How can improved UPC standards help retail wine stores?

Posted on  | July 14, 2011  
Written by | Ian Griffith

The quest for a unique wine item number for use throughout the industry has been a recurring theme in this column. So much so that I was invited to sit on a panel at the Wine Industry Technology Symposium to present the retailer perspective in a discussion of what the 3 tiers could do better to share product information.

The assumption of the discussion was that the UPC code or more correctly GTINs (Global Trade Item Numbers) are the de facto codes for the industry when it comes to sharing information. However while some other industries rely on these codes to invoice and ship products throughout the supply chain, the wine industry uses a variety of IDs starting with the TTB ID for label approvals, the winery item number, distributor item, and store SKU. The panel included specialists from GS1, the organization that administers GTINs, with experience from other sectors.

From the retailers’ perspective there are a number of challenges to the way UPC codes are used in this industry.  A retailer needs the UPC code on a bottle to correspond to a SKU so that a reliable scan can be made by a cashier. When the store discovers the same UPC exists on different wines they need to create a replacement bar code. There are a number of examples where wineries might not provide UPC codes that meet a retailer’s requirements: codes are not vintage specific, the same code is used for similar items, or when different importers apply their own UPC codes which can lead to multiple codes for the same wine.  Then there are wineries that either don’t use UPC codes because they think it turns their high end wine into a commodity or because they want to keep it out of box stores that have a UPC-only policy. So retailers have learned they can’t rely on receiving a unique UPC code for each wine in the store.

Complicating the situation for retailers is the fact that their most immediate trade partner, the distributor doesn’t have a practical use for the bottle level UPC.  Distributors and wineries scan either the case or the pallet code when they ship wine.  Where distributors like retailers are looking for operational efficiencies from a unique ID, wineries have a different goal. They are trying to improve their business intelligence with better reports on a distributor’s depletions and which retail and restaurant accounts have their wine.

Wineries are in a position to implement GTINs that meet the requirements of their trade partners and can pass them into the supply chain in exchange for more accurate reporting data. The challenge is to make a compelling business case for the investment by wineries to improve their standards, and if the goal is transparency wineries can expect some resistance to the idea of making sales and account information more accessible.

In terms of solutions, the low hanging fruit would be to have wineries and distributors agree to better case and pallet level standards to improve their data sharing.  This code might be adopted by more retailers if the case and pallet level codes were easily converted into UPC codes but that’s not a consistent option at the moment.  If wineries want business intelligence at the retail level they shouldn’t assume that both the case and bottle codes will be stored in a store’s POS system. The solution for retailers will more likely come from convincing wineries that the only way to collect vintage level intelligence is to provide vintage specific UPC codes on the bottle.  The question for retailers is whether the improved efficiencies from a reliable UPC will be worth the exposure from sharing inventory information with the supply chain. Hopefully the answer will be yes.

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