China: a producer and consumer of fake wines & spirits

Johns Daphne whiskyChina's booming wine and spirits market has made it a hot spot for both the sale and production of counterfeits, according to new market research.

The report by Vandagraf - entitled Wines & Spirits: Anti-Counterfeit, Brand Protection & Product Authentication - notes that around 30 per cent of the alcohol consumed globally is thought to be counterfeit, with levels as high as 10 to 15 per cent even in fairly well-regulated markets such as the US and Europe.

The trade in illicit wines and spirits is largely split into two categories - look-alike counterfeits which mimic genuine products but which are nearly always of inferior quality - and refilling of genuine bottles.

China's booming wine market has created an extraordinary demand for empty bottles of famous wines, with fraudsters willing to pay hundreds of dollars for a good bottle that can be re-filled with something less expensive.

"In a country where, for example a highly desirable Chateau Lafite Rothschild 1982 can command as much as $5,900, the empty bottle can fetch as much as $1,500 on the black market," notes the report.

In response, some European wine exporters have been campaigning for restaurants to smash the bottles after the genuine wine has been consumed so that they cannot be re-filled, and ensure that capsules are destroyed so that they cannot be illicitly re-used.

Despite the significant losses attributed to counterfeiting across all industrial categories, the brand protection industry has yet to really take off, says Vandagraf.

The global market for brand protection solutions has been estimated to be running at less than 0.5 per cent of related global financial losses which were at an estimated $1.02bn in 2014.

Best estimates put the growth of brand protection solutions at 12.6 per cent in 2014, projected to continue at around the same level for the next few years, according to the report.

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