While industry verticals like pharmaceuticals, alcohol and tobacco show signs of ramping up usage of item level tagging, the apparel industry continues to be the main driver when it comes to item level tagging.

In a recent web cast hosted by VDC Research, RFID analyst Mike Liard estimated that apparel accounts for 75-80 percent of passive UHF item level tagging volume, with nearly 1.3 billion tags expected to be consumed this year.

Liard says that he expects another few hundred million tags to be consumed by both pharmaceutical and by fast-moving CPG items like tobacco and alcohol, mostly in the Asian markets. Liard says that the total market for passive UHF item level tags should approach 1.7 billion this year.

“The hottest vertical using passive UHF tags for ITL is without question the retail apparel segment, for both open loop and closed loop supply chains,” says Liard.

Regional markets in China and Korea are seeing volumes ramp up in the tobacco and alcohol sectors, driven mainly by brand protection and consumer authentication. “China and Korea are deploying the technology and trying to achieve protection of brand and to enable consumers to authenticate products in a retail environment,” says Liard.

Liard says that many countries are eagerly watching how the Korean mandate for pharmaceuticals progresses, including the U.S. and Germany. The Korean mandate calls for tagging half of that country’s drugs by 2015. That initiative is seeing serious ramp up in the 2012-13 time frame.