Cracking Down on Counterfeit Wine and Spirits

According to a recent article, Chinese and French wine authorities are working together to crack down on counterfeit wine in China. Chinese authorities engaged the CIVB, the Bordeaux wine trade body, to ?police? Chinese supermarkets and liquor stores for fakes. In unrelated efforts to curtail counterfeit wine, American wine collector Russell Frye has started a wine authentication website where legitimate bottles can be registered and counterfeits can be reported.

Oftentimes, consumers believe they reap benefits from cheap counterfeit goods, often willing to sacrifice the integrity of the product for the lower price. But counterfeiting is a big problem for consumers, as well as producers of legitimate products and even governments. Counterfeit alcoholic beverages has been a growing problem, especially in developing markets that are also developing tastes for western wines and spirits?these products are often too expensive for many consumers in those markets to afford, and so counterfeiting those products can be very lucrative. The problem has even been surfacing in developed countries where counterfeiters might sell products to liquor stores and bars more cheaply so as to undercut the sales of legitimate products.

The most obvious harm of counterfeit goods is to the producers of goods which the counterfeiters are knocking off. In the wine and spirits industry, counterfeit versions of name brands like Smirnoff, Jack Daniel?s, Johnnie Walker, Chivas, and others have popped up in places far and wide, including in the UK, Russia, Czech Republic, Vietnam, and China. These companies not only lose out on revenue, but might also have to deal with intellectual property concerns such as trademark infringement and geographical indication issues, or other commercial issues like diminution of brand goodwill (if, say, consumers get sick from, or don?t enjoy the taste of, products they believe to be a certain name brand which in reality are counterfeit). Counterfeiting in vintage or high-end wines can also cause serious problems for collectors?this has been a growing problem particularly among the new rich of China who have money, but often do not possess the wine knowledge to separate, say, fake 1961 Chateau Petrus from the real stuff. But even wine-educated American collectors have been famously duped.

Additionally, the fact that these products are ingested raises health and safety concerns that other counterfeit products, such as fashion accessories or electronics, don?t present. These counterfeit wines and spirits are not regulated by appropriate health and safety standards, and some counterfeit alcoholic beverages have been discovered to contain very harmful chemicals, such as methanol (which can cause blindness and death), as well as chloroform and isopropanol (which are commonly used in cleaning products). In July, an explosion at a plant in the UK producing counterfeit vodka caused five deaths, raising additional safety concerns related to the illicit production of these counterfeit goods.

This story raised other concerns about how increasing liquor taxes are driving the growth of counterfeit alcoholic beverage production and other fraud: dodging these taxes by counterfeiting these products can cost governments millions of dollars. In the UK, which has a very high alcohol excise tax, HM Revenue & Customs has said that fraud, illicit production and smuggling cost the Treasury about ?600 million a year in lost revenue.

What are producers doing to protect their brands and intellectual property? Often, counterfeiters of wine and spirits simply take empty bottles of the real stuff and re-fill them with imitation product; sometimes they manufacture labels that closely resemble the real products?. To combat these methods, manufacturers have been turning to technology like laser-etching bottles and using special tags and microchips. Of course, the cost of these measures would likely be passed on to consumers.

But what can consumers do to spot fakes? According to oenologist Ed Soon, ?The most obvious tell-tale signs include evidence of errors on the label, cork tampering and wrong bottle shapes. Does the bottle of the vintage in your hand look too new? It could well be a fake. Unless a bottle has recently been re-dressed by the chateau, expect some label damage and staining in older wines. Less is more when your bottle seems to have an unusually high-fill level. Beware of corks with incorrect vintage stamps, and mismatched bottle and label markings. For old reds, watch out for an unusually deep colour, a ?young? taste, or the lack of sediment in the bottle.?

Counterfeit wine and spirits is a game in which everyone loses. So, producers: assert your trademark and geographical indication rights if they are implicated by counterfeit products, and consumers: check those labels, and don?t drop thousands of dollars for that vintage Chateau Lafite before you drink dig a little deeper.

Source: http://www.ipbrief.net/2011/10/01/cracking-down-on-counterfeit-wine-and-spirits-business-health-and-intellectual-property/

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