Authentication News™ interviewed Andrew Clint, (Managing Director of De La Rue’s Authentication Division) to explain more about the new division, its products and solutions and the future.
Q: Can you describe De La Rue’s Authentication (DLR Authentication) division in terms of what markets and products / services it provides?
A: The Authentication Division is focused on high growth markets encompassing government revenue solutions (GRS), brand protection and security features for identity documents. Principally the products and services we provide are tax stamp solutions supplied to governments, which account for around 50% of revenues, whilst the remaining 50% of revenues are from the brand protection sector and ID security features. We supply a range of physical products including tax stamps, authentication labels, cheques and bank cards for Africa, brand protection solutions, and ID security components such as polycarbonate. Underpinning all of these are our software solutions DLR Certify™ (used for GRS), Traceology™ (used for e-verification and brand protection) and a dedicated licencing platform used for Microsoft.
On the tax stamp market, we have significant capability and capacity and now supply in excess of six billion stamps from our site in Malta. This site has recently had major investment in new equipment and is a centre of excellence for De La Rue’s Authentication Division. We supply six countries in the European Union under the EU Tobacco Products Directive (EUTPD) and we have recently launched FCTC compliant solutions in the UAE and Saudi Arabia for tobacco. Additionally, we serve several other countries around the world with tax stamp solutions.
In brand protection we are proud to continue our partnership with Microsoft, now in excess of 20 years, where we supply Certificates of Authenticity and Genuine Microsoft Labels – all managed through a licencing platform. As you know, we purchased Du Pont’s volume hologram business in 2016 which supplies the holographic product Izon® and the e-verification platform Traceology. We have a strong pipeline of new solutions for the brand market and are expanding the volume hologram business into the EU and Asia. And we are about to launch a new set of embossed holography labels which will include track and trace functionality for the brand market.
In addition, we are very active in new areas of authentication and product protection; for example, in the legalised cannabis sector we recently announced an agreement with KushCo Holdings to supply anti-counterfeiting labels with serialisation and track and trace for North America. We are also working with a UK based blockchain start-up to provide a combined physical and digital solution that can track from ‘seed to shelf’ in the cannabis supply chain. What is also interesting is that as we engage with the regulatory authorities in this sector, we are beginning to see some crossover between brand protection and government regulation.
Across the Authentication Division the software and mobile applications are becoming as important, in some cases more important, than the physical label. We have active mobile applications in use by customs authorities and government inspectors around the world, verification applications launched for consumers in both brand and GRS programmes and we have an application in beta testing with a client that will authenticate a volume or embossed hologram. Finally, we are active in blockchain, with a pilot currently running with one our customers in the consumer electronics market.
Q: What are the major strengths of DLR Authentication?
A: The strengths of DLR Authentication can be summarised as: our agility to adapt quickly to the market and customer needs, our strong heritage and legacy in supplying governments and brands for many decades, our combined offering of digital and physical solutions, our constant innovation and our speed of implementation.
In addition to these strengths, we have a strong holographic capability, customisable and adaptable products and solutions, and a long-term stable customer base together with speed to market so that we can satisfy customers quickly for their requirements.
Q: At last year’s AGM De La Rue predicted a very optimistic future for product authentication and traceability. Was this optimism well placed?
A: Yes, the optimism was very well placed; as reported in the H1 results, the business has experienced 70% year-on-year growth for the first half of FY20.
Q: Authentication solutions are often sold as a system comprising software, printed features and detectors. How well placed is De La Rue to deliver these solutions?
A: We are very well placed to deliver these solutions, having made significant investments in both our physical product production capability and our software solutions.
For example, in our software solutions portfolio, we have DLR Certify and, as mentioned earlier, our Traceology platform. Our software systems are configurable, flexible and can be deployed either centrally or decentralised as required by our customers. All our solutions have an app that can be used by both inspectors and consumers. The software and our digital capabilities are of increasing importance in the authentication space.
Our printed features and technologies together with our design capabilities are also a key component of our solution. De La Rue has many years’ experience in providing both governments and brand customers in this area with world beating designs and print features.
Serialisation is also a key component in this sector. We have our own core competence in this area and can provide different types of serialisation.
Service management is also a key component – De La Rue is able to provide 24 hour, 7 days a week support. For example, our programs in Saudi Arabia and the United Arab Emirates have this service management functionality based in the region and backed up by senior technical expertise from the UK.
Our manufacturing capability, particularly with our investments in new equipment in Malta and other sites, has enabled us to provide the latest innovative features and products and also ‘future proof’ products for customers, ensuring they benefit from the latest innovations and volume requirements for this market.
In the cannabis market, as alluded to earlier, we are making progress in the ‘seed to shelf’ tracking of cannabis and are also developing solutions in the emerging ‘right to repair’ consumer electronics market.
Other areas where we have developments are in the luxury item sector where there is a need for recyclability, sustainability and tracking of products through to end of life, where we are looking at digital passporting of products.
Q: De La Rue purchased DuPont’s holographic business a couple of years ago. What has happened since the acquisition for this business?
A: Since the acquisition we have continued to develop our volume Izon product and also won new business such as KushCo Holdings amongst others. Historically Izon has mainly been marketed in the US and we plan to expand our geographical reach in the coming months. As an addition to the Traceology software platform we are piloting the hologram validation application and are planning significant investments in Traceology to bring new functionality to market. The volume hologram remains one of the most secure physical brand protection features, so we will be reviewing the design of the Izon product and looking to bring new, innovative effects to market within the next year.
Q: With the increase in digitisation and dematerialisation of documents, what does the future look like for physical authentication features?
A: Good question; the way we see the market is that physical authentication still has a long shelf-life. However, the key is being able to provide, either separately or in combination, digital and physical such as what we currently provide for our tax stamp programs and through Traceology. There are definite synergies where the best aspects of physical and digital can be combined to deliver products that provide what customers require in an increasingly digital world. Using digital and physical together provides a form of multi-factor authentication that can’t be delivered by a physical label or a digital code on their own.
In the brand sector, physical authentication, especially holography integrated with the brand’s designs, is still very much a part of an organisation’s brand protection strategy, like in the government sector, combining physical with digital is typically a key functional requirement.
De La Rue has the capabilities to provide physical, digital and combinations thereof depending on the requirements, and we are focused on developing both channels to work seamlessly together.
Q: What are the ambitions for the Authentication Division?
A: The Authentication Division is an ambitious and forward-looking business aligned to bring the right solutions to market to meet our customers’ future needs. On these foundations we plan to continue growing the business organically into new geographies and verticals and to partner where appropriate.
For the tax stamp market, growth is, at the moment, mainly driven by the WHO FCTC and EU TPD regulations, and we are engaged at senior levels with governments and stakeholders as they plan to implement new tax stamp programmes.
In the brand protection sector, we see growth from diversification of our product and software solutions into different product areas, and focused on areas such as consumer engagement facilitated by the physical and digital solutions that we provide. We are also working with packaging companies to provide solutions ready for integration, customisable and available in the volumes required for this market.
In the ID security component area, we supply polycarbonate from our line in Malta which will continue to supply products to our partners such as HID, and we also are engaged with customers on other potential opportunities going forward. In addition, our holographic expertise supplies passport laminates and photopolymer for passport personalisation.
Finally, our joint venture facility in Kenya, owned with the Kenyan government, produces cheques, cards and ballot papers. We anticipate growth in this area as we leverage our cheque and card production capability across sub-Saharan Africa.
In summary, we are very optimistic about the future for the Authentication Division and are looking forward to continuing to support our customers in protecting their revenues and reputations.