YPB Group smartphone readable product packaging allows consumers to digitally connect with brands

YPB Group Ltd (ASX:YPB) is perfectly placed to ride the wave of consumer and brand concern around counterfeit products and authenticity post COVID. The company’s initial premise was their proprietary invisible tracer (T2) which couldn’t be copied, destroyed or even seen, and could be put into any type of product packaging. CEO and chairman John Houston said: “The drive was to help brands protect their products against counterfeit. “We started off with the invisible tracer where you could detect its presence with a simple, inexpensive little scanner but almost every brand I showed it to asked if we could get a mobile phone to do what a scanner does. “So we secured the intellectual property (IP) rights to such a technology which allows a consumer to take their mobile phone, tap it against a product to identify if it’s real or not, safe to consume and which links the customer digitally to the brand.” The company recently reached this mobile readability milestone with its MotifMicro technology. Mobile readability This drive for mobile connectivity comes from Houston’s extensive experience running and building mobile phone companies for Hutchison Telecommunications Ltd (ASX:HTA) (OTCMKTS:HUTCY) and Orange SA (NYSE:ORAN) (FRA:FTE) (OTCMKTS:NCTF). Houston said: “We’ve developed a family of apps and we’ve recently had a breakthrough in the ability of an android phone to read our MotifMicro technology. “We believe that the company is at a point of inflexion where the COVID-19 pandemic has actually heightened consumer awareness of safety and product provenance and we think that we’re in a fabulous position to move forwards.” In Australia alone, smartphone adoption is at 98%, which YPB believes makes the company more relevant than ever for consumers to digitally connect with brands. “Authenticity triggers engagement” Chairman John Houston said: “Towards the end of 2016-2017, we wanted to focus more on the consumer-facing front because we live by the ethos that authenticity triggers engagement. “YPB was actually at the forefront of developing a technology called Connect which has the ability to link a physical product into the digital environment.” The Connect solution essentially takes any digital mark such as a QR code (which can easily and inexpensively be inserted into product packaging) and creates a link to the brand from the end consumer’s smartphone. Houston said: “We take a physical product and we link it into a digital environment. “MotifMicro is the jewel in our crown because it takes the best part of our T2 technology, and it takes the best part of Connect and it puts the power in the consumer’s hand to authentically check that what they buy is genuine or safe - right from their mobile smartphone. “We initially started up with iOS devices and for us to have cracked the Android readability as well is really quite exciting for future revenue generation.” Point of purchase Where this technology has the most impact for brands and consumers alike is at the point of purchase. Houston said: “I think that more than anything consumers in the Western part of the world want transparency and product provenance. “When you go to buy a cosmetic product, you’re probably more aware now what the social and environmental impacts of that product are. “You turn it over and sometimes the brand can’t get all the information onto the product packaging. “So, what our Connect platform does is allows a brand to provide a more in-depth understanding of that product prior to the point of purchase. “You can scan the product with your phone and get all the information about it prior to making a decision.” “Economical cost entry” Houston said the reason the company had achieved ongoing success with its T2 tracer product was because it had a very economical cost entry. “Our products, whether it be T2, YPB’s Connect platform, MotifMicro or some of our other high-security products, they are all attached to recurring revenue because it’s a price per application system. “If you want to use Connect it’s a price per the QR code and a SaaS monthly licence model to access the platform.  “If you look at T2 through a supply chain, again it’s charged out at a per-application price and due to the nature of manufacturing and selling items, the revenue model is recurring.” “As the world changes, brands and their supply chains are wanting to be able to put tools in their toolbox to guard against counterfeiting or to be able to prove authenticity through a supply chain.” Post-COVID commerce YPB has experienced an increase in awareness of its products due to the e-commerce and export impacts of the COVID-19 pandemic. Houston said: “There has been a huge uplift in awareness not only through brands wanting to protect their products through a supply chain but more than ever we’re seeing brands want to be able to actively ‘connect’ to their end consumer through with use of our Connect platform for example. “Two years ago, it was a very novel piece of technology and through just general use, packaging converters and manufacturers now want to add tools to their folio for brands that they package for. “It creates a value add for packagers to help their brands ‘connect’ with their end consumers. “COVID has created huge awareness of the things that are going to drive YPB’s Connect platform, such as product information, product providence etc. “Brands are becoming more open to incorporating YPB’s Connect QR codes, particularly in Australia, where the COVID-19 pandemic has shown millions of Australians how to use QR codes.” Nature One Dairy contract YPB recently signed a contract with Nature One Dairy, an infant formula producer and a contract packager for other brands. Houston said: “If you go back two or three years an infant formula brand probably thought they didn’t need to mark their product with a QR code, or protect it from counterfeit, but because of the huge shift in export and the consumer’s insistence on product providence, these brands know that Connect is an essential tool to engage their consumer and for the brand to find out where their products are ending up. “In the growing Australian Southeast Asia and Chinese markets, we’re focusing on dairy, alcohol and cosmetics and very much also on building relationships with packaging partners (or what we like to call packaging converters) in these growing and vital export corridors. “We’re working with these packaging partners more and more and are being called to be the voice to the brands on how to allow them easy access to their end consumers.” Near term outlook Houston said: “We’ve had two really big commercial successes in Australia, just before COVID in Nature’s Care and Nature One Dairy, and we see future success in the roll out here of our Connect platform. “Our tracer product is now becoming much more sought after for example in China and we’ve priced it so we’ve got now the ability to deliver it in huge volumes that we were never able to before, so that’s quite exciting for the revenue impact of the company.” Going forwards, Houston said the company plans to commercialise its MotifMicro technology. He said: “For the rest of this year and next year we have very pragmatic approach to generating revenue out of our MotifMicro technology, and with the Android readability milestone reached that is now one step closer. “YPB is more relevant than it’s ever been because of the way the world is at the moment. “COVID-19 has actually driven the awareness of QR Codes – which is the entry point to our Connect platform and product provenance – so COVID has actually done an awareness job with our consumer that we could never have afforded to do.”