma serialization, how ASL BELGISI works, and labeling requirements, read our “Uzbekistan Traceability Update” from earlier this year. Keep in mind that we wrote this before the first deadline delay and adoption of Resolution No. 149.

Final thoughts

The Uzbekistan pharma serialization deadlines are upon us — about three weeks away. Since its inception, ASL BELGISI has been a hot topic in the industry, especially in key pharma-producing countries.

India, for example, has taken a keen interest in the requirements. One recent article reported that Indian pharma companies are “looking for more clarity over regulations and technical standards … and looking for a transition period to migrate to digital labeling.” The same article noted several other interesting points:

      • India’s pharma exports to Uzbekistan more than doubled in fiscal year 2020-21.
      • India’s export of pharma products to Uzbekistan totaled $137 million in 2021.
      • Uzbekistan’s pharma market is valued at $1.5 billion.
      • There are opportunities for investment and exports in Uzbekistan’s oncology and dermatology sectors.

The good news is that we can help you navigate Uzbekistan pharma serialization requirements no matter where you’re based — India, Asia, the EU, the UK, Latin America, the United States. We have experts in all of these markets, and rfxcel and Antares Vision Group are committed to ensuring you’re compliant everywhere you do business. Contact us today and schedule a short demo of our award-winning Traceability System and our Compliance Management solution.

 

Antares Vision Group Will Be at GS1 Connect 2022 in San Diego Next Month!

We’re getting excited for GS1 Connect, June 7-9 at the Marriott Marquis San Diego Marina! Not only are we a Premier Sponsor — we’ll be speaking about supply chain traceability and smart hospital systems.

We’ll also be at Booth 115 with our award-winning Traceability System, demonstrating solutions for the food and beverage, pharmaceuticals, and cosmetics industries.

So take 20 seconds (really) to sign up to meet us. We have a limited number of discount codes for 10 percent off your registration fee. And while you’re at Booth 115, take our short survey and you could win a $500 DoorDash gift card.

More about GS1 Connect and our speakers

The theme of this year’s conference is “Adapt.” The focus is on how businesses have used GS1 Standards to overcome challenges to thrive in uncertain times. There will be 40+ live sessions (including ours!), 50+ exhibitors (including us!), trading partner roundtables, and other events centered on user stories and leadership insights for supply chain optimization.

As GS1 says, the event is a place to “network with the greatest supply chain minds and learn how to leverage GS1 Standards to optimize your business.” Indeed.

In “Supply Chain Traceability: Can Your Business Survive Without It?” Herb Wong, our vice president of product and strategy, will discuss why traceability is foundational to business success in a rapidly evolving landscape of digitalization, ever-changing consumer expectations and power dynamics, tougher regulations, and supply chain uncertainty. He’ll be speaking on Thursday, June 9, at 1:45 p.m.

In on-demand session 509, “Smarter and Safer Hospitals: When Innovative Technologies Meet Patient Safety, our Digital Healthcare Department Director Adriano Fusco and Dr. Alberto Sanna, director of the Research Center for Advanced Technologies for Health and Well-Being of the IRCCS San Raffaele Hospital in Milan, Italy, will discuss how traceability and GS1 Standards enable end-to-end visibility of medications from arrival at the hospital to dispensation and optimized resources to focus on patient safety.

Final thoughts

We’ve always valued GS1 Standards, and we’ve always ensured our customers can adhere to them and take full advantage of them to maximize efficiency and create value across their operations everywhere they do business.

And who took the time to note the 50th anniversary of the venerable Global Trade Item Number (GTIN)? We did, with a blog post devoted to GS1 barcodes.

As we said in that article, “Where would we be without standards?” We’d love to see you at GS1 Connect and talk about those standards and how they fuel traceability. We hope you’ll take those few seconds to sign up to meet us at Booth 115, get 10 percent off your registration, and enter to win a nice prize when you take our survey.

In the meantime, drop us a line if you have any questions or want to know more about our traceability solutions for pharma, food and beverage, cosmetics, and other industries. We never pass on an opportunity to talk about what makes us your best partner for end-to-end supply chain solutions, from L1 all the way to L5!

See you in San Diego June 7-9!

African Pharmaceutical Regulations: The African Medicines Agency and the Push for Harmonization

Welcome to the last installment of our Africa supply chain series. Part 1 talked about geography, demographics, and the economy, and Part 2 was about challenges and opportunities. Today, we’re tackling the complex landscape of African pharmaceutical regulations.

Specifically, we’re looking at the African Medicines Agency (AMA), envisioned as a single regulatory body that would cover all 54 countries on the continent. It’s a big topic, but we’ll break it down into easy-to-understand terms. Let’s get started.

African pharmaceutical regulations: defining the key players and terminology

To understand African pharmaceutical regulations, you have to know the key players and be familiar with some core vocabulary. Today, we’re talking in broad terms to establish some baseline knowledge; if you want to know more about any of the entries below, just click on the linked text.

African Medicines Agency (AMA): According to its business plan, the AMA’s vision is “a healthy African population with access to quality, safe, and efficacious medical products and technologies.” It was established in January 2015 and officially began in November 2021 after 15 countries signed and ratified the AMA Treaty and deposited their instruments of ratification with the African Union Commission (see below). The AMA does not yet have a website; visit the African Union website for more information.

African Medicines Regulatory Harmonization (AMRH): Formalized in 2009, the AMRH is an initiative to “provide leadership in creating an enabling regulatory environment for pharmaceutical sector development in Africa.” It is part of the African Union Development Agency (see below) and the Pharmaceutical Manufacturing Plan for Africa (PMPA).

African Union (AU): The AU was launched in 2002, succeeding the Organization of African Unity, which was active from 1963 to 1999. It comprises five regions and has 55 members: Central Africa (9 states), Eastern Africa (14 states), Northern Africa (7 states), Southern Africa (10 states), and Western Africa (15 states).

African Union Commission (AUC): The AUC is the AU’s secretariat and runs the day-to-day activities of the Union. It is based in Addis Ababa, Ethiopia.

African Union Development Agency (AUDA-NEPAD): AUDA-NEPAD’s mandate is to “coordinate and execute regional and continental projects to promote regional integration towards the accelerated realization of Agenda 2063” and “strengthen capacity of AU member states and regional bodies.” (See Part 1 of our series for more about Agenda 2063 and read the AUDA-NEPAD 2021 Annual Report here.)

National Medicines Regulatory Authorities (NMRAs): Each country’s NMRA is responsible for regulatory functions such as marketing authorization, pharmacovigilance, market surveillance quality control, clinical trials oversight, licensing establishments, and laboratory testing.

Regional Economic Communities (RECs): RECs are regional groupings of African countries formed to facilitate regional economic integration and the wider African Economic Community. The AU recognizes eight RECs:

    1. Arab Maghreb Union (UMA)
    2. Common Market for Eastern and Southern Africa (COMESA)
    3. Community of Sahel-Saharan States (CEN-SAD)
    4. East African Community (EAC)
    5. Economic Community of Central African States (ECCAS)
    6. Economic Community of West African States (ECOWAS)
    7. Intergovernmental Authority on Development (IGAD)
    8. Southern African Development Community (SADC)

Regional Centers of Regulatory Excellence (RCORE): AUDA-NEPAD, through AMRH, designated 11 RCOREs to work in eight regulatory functions to build regulatory capacity at NMRAs:

African pharmaceutical regulations: current context

With the AMA going into force barely five months ago, and considering the vastness of the African continent and the diversity of its countries, it should be no surprise that the current context for African pharmaceutical regulations is … one of flux.

Authorities (e.g., the AU and AUDA-NEPAD), through the NMRAs and RCORES, as well as through coordination with the RECs, are working through the many challenges of harmonizing regulations. There are a lot of moving parts that need to coalesce under the AMA umbrella. For example:

Different legal and regulatory frameworks. Many countries and RECs have developed or are developing their own regulatory legislation. But right now, it appears they are not obligated to coordinate, standardize, or harmonize their laws. Therefore, regulations can vary from country to country in a REC, and any country’s laws might also diverge from their REC’s requirements. Regulations also vary from REC to REC, such as the Southern African Development Community (SADC), the East African Community (EAC), and the Economic Community of West African States (ECOWAS).

Furthermore, legal and regulatory frameworks can be unclear and incomplete, and authorities may not make public announcements about their intentions, timelines, and progress. Manufacturers and other supply chain stakeholders may have to submit paperwork to more than one NMRA, which duplicates efforts and wastes resources.

Need for capacity-building. A March 2021 article in the Journal of Pharmaceutical Policy and Practice noted that all but one country had an NMRA or “an administrative unit conducting some or all expected NMRA functions,” but only 7 percent had “moderately developed capacity” and more than 90 percent had “minimal to no capacity.” Complicating matters, some NMRAs operate as independent organizations and some operate within their country’s Ministry of Health.

Reliance on imports and the problem of counterfeits. The United Nations Economic Commission for Africa (UNECA) estimates that Africa imports about 94 percent of its pharmaceutical and medicinal needs at an annual cost of $16 billion. This is a regulatory and logistical challenge. It also means there are plenty of opportunities for illegal activity. We noted in Part 2 that 42 percent of all fake medicines reported to the WHO from 2013 to 2017 came from Africa. The WHO also estimates that one of every 10 medical products in low- and middle-income countries is substandard or fake, while another report says up to 70 percent of pharmaceuticals could be fake in developing regions.

The AMA

These disparities, capacity needs, and logistical challenges were among the reasons why the AU wanted to establish a continental regulatory system. And like other regulatory systems, the AMA is designed to protect people, to ensure that all Africans have access to safe, efficacious, and affordable products that meet international standards.

The AMA is based on the AU Model Law on Medical Products Regulation. In broad terms, its goal is harmonization by achieving the following:

      • Registration and marketing of health technologies
      • Granting manufacturing and distribution licenses
      • Conducting quality and safety inspection of health technologies and manufacturing facilities
      • Authorizing clinical trials through an established National Ethics Committee or Institutional Review Board
      • Overseeing appeals procedures through an established Administrative Appeals Committee

International reaction to the AMA has been mostly positive. The International Federation of Pharmaceutical Manufacturers & Associations, for example, said that the “AMA has the unique opportunity to become one of the most efficient and modern regulatory systems in the world.”

And just last month before a two-day EU-AU summit, the EU (including the European Commission, the European Medicines Agency, and member states Belgium, France, and Germany) and the Bill & Melinda Gates Foundation announced they would mobilize more than 100 million euros over the next five years to support the AMA and other pharma regulatory initiatives at regional and national levels.

As of March 3, 2022, 30 African countries had backed the AMA: 19 had signed and ratified the AMA Treaty and deposited their instruments of ratification with the African Union Commission; two had signed and ratified but not deposited; and nine had signed but not ratified. Thirteen countries have said they’d want to be home to the AMA headquarters.

Still, 25 countries have not signed the AMA Treaty, including South Africa, Nigeria, Kenya, and Ethiopia, four of the most important economies on the continent.

Final thoughts

African pharmaceutical regulations and the AMA are evolving. And like all regulations, there will be stops and starts.

The important takeaway is this: The pharma industry must be prepared for the continent-wide AMA regulations and the AU’s vision of a single authority working with a harmonized set of standards. Though there are holdouts, Egypt, Africa’s third most populous country and an important economic power, has ratified and deposited the treaty. This is a significant event in the efforts to get those countries on board with the AMA.

Preparation is the key to compliance and keeping your supply chain running. And we’re experts in making sure you’re prepared for regulations — and every other aspect of supply chain management and optimization — everywhere you do business. Pharmaceutical companies rely on our solutions to comply with strict regulations and to get the most out of their supply chains, from harvesting rich, actionable data in real time to leveraging serialization technology for brand protection and consumer engagement.

Contact us today to speak with one of our experts. In just a few minutes, they can show how our Traceability System will optimize your supply chain today and, importantly, ensure you’re prepared for what’s coming tomorrow.

And if you’re like us and just can’t get enough of regulations and compliance, download our updated “Pharmaceutical Compliance: A Global Overview” white paper. We’ve added more than 25 countries, including REC member states, expanded our “rfxcel Compliance Resources” section, and a lot more. Get it today!

Last but not least, take a look at our other news from the Africa and Middle East region:

Understanding the Supply Chain in Africa, Part 2: Challenges and Opportunities

Welcome to Part 2 of our look at the supply chain in Africa. In Part 1, we did “Africa by the numbers,” getting into the details of the continent’s geography, demographics, economy, and goals of “Agenda 2063.” Today, we’re talking about three challenges and three opportunities. There’s a lot to cover, so let’s get started.

Three challenges for the supply chain in Africa

As we said in Part 1, Africa is big: about 11.7 million square miles (30.3 million square km). The continent has eight primary physical regions — the Sahara, the Sahel, the Ethiopian Highlands, the savanna, the Swahili Coast, the rain forest, the African Great Lakes, and Southern Africa — and traversing these diverse landscapes is not always easy.

Which brings us to the first challenge for the supply chain in Africa: physical and electronic infrastructure. Stated simply, Africa has a long way to go with infrastructure. McKinsey & Company’s “Solving Africa’s infrastructure paradox” (March 2020) provides a good overview of this challenge, the paradox being that there’s a high demand for projects and sufficient capital, but not much action. Specifically,

“… infrastructure investment in Africa has been increasing steadily over the past 15 years, and … international investors have both the appetite and the funds to spend much more across the continent. The challenge, however, is that Africa’s track record in moving projects to financial close is poor: 80 percent of infrastructure projects fail at the feasibility and business-plan stage.”

One eye-opening statistic from the McKinsey article: More than two-thirds of the world’s population that does not have access to electricity lives in sub-Saharan Africa. That’s 600 million people. The challenge is self-evident. Agenda 2063 has ambitious infrastructure components (e.g., rail, air, water) and could very well smash this paradox. But it will take time.

Here are two other key challenges for the supply chain in Africa:

The informal economy. The Center for Global Development reports that Africa’s informal sector is the largest in the world, citing International Labor Organization statistics that it accounts for almost 90 percent of the economy in sub-Saharan Africa and about two-thirds in North Africa. Research from 2019 showed that the informal sector provided 90 percent of all new jobs and 70 percent of all employment across sub-Saharan Africa.

In Africa’s urban areas — the fastest-growing in the world — World Bank data shows that almost 81 percent of jobs are in the informal sector, while the International Labor Organization reported that almost 96 percent of youth ages 15-24 and a little more than 93 percent of women work in the informal economy.

This means that a significant part of the supply chain in Africa is informal, operating through non-official channels and without government oversight, regulation, or taxation. This makes it difficult for businesses to operate in Africa and enables an environment in which other supply chain problems can arise.

Counterfeits. Illegal copying and counterfeiting is widespread in Africa, as it is in other parts of the world with unregulated informal economies and insufficient supply chain protections. Bad actors are only too happy to exploit these conditions.

For example, 42 percent of all fake medicines reported to the World Health Organization from 2013 to 2017 came from Africa. (WHO estimates one of every 10 medical products in low- and middle-income countries is substandard or fake.) Reading between the lines, the proliferation of counterfeit medicines in Africa’s supply chain might be even greater, as weak regulations and lax enforcement often results in under reporting.

To illustrate the problem, last year an Interpol-supported operation in Southern Africa targeting “trafficking of illicit health products and other goods” nabbed 179 suspects and seized products worth approximately $3.5 million. Examples of similar events include the following:

    • 2015-2018: Almost 20 tons of fake medicines seized in Mali
    • 2017: More than 420 tons of illegal pharmaceutical products seized in seven West African countries
    • 2018: 19 tons of counterfeit medicines seized in Ivory Coast, Guinea-Bissau, Liberia, and Sierra Leone
    • 2019: 12 tons of counterfeit pharmaceuticals intercepted in Ghana

But official channels are working to address the problem, including these initiatives:

    • The United Nations Office on Drugs and Crime announced a “holistic strategy” to combat crime and fake drugs in West and Central Africa.
    • The African Union announced that the African Continental Free Trade Area (AfCFTA) Secretariat had signed a letter of intent to work with other partners to combat counterfeit trade.
    • The Lomé Initiative is a binding agreement among the Republic of the Congo, Niger, Senegal, Togo, Uganda, Ghana, and the Gambia to criminalize trafficking falsified medicines.
    • The legal profession is also aware of the problem.

Three opportunities for the supply chain in Africa

The rise of manufacturing. African manufacturing made headlines last month when Afrigen Biologics and Vaccines in Cape Town, South Africa, announced it had successfully copied Moderna’s COVID-19 vaccine with no input from the U.S.-based company. At about the same time, the director of the Africa Centers for Disease Control and Prevention said 10 countries were making vaccines right now or planning to do so, with South Africa, Senegal, Rwanda, Algeria, and Morocco taking leading roles.

Led by organizations such as the African Partnership for Vaccine Manufacturing and the African Vaccine Manufacturing Initiative, a coordinated push is underway to manufacture vaccines in Africa “from scratch” (i.e., not merely “filling and finishing” imported products) and make the continent “vaccine independent.”

And this is emblematic of an African manufacturing renaissance of sorts. In the second quarter of 2021, for example, United Nations’ growth estimates indicated a 17.8 percent expansion of manufacturing output. (Output had dropped by 17.1 percent during the same period in 2020, primarily attributable to the pandemic.) Also in the second quarter of 2021, manufacturing output increased “in many African countries,” including South Africa (39.3 percent), Rwanda (30.2 percent), Senegal (22.6 percent), and Nigeria (4.6 percent).

Other examples are abundant: Carmaker Nissan is opening new facilities, and analysts see Africa emerging as an auto industry hub, including for electric vehicles. Overall, research shows that manufacturing on the continent is growing, or strongly rebounding from the pandemic, especially in key economies in sub-Saharan Africa.

A healthy manufacturing sector means a supply chain with opportunities to modernize alongside production facilities, to adopt international standards (e.g., GS1) and best practices, and to build the infrastructure to secure products from the time they leave the manufacturing floor to the time they reach consumers.

A large — and young — labor force. As we noted in Part 1 of our series, approximately 1.4 billion people live in Africa (about 17 percent of the world population) and the median age is 19.7, making it the youngest continent on the planet. According to the World Bank, half of the population in Sub-Saharan Africa will be under 25 by 2050.

This could poise African countries for an employment/ongoing manufacturing boom similar to what’s happened in Vietnam, Malaysia, Singapore, Mexico, and India. With more jobs in more sectors, including technology, and more products originating on the continent, the supply chain will need to grow and adapt. This will create opportunities for modernization and synchronization with global standards and best practices.

A consumer-centric economy. Africa is an enormous market for domestically produced and imported goods and services. As AfCFTA matures and projects under Agenda 2063 and other initiatives are completed, hundreds of millions of consumers should have more and easier access to these goods and services. They should also be willing to spend more money: As of 2021, the final household consumption expenditure in Africa was a little more than $1.9 trillion; McKinsey says this could reach 2.5 trillion by 2025.

This will have a huge impact on the supply chain in Africa — for manufacturing, logistics, distribution, warehousing, and “the last mile.” The more vigorous Africa’s economy becomes, the more businesses should anticipate development of new industries, dissipation of the informal sector, increased demand for better products, and a growing “consumer class” that will come to expect the supply chain to work everywhere on the continent.

Final thoughts

The supply chain in Africa is a work in progress. Some countries, particularly those in Sub-Saharan Africa, are farther along than others. The reasons for this are diverse, ranging from stronger institutions and more stable infrastructure to fortunate geography that facilitates better access to the flow of global trade.

It’s the wise organization that follows the progress and continuously prepares to do business in Africa. This means being able to work with the supply chain, complying with regulations as they’re rolled out and refined, optimizing your systems — and finding the right solution provider.

Contact us today to speak with one of our digital supply chain experts. In just a few minutes, they’ll demonstrate how our Traceability System will ensure your business can integrate with the supply chain in Africa. After doing that, move on to the last installment of our Africa supply chain series, which highlights the pharmaceutical regulatory environment. In the meantime, think about your supply chain and consider the words of Dr. Akinwumi Ayodeji Adesina, president of the African Development Bank Group:

The future belongs inexorably to the continent of Africa. By 2050, it will have the same population as China and India do now. There will be burgeoning consumer demand from a growing middle class, a population of nearly 2 billion people, of which around 800 million young people will be looking for meaningful and sustainable employment.

If we can harness this potential by aligning supply with demand, markets with customers, and skills with jobs, and keep most of these elements and links largely within Africa, then Africa will become an unstoppable economic force, capable of feeding itself and the rest of the world for good measure. That is the future scope for Africans to shape in their own interests and for their own economic ambitions.

 

Understanding the Africa Supply Chain, Part 1

Supply chains are about people. Yes, technology — like the digital solutions we provide — and regulations are important, but people are the true drivers, the alpha and omega. People design supply chains and make them run (efficiently and legally, we all hope). As consumers, people are the final destination of every supply chain; if you don’t understand their needs, wants, and habits, and if your products cannot reach them reliably, you’re out of business. The Africa supply chain is no exception.

In Part 1 of our series about the Africa supply chain, we’re looking at facts and figures about the almost 1.4 billion people on the continent. By understanding the people — where they live, their economies and how they work, and ambitious initiatives that will affect their daily lives — we provide the context for a broader discussion and understanding of the Africa supply chain. Let’s get started.

Africa by the numbers

Geography and population

Africa is big. It’s about 11.7 million square miles (30.3 million square km) total, and about 5,000 miles (8,000 km) from north to south and 4,600 miles (7,400 km) from east to west. Only Asia is bigger: 17.2 million square miles (almost 44.6 million square km).

There are 54 countries in Africa. As we said above, the population is approximately 1.4 billion — that’s about 17 percent of the world population. For comparison, there are roughly 4.6 billion people in Asia, 748 million in Europe, 654 million in Latin America and the Caribbean, 370 million in North America, and 42.5 million in Oceana. Africa is also the youngest continent in the world: The median age is 19.7 years. According to the World Bank, half of the population in Sub-Saharan Africa will be under 25 by 2050.

Africa has the highest growth rate in the world, and its population has increased every year since 2000, when it was approximately 811 million. By 2100, the population will approach parity with Asia. Nigeria is the most populous country, with 206 million people, followed by Ethiopia, which has 115 million. Egypt ranks third — 102 million people — and is the most populous country in in North Africa. (Be sure to read our overview of the Egypt pharmaceutical supply chain to learn about what’s happening there.)

The continent is home to between 1,500 and 2,000 languages, about one-third of the world’s languages. At least 75 of those have more than 1 million speakers.

Urbanization

Africa has led the world in urbanization this decade. As of 2021, 609 million people lived in urban areas; this could reach 722 million by 2026. According to the Population Division of the United Nations Department of Economic and Social Affairs, 22 cities in Africa are expected to grow at an average annual rate of more than 5 percent in the first half of the 2020s, and 58 are expected to grow at 4-5 percent. The two fastest-growing cities in the world are Gwagwalada, Nigeria, and Kabinda, Democratic Republic of the Congo. Cities in Angola, Tanzania, and Mozambique are topping current growth statistics, and by 2035, Africa’s fastest-growing cities are forecasted to be Bujumbura, Burundi, and Zinder, Nigeria.

Proliferation of mobile technology

According to the GSMA, an association representing mobile network operators around the world, 495 million people — 46 percent of the population — were subscribed to mobile services in Sub-Saharan Africa at the end of 2020. This was an increase of almost 20 million over 2019. By 2025, adoption of 4G will double to 28 percent (the global average is 57 percent), and 5G will reach 3 percent of total mobile connections.

GSMA reports that 40 percent of the population in Sub-Saharan Africa is under the age of 15. Overall, Africa’s very young population will drive mobile use. Importantly, we can also assume that this demographic will use their mobile devices for everything from banking and shopping to entertainment, creating opportunities for companies to connect to consumers and involve them in the Africa supply chain.

Economy

Pre-pandemic, United Nations statistical data showed that Africa’s economy grew by about 3.4 percent in 2019, “creating one of the longest stretches of uninterrupted positive economic expansion in [the continent’s] history.” This helped fuel a growth of the middle class year over year.

In 2020, Africa experienced a 3.4 percent contraction in gross domestic product (GDP).

According to the United Nations Industrial Development Organization (UNIDO) Industrial Development Report 2022: The Future of Industrialization in a Post-Pandemic World, the pandemic has caused considerable output loss in Africa, as it has in most of world. Here are projected output losses by 2021 for the “economy groups” in Africa:

    • North Africa (four economies): 7.3 percent
    • Less-developed countries (14 economies): 6.8 percent
    • Sub-Saharan Africa (12 economies): 6.4 percent

For perspective, estimated output losses were 7.5 percent in West Asia (5 economies), 4.1 percent in Northern and Western Europe (4 economies), 2.7 percent in North America and Pacific (4 economies), 10.3 percent in less-developed countries in Asia, and 1.4 percent in China.

According to a quick online survey of Africa-based websites, the top job sectors on the continent are agriculture, which accounts for 15 percent of GDP; infrastructure; mining; service; banking and finance; information and communications technology; entrepreneurship; entertainment; and tourism. See here and here for more information.

In 2020, 453 million people were employed in Africa, with the majority in Eastern Africa. The two most populous countries, Nigeria and Ethiopia, had the highest working populations, about 56.6 million and 51.3 million, respectively.

According to the World Bank, regional growth in Africa projections look like this:

    • Sub-Saharan Africa: Growth for 2022 and 2023 will remain just below 4 percent.
    • East and Southern Africa: Growth of 3.4 percent in 2022; excluding Angola and South Africa, 4.3 percent growth is expected in 2022.
    • West and Central Africa: Growth of 5.3 percent in 2022; the West African Economic and Monetary Union (Benin, Burkina Faso, Côte D’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo) is projected to grow at 6.1 percent in 2022. Nigeria is expected to grow by 2.9 percent (African Development Bank Group).

Agenda 2063 and the Africa Supply Chain

Agenda 2063 “is Africa’s blueprint and master plan for transforming Africa into the global powerhouse of the future.” It is being implemented through five 10-year plans, the first of which is scheduled to end next year. Many of its Flagship Projects relate to modernizing and expanding infrastructure; therefore, they are directly related to the Africa supply chain. For example:

African High-Speed Train Network: The network will connect all countries’ capitals and commercial centers, including connecting the 16 landlocked countries to major seaports and neighboring countries.

Single African Air-Transport Market (SAATM): The goal is “the full liberalization of intra-African air transport services in terms of market access [and] traffic rights for scheduled and freight air services by eligible airlines, thereby improving air services connectivity and air carrier efficiencies.”

Continental Commodities Strategy: The goal is to move Africa away from being a raw materials supplier to “developing [its] commodities as a driver for achieving the structural, social, and economic transformation of the continent.” Integrating into regional and global value chains is a key part of the strategy.

The African Continental Free Trade Area (AfCFTA): The goal is to accelerate intra-African trade and boost Africa’s “trading position in the global market by strengthening [its] common voice and policy space in global trade negotiations.” Thirty-six countries had ratified the AfCFTA agreement as of February 5, 2021.

Final thoughts

To understand your supply chain, you have to understand people. We hope this overview of Africa was informative, showing where people live, how they work, the continent-wide trends, and what’s being done to ensure the Africa supply chain better serves every person in all 54 countries.

Everything we’ve talked about today influences the Africa supply chain; however, urbanization could be the most telling and important. As cities continue to grow — remember, urban populations are projected to reach 722 million by 2026 — people will demand more access to goods and services, and the supply chain will have to respond nimbly and efficiently. The proliferation of mobile devices and networks, especially among young people, is another important driver.

rfxcel understands supply chains. The technology, the regulations, and how they affect people. Move on to Part II of our Africa supply chain series, where we discuss recent developments and regulations in specific countries. And be sure to contact us if you have any questions or want a short demonstration of our solutions. We’d love to hear from you.

Last but not least, take a look at our other news from the Africa and Middle East region:

Uzbekistan Traceability Update: Pharma Serialization Begins Feb. 1, 2022

Note: On February 7, 2022 — just 10 days after we posted this article — Uzbekistan’s State Tax Committee announced that it was “extending the timeframe for the phased introduction of mandatory digital markings” for pharmaceutical products. The February 1 deadline is longer in effect for this product category. Read the details here.

 

On February 1, 2022, Uzbekistan traceability requirements for medicines and medical devices will go into effect. It’s the latest compliance deadline in the country’s push for serialization and digital marking regulations that will affect an array of industries. Here’s a breakdown of the law and the latest Uzbekistan traceability updates.

The Uzbekistan Traceability System: ASL BELGISI

The Uzbekistan traceability system is called ASL BELGISI. It’s managed by CRPT Turon, the equivalent of Russia’s Center for Research in Perspective Technologies (CRPT), which manages Russia’s National Track and Trace Digital System (Chestny ZNAK).

On November 20, 2020, the Uzbekistan government published Decree PKM-737, “Establishment of Obligatory Digital Labeling.” It mandates serialization for tobacco products; alcohol, including wine and wine products; beer and brewing products; appliances; medicines and medical devices; and water and soft drinks.

Furthermore, it requires supply chain participants to register with a national catalog of labeled goods; when an application is approved, the participant receives an account and is granted access to the system.

According to the CRPT Turon website, the “main task” of ASL BELGISI “is to guarantee consumers the authenticity and declared quality of the purchased products.” Like Chestny ZNAK, consumers can download a mobile app to scan products, report suspect products, and provide feedback about the system.

Marking requirements

Uzbekistan traceability requirements mirror those mandated in Chestny ZNAK. All domestically produced and imported goods must be marked with DataMatrix codes that are traced across the supply chain through a four-step process:

    1. CPRT Turon assigns a unique DataMatrix code to each product and the manufacturer or importer places it on the packaging.
    2. The product’s movements are traced throughout the supply chain, from the factory or point of importation to the consumer, via scanning of the DataMatrix code.
    3. Retailers scan the codes when products are stocked and sold.
    4. Consumers can use the ASL BELGISI app to check a product’s legitimacy (i.e., confirm that it’s not a counterfeit) and access product information.

To get DataMatrix codes, participants must be registered with ASL BELGISI, describe the goods in a national catalog of labeled goods, then formally order the codes and apply them to the products. The codes must be applied to packaging or a product label according to the ISO/IEC 16022-2008 “Automatic identification and data capture techniques – Data Matrix bar code symbology” specification. At present, each DataMatrix code costs 68 som (excluding VAT), which is quite literally a fraction of a U.S. dollar: $0.0063.

Like its Russian counterpart, ASL BELGISI uses “verification keys” and “verification codes.” These are also commonly known as crypto codes. CRPT Turon generates these codes.

Generally, the DataMatrix codes for products in every regulated industry must include four data points:

    • A 14-digit product code (i.e., Global Trade Item Number, or GTIN)
    • A 13-character randomized serial number generated by CRPT Turon or a supply chain participant
    • A four-character verification key generated by CRPT Turon
    • A 44-character verification code generated by CRPT Turon

For aggregation, a Serial Shipping Container Code (SSCC) number must be provided in a one-dimensional barcode following the ISO 15394:2009 “Packaging – Barcode and two-dimensional symbols for shipping, transport and receiving labels” specification.

Regulated industries and key dates/requirements

Uzbekistan traceability regulations currently apply to five product categories: tobacco; alcohol, including wine and wine products; beer and brewing products; appliances; medicines and medical devices; and water and soft drinks. Below, we list the latest information about each category.

Filter cigarettes
    • January 1, 2021: only labeled products may be produced and imported
    • July 1, 2021: manufacturers may ship only labeled products to wholesalers
    • October 1, 2021: distributors may ship only labeled products to retailers
    • January 1, 2022: sale of unmarked cigarettes is prohibited
    • October 1, 2022: mandatory labeling for all types of tobacco products
Alcohol
    • January 1, 2021: only labeled products, including wine and wine products, may be produced and imported
    • December 1, 2021: alcoholic beverages packaged in metal containers, including aluminum containers, must be labeled
    • December 1, 2021: aggregation required for alcoholic beverages, including wine and wine products
    • November 1, 2022: aggregation required for alcoholic beverages packaged in metal containers, including aluminum containers
Beer and brewing products

Mandatory labeling began on April 1, 2021.

Appliances

A pilot for appliances began on July 1, 2021. Mandatory labeling is being introduced in phases. Vacuum cleaners, refrigerators, freezers, washing machines, TVs, and monitors were required to be labeled beginning December 1, 2021.

Medicines and medical devices
    • June 1, 2021: 6-month pilot for medicines and medical devices begins
    • January 28, 2022: CRPT Turon announces that the pilot is officially closed
    • February 1, 2022: only labeled products may be produced and imported

CRPT Turon reported that, during the pilot, all participants successfully registered with ASL BELGISI and registered agreed-upon product in the national catalog of labeled goods. They also successfully installed marking equipment on production lines, trained employees to use the equipment, and released batches of properly labeled, serialized products.

More about the requirements for medicines and medical devices

In addition to a DataMatrix code that includes a 14-digit product code (i.e., GTIN), a 13-character randomized serial number, a 4-character verification key, and a 44-character verification code, packaging must have a human-readable GTIN, lot number, expiration date, manufacturing date, and serial number.

Digital marking must be applied directly to packaging on the production line in a “specially designated place” and not be larger than 10×10 millimeters. The codes must be affixed in a way that prevents them from being separated from packaging during the entire shelf life of the product. Codes may not be printed on external packaging material, including transparent film/wraps, and my not be obscured by other information.

Water and soft drinks

This product category includes bottled water, soft drinks, and fruit and vegetable juices.

    • June 1, 2021: pilot for water and soft drinks begins
    • March 1, 2022: only labeled products may be produced and imported

Final thoughts

In June 2021, CRPT Turon announced that it had issued more than 350 million codes, including more than 200 million for tobacco products, almost 130 million for alcohol products, and approximately 20 million for beer products.

As of today (January 28, 2022), it reports that it has issued nearly 583 million codes for tobacco products, more than 300 million for alcohol products, almost 143 million for beer products.

These figures illustrate a simple fact: Strict serialization and traceability regulations are here to stay in Uzbekistan. Russia has led the way with Chestny ZNAK, which arguably has the world’s toughest supply chain requirements, and we should watch the regulatory landscape in the other Newly Independent States (NIS) — Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Ukraine.

As we said above, ASL BELGISI, the Uzbekistan traceability system, mirrors Russia’s Chestny ZNAK. rfxcel is an undisputed leader in Chestny ZNAK compliance. Consider these facts:

  • We’re an official CRPT partner for medications, bottled drinking water, tobacco, footwear, tires, light industry, perfumes, dairy, bicycles, and wheelchairs.
  • We’ve demonstrated to the CRPT that our solutions for traceability and compliance meet its stringent requirements.
  • We’re accredited as an IT company by Russia’s Ministry of Digital Development, Communications, and Mass Media.
  • We’re one of the few providers with active implementations in Russia (e.g., major global consumer goods and pharmaceutical companies).
  • We have an ever-growing Moscow-based team that knows the regulations and brings expertise in key areas of supply chain management and technology.
  • We’ve led the way in thought leadership with white papers and industry updates and information. (See the list below for a sample.)

We’ve also developed end-to-end traceability and compliance hubs for governments that want to lock down their supply chains with the best digital technologies and solutions. Read more about those here and here.

Contact us today to learn more about our traceability and compliance solutions. Our digital supply chain experts will share a short demo of our award-winning Traceability System and show you how to remain compliant and agile no matter where you do business.

A sample of our Chestny ZNAK coverage

 

Wine Brand Protection and the Fight Against Counterfeits

Today we’re talking about wine brand protection. Why it’s important for the industry and how to use your supply chain to make it as strong as it can be. Specifically, we’re focusing on counterfeits, an evergreen problem for the industry.

Talking about brand protection is a fitting conclusion to our series of articles about wine and a great way to mark the last day of the Unified Wine and Grape Symposium. Speaking of which, stop by Booth 807 to meet us and our other Antares Vision Group team members, FT System and Applied Vision. We’d love to see you before everybody heads home.

Now on to wine brand protection and the fight against counterfeits.

Why is wine brand protection important?

In the wine industry, your brand is critical to success. Whether you’re a multi-generational operation or the new kid on the block trying to make your mark, it’s one of your most valuable assets.

Your brand tells the story of your wine, from the soil and the vines to the bottle to your customers’ tables. It connects you to your partners and consumers. It sets you apart from your competition. It’s your identity out there in the world.

Alas, wine — and spirts — are under a constant barrage of brand protection threats and challenges. The circumstances range from bad actors trying to rip you off to the ebb and flow of the market and the trends that are defining it as we’ve made our way into the 2020s. Today, we’re focusing on the bad actors. Let us know if you’d like us to write more about factors or have anything to add to our discussion.

Counterfeits and fakes

Counterfeits and fakes are the undisputed champion of threats to wine brand protection. It’s an age-old problem, though industry observers rightly note that the pandemic has created more opportunities for fraud. The increase in online sales, including auctions, and less in-person due diligence because of travel restrictions are two examples.

How is wine counterfeited? Let us count the ways. There can be theft at production and storage sites. Theft and diversion also happen as wine is being delivered across the supply chain.

Counterfeiters also like to misrepresent a wine’s origin, vintage, variety, blend — really anything that distinguishes a brand and increases their chances of making a profit.

“Damaged wines” also manage to get into the marketplace. These might have been stored at the wrong temperature or have torn labels and bad corks. Adulterated or cheap wine is bottled in a prestige package.

In Part 1 of our wine traceability series, we mentioned the notorious Rudy Kurniawan. But the daily reality of counterfeit wine (and spirts) is much less dramatic. Consider these news items:

In 2011, hundreds of bottles of fake Jacob’s Creek wine were seized in the UK. More recently, a shopkeeper in England was fined more than $5,000 for having 142 bottles of fake Yellow Tail on his shelves. He said he bought the wine from a man who popped by his shop in an unmarked van; authorities say he could have profited in excess of $600 by selling the plonk. He didn’t get a receipt or an invoice, and the man in the van has not been found. Interestingly, analysis showed that the bogus Yellow Tail was less than 12 percent alcohol. Real Yellowtail is 13.5 percent. This is another example of how counterfeit wine is adulterated.

In 2020, 4,200 counterfeit bottles of Bolgheri Sassicaia, a prestigious (and very expensive) wine, were seized in operation “Bad Tuscan.” Revealing the international nature of counterfeiting, investigators said the fake wine originated in Sicily, the bottles came from Turkey, and the labels and wooden boxes came from Bulgaria. Furthermore, “The 2010 and 2015 vintages, celebrated by Italian and international critics, were the most prevalent among the fakes.”

As for the spirts industry, fake bourbon is hot right now and authorities nabbed 400+ liters of counterfeit vodka this month in Scotland.

To illustrate the problem more broadly, about 1.7 million liters of counterfeit alcohol was seized in Europe between December 2020 and June 2021. That haul was part of a joint INTERPOL-Europol operation called OPSON X, which netted almost 15,500 tons of illegal products with an estimated street value of nearly $60 million. Upwards of 68,000 checks were carried out by 72 participating countries, resulting in more than 1,000 criminal cases.

The upshot is that up to 20 percent of wine sold worldwide is fake and counterfeits cost the industry as much as $3 billion every year.

What can we do about it?

Counterfeiters and fraudsters exploit weaknesses. This is what gives them openings to assault your brand. The good news is that you can mitigate these weaknesses and gather real-time intelligence for effective brand protection strategies using your supply chain.

Your supply chain mirrors your brand. It’s the embodiment of your business. If it’s not healthy, your brand can’t be healthy. You need to be able to continuously scan it, diagnose it, and take immediate action should a threat arise.

Four supply chain solutions in particular are vital for wine brand protection: serialization, real-time monitoring, end-to-end traceability, and mobile traceability.

We talk about these in Part 2 of our brand protection series, “Brand Protection Strategies and Your Supply Chain.” Part 1 talks about top supply chain threats and your brand protection strategy. We encourage you to read these articles, as well as our consumer engagement series.

Final thoughts

Your success and reputation depend on how seriously you take brand protection. This means being able to authenticate every ingredient and every bottle. You have to monitor and prove storage conditions and provenance. You have to have deep, real-time insight into what you’re doing and where your products were, are, and will be. And you have to have the granular data to back up every claim and demonstrate to your customers that your wine is exactly what you say it is.

If you read our “Wine Consumer Engagement: Ten Things to Know for 2022” post from the other day, you saw that our mantra for wine consumer engagement is “A message in every bottle.” For wine brand protection, we like to say that you should tap into the “Brut” force of your supply chain. The short list of benefits includes:

    • Fortify with supply chain data and protect with unique digital IDs
    • Create an indelible provenance and create your product story
    • Monitor in real time 24/7
    • Inspire consumer trust and crowdsource brand protection
    • Leverage IoT to eliminate blind spots
    • Maintain chain of ownership
    • Protect trading partners and consumers

And, of course, combat counterfeits and theft. Contact us today to learn more about pairing your brand with the finest supply chain solution for wine brand protection. Also be sure to read our other articles about the wine supply chain and why your supply chain is vital for effective brand protection and consumer engagement:

Wine Consumer Engagement: Ten Things to Know for 2022

Virtual tastings are so 2020. Don’t get us wrong: They’re still a thing. But to do wine consumer engagement right in 2022, winemakers have to do a lot more than ask people to hop on a Zoom call. That’s why today we’re talking about 10 things that are vital to successful wine consumer engagement.

Also, don’t forget that the Unified Wine and Grape Symposium starts today! We’ll be exhibiting with our fellow Antares Vision Group member companies FT System and Applied Vision, so sign up today and visit us at Booth 807.

Ten things to know about wine consumer engagement in 2022

Like our recent “Five Wine Supply Chain Trends for 2022” and “Trends for the Digital Wine Supply Chain” blog posts, we’re not ranking these aspects of wine consumer engagement. They’re all important. Winemakers should consider each carefully when crafting their engagement strategies.

1. Nail your story

Your brand’s story is vital to wine consumer engagement. (All consumer engagement, actually.) It’s the foundation of “the face” and the heart of the personality you’re going to project to your customers and potential customers. What do you want people to know about you? Where is your brand “coming from”? What sets you apart from other brands?

Many of the other aspects of wine consumer engagement we’re discussing today stem from and overlap with the decisions you make about your story. To get this right, expect to do some soul-searching and ask yourself some tough questions about who and what your brand is.

2. Know your customers

It’s Marketing 101, right? If you don’t know who’s buying your products, you’re missing opportunities and wasting money. Today, however, knowing your customers requires elbow grease. You have to devote time and resources to gather information (i.e., data) and develop profiles to inform your wine consumer engagement.

Here’s a handy tool: ALE. It’s an appropriately wine-and-spirits-flavored abbreviation for ask, listen, and engage. Ask consumers questions. Listen — really listen — to their answers, feedback, suggestions, opinions, etc. Importantly, what they say might not jibe with your own vision of your brand, so be willing to adapt and pivot and do the extra work to give people what they want, not what you want them to want.

To engage, pull out all the stops. Social media, of course. But you can also get out into the real world. Talk with sommeliers to see what’s trending with wine lovers. Talk with retailers to learn what people are thinking and buying. For instance, is there a cheaper brand that people are being drawn to? What brands have buzz?

We all know that wine can be a very personal experience. It’s part of its appeal. It’s why people get excited about wine and anticipate the purchase as much as the uncorking. Take advantage of that. Ask, listen, and engage.

3. Customer first, brand second

So, you’ve done the research and know who your customers are. Time to let them know all about your brand, right?

Not really.

Always remember that wine consumer engagement is about the consumer. They are the hero, not you. It can be a difficult lesson to learn, but your job is to guide people toward what they want and demonstrate the value your brand brings. Don’t make it all about you, because it’s not. Give people what they want to see and share, not what you want to show them.

4. Accept that you might not be that special

This might sting. You have to be self-aware. You have to know your strengths and weaknesses. You have look in the mirror and do an honest self-assessment.

What, if anything, makes you unique? Remember, unique means unlike anything else. One of a kind. Are your competitors saying they’re unique while making the same claims you’re making?

Industry observers are noting that wineries are saying the same thing. “Estate-grown,” “multi-generational,” “visionary winemaker,” and “terroir” are on their short list of traits and lingo that are decidedly not unique in the market. You can talk about these things, but don’t pin your identity on them.

Knowing your customers is what will make your brand stand out. What do they like (and dislike) about your wines? Where do they drink your wines? How do they “use” your wines? Are they talking about and sharing your wines on social media? What do they expect from you? Meeting their demands is what will make your brand special.

5. Be yourself

All this said, it is critical to be yourself. Don’t put on airs. Don’t pretend to be something you’re not. Don’t be a bore. Today’s consumers have a nose for you-know-what. If they get even a whiff of phoniness, watch out. So, you have to be authentic. Keep it real.

6. Focus on sharing

Think of wine consumer engagement as a self-perpetuating chain in which the links are interactions, including sharing between and among your customers. For this to happen, you have to create content that people want to see, experience, and share. The possibilities are virtually limitless — videos, contests, loyalty programs, giveaways, prizes … . Just remember to focus on your consumers, not yourself.

7. Always bring value to consumers

Ask yourself this question every day: What have you done for them lately?

You must always bring value to your customers. “ABV” — another industry-appropriate abbreviation. This means different things to different people, of course. For some, it might mean proving the provenance of your wines and demonstrating that you’re focused on transparency and sustainability. For others, it could mean sharing a picture of your team out in the vineyard or a fun promotion, such as winning a prize for sharing a video. If you’re not always bringing value to your customers, who are the heroes of your wine consumer engagement, you’re going to push them away.

8. Devote resources

Wine consumer engagement isn’t a “set it and forget it” proposition. It shouldn’t be an afterthought delegated to whoever might happen to have some spare time.

You need a person or a team to conceptualize and create content, push it out across all your channels, monitor and analyze reactions, make changes, and respond to what people are saying and asking. You also need to pay attention to what your competitors are doing and saying.

In other words, you have to be fully engaged in your consumer engagement.

9. Business as usual probably won’t cut it

It’s a cliché because it’s true: You have to think outside the box. Running an email campaign* or posting a video on Facebook then kicking back with a nice Pinot to watch your sales boom isn’t how wine consumer engagement works. It’s called consumer engagement for a reason: You want to get a response. You want to build that self-perpetuating chain of interactions. Creativity is key. It’s another reason to devote resources to make sure you’re doing it right.

*A note about email and marketing: Some people say it’s dead; others say it’s alive and well. Only you can decide if it works for your brand and if it should be part of your consumer engagement strategy.

10. Leverage supply chain data

We’ll let you in on our secret: The key to effective wine consumer engagement is your supply chain, which is a goldmine of actionable data.

The basic building block is serialization, which turns every product into what we call a “digital asset.” Each digital asset has a unique digital identity that can be monitored from production all the way to the person who buys it. With rich, traceable data about every item in your supply chain at your fingertips, you can establish and maintain connections with consumers before, during, and after the sale. For example:

    • Link every product to unique content and brand interactions
    • Give consumers the information they demand (e.g., provenance, transparency, sustainability)
    • Hyper-personalize and hyper-target every engagement based on location, time, or purchasing data
    • Empower consumers to reject counterfeits, alert for diversions/gray markets, authenticate products, help with recalls
    • Gain valuable insight into your customers

Final thoughts

“A message in every bottle.” This is rfxcel’s mantra for using your supply chain for wine consumer engagement. Our Traceability System provides granular data from the vineyard all the way into your customers’ daily lives. You can use it to define and tell your story, know your customers and bring them value, and inspire your brand to think outside the box.

If you’re at the Unified Wine and Grape Symposium this week, stop by Booth 807 to see our solutions in action and learn more about how we can help your brand stand out in a very crowded market. If you aren’t there, contact us today to schedule a short demo with one of our digital supply chain experts.

And be sure to read our other articles about the wine supply chain and why your supply chain is vital for effective consumer engagement and brand protection: