Apples and pears: Australian Fruitgrower magazine on integrity and brand protection

Written by guest blogger Dr Hugo Britt, this article first appeared in Australian Fruitgrower magazine, published by Apple and Pear Australia Limited (APAL). They’ve done a terrific job in recounting an address by Laava Joint CEO and Commercial Director Gavin Ger, given at the APAL 2020 Post-harvest Seminar. Laava Smart Fingerprints® now feature on Pink Lady® apples imported into China in a project with APAL and James Tyler.
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Last year, Gavin Ger decided to treat himself to a bottle of Bordeaux as he passed through a supermarket on a business trip to China. Examining the label of the 2016 Cartesien Bordeaux Supérior, everything seemed legitimate: the text was half in French, half in Chinese characters. It not only had a barcode but sported a QR code as well. At $25, the price point was about right – a bargain compared with buying the same bottle in an Australian store, but not so cheap as to be suspicious.

Returning to his hotel room after a long day, Gavin opened the bottle, poured himself a glass, took a sip … and immediately spat the contents out into the nearest sink. The ‘wine’ – if it could be called that – tasted like battery acid.

Like so many others, Gavin was a victim of counterfeiting. Ironically, he happens to be an expert on the practice. Gavin is the Commercial Director and Joint CEO of Laava, a company that protects businesses from counterfeiters, and builds brand engagement with their customers.

Speaking recently to members of Apple and Pear Australia Limited (APAL), Gavin pointed out that the unpleasant taste wasn’t his only concern. “A counterfeit product isn’t subject to any of the quality or food safety controls that we usually take for granted,” he said. “That bottle could have contained vinegar and food colouring, but it could also have contained harmful bacteria or worse.”

Laava, End-to-end integrity: protecting the brand
Laava, End-to-end integrity: protecting the brand

Counterfeiting Australian apples

For Australian apple and pear growers, the Chinese market will present an enormous opportunity, but the sharks are circling. Counterfeiters know that Chinese consumers will pay a premium for high-quality Australian produce, and so there is a significant incentive for them to attempt to pass off lower-quality produce as Australian by copying branding, packaging, and even QR codes. With the quality of counterfeiting ranging from clumsy to sophisticated, there’s a real danger that counterfeit apples could erode overseas consumers’ trust in Australian apples and shrink the size of the export opportunity.

“There’s a clear economic benefit that can be gained by riding off a brand that has invested a lot, has high market awareness and high regard. The economics are one driver, but general consumer confusion is the other factor. That’s why we’ve created a solution that can give consumers confidence that a product is genuine.”

Gavin Ger, Joint CEO and Commercial Director, Laava

Chinese consumers are very aware of the counterfeiting problem; in fact, for 27 per cent of consumers, ‘food and trust’ is their biggest concern. They are therefore willing to pay more for a brand that can offer greater trust and transparency.

For Gavin and his team, the solution goes beyond traceability to embrace what he calls ‘integrity systems’, including:

  • Authentication
  • Provenance
  • Biosecurity
  • Certification and compliance
  • Cross-border protocols and data-flows
  • Protocols for packaging
  • Consumer engagement and digital storytelling.

The solution

Achieving end-to-end integrity will take a multifaceted approach, an unprecedented level of cooperation among supply chain partners, and smart technology solutions. One such solution is Laava’s Smart Fingerprint®, each a unique and secure digital identifier that provides the item-level trust and security that consumers are increasingly seeking. Customers simply scan the Smart Fingerprint to access the item’s story, including provenance, traceability and marketing information.

The Smart Fingerprints can only be generated and recognised within Laava’s secure ecosystem, and if copied, will be picked up by Laava through the detection of unusual scanning patterns and activity and flagged as ‘suspicious’.

How do Smart Fingerprints work?

When a customer scans a Smart Fingerprint with the Laava scanner, an image is taken of the Smart Fingerprint and sent to Laava. First, it’s optically analysed to pass a number of tests, then sent to the server and matched to see if it’s one of Laava’s.

It’s then checked against business rules – has it been scanned a number of times, is it located in the right country and in the right location within that country? Only then does the content come back to the consumer (securely delivered via the Laava platform) showing that it’s verified – all within a couple of seconds.

The Smart Fingerprints themselves are generated by Laava and issued to the brand. “We control the two key parts: the generating and the scanning,” says Gavin.

There is no need to download an app or signup to Laava to scan the Smart Fingerprints. Laava can embed the scanner directly into a brand website or app, or in the case of China, a WeChat miniprogram that launches the scanner instantly when someone points their phone at a Smart Fingerprint. “They take a photo, it authenticates.”

Will customers get out their phones to check product authenticity?

Chinese consumers spend a great deal of time on social media platforms such as WeChat, and do much of their day-to-day interaction (browsing webpages, paying for products, ordering taxis and so on) through that platform. This includes the use of QR scanners.

QR codes are ubiquitous in China, mainly because scanning a QR code is easier than typing Western characters into a phone screen. “Chinese consumers are used to scanning,” Gavin says. “They have a much higher incidence of getting out their phones to interact with a product.”

What happens when a counterfeit Smart Fingerprint is scanned?

If the Smart Fingerprint has been faked by a counterfeiter, Laava’s scanner will recognise it’s not one of theirs and reject it immediately.

If it passes the first test, then it is checked against the business rules, such as a set number of scans. Once this is exceeded, the customer is sent a message that says: ‘suspected counterfeit, don’t buy’, and gives the contact details for getting in touch with the brand owner. Normally a Smart Fingerprint would only be scanned two or three times, but a counterfeit Smart Fingerprint will be copied and scanned over and over again, as that is their business model.

Brand owners set the scan count rules themselves. For example, if it’s likely that a lot of ‘tyre-kicker’ customers will scan the product without purchasing, the brand owners could set the rule that it can be scanned hundreds of times within a ‘geofenced’ location like a supermarket, but only say, 10 times outside of that space.

Other options are to put a second, linked Smart Fingerprint inside the packaging or under a peel-to-reveal label for scanning post-purchase – or even to put one on the sales docket.

Gavin shared a fascinating sequence of images that Laava collected as a counterfeiter attempted to copy a Smart Fingerprint this 2019/20 Australian cherry season. The images showed the Smart Fingerprint being cut out of the original cherry box, then an attempted alteration in Photoshop followed by an attempt to mass reproduce it on new labels.

“They kept scanning the Smart Fingerprint, which triggered the system to say ‘potentially counterfeit’. By the final image, you can see the counterfeiter scrunching up the label in frustration – we could tell they’d given up.

Why are Smart Fingerprints more counterfeit-proof than QR codes?

QR codes are more suited to identification than authentication because they are part of an industry open standard. Anyone can generate a QR code, and anyone can build a QR code reader. “There’s no centralised control, no centralised issuer and they were not designed for authentication. This means anyone can swap out what looks like a genuine QR code for a fake one.”

This is exactly what happened to one of Laava’s key launch partners – Reid Fruits of Tasmania, whose world-renowned cherries sell for hundreds of dollars a box. QR codes generally link to a website, but even the website can be fake.

“This happened to me when I scanned the QR code on the bottle of Bordeaux. The website looked legitimate. In reality, customers may be duped by a fake box, with a fake QR code that takes them to a fake website. The very same thing happened to Reid Fruits last year with their QR codes. It’s very sophisticated.”

Gavin Ger, Joint CEO and Commercial Director, Laava

Where does the Smart Fingerprint go?

Laava, End-to-end integrity: protecting the brand

In the case of apples, the Smart Fingerprint would go on prepacks or on boxes/rigid packaging. It is also possible to embed the Smart Fingerprints at the fruit level, if needed. A common Laava requirement is to embed the Smart Fingerprints within standard packing labels, which is easily supported.

Laava’s packaging partners can even embed the Smart Fingerprint directly into the packaging design itself without the need to print and add an additional label. Laava customers do not have to change their packhouse processes, and no additional equipment is required.

What’s the cost?

For an apple grower, there are different flexible packages. “Most horticultural brands prefer the seasonal subscription model, but we also keep it simple and price per label,” says Gavin.

“Subscription packages start at $299 per month, and the cost per Fingerprint can end up at just one cent an item or even less for large volumes. We’ve sought to make the technology extremely affordable to put it in the hands of any grower, packer or exporter who wants to tell the story of their brand while protecting it against counterfeiters.”

This article first appeared in Australian Fruitgrower, Autumn 2020, Vol. 14, Issue 1. Thanks to APAL for permission to reproduce here.

To find out how Laava can solve your business problems, contact Laava today.