EU wine and spirits companies are losing a staggering €1.3bn a year as a result of the trade in fakes, a new report reveals.
Produced by the European Union Intellectual Property Office (EUIPO), the report details the economic cost of IP infringements to the sector, claiming that 4.4 per cent of legitimate sales of spirits and 2.3 per cent of wine sales are lost each year to counterfeits.
These lost sales result in the loss of around 4,815 jobs in the wine and spirit sector each year, it adds. This is because lost revenue means fewer workers can be hired.
The counterfeiting of wine and spirits also has a ripple effect on the entire market. The EUIPO believes the black market in wine and spirits causes approximately €3bn in lost sales to the EU economy and shaves a further 18,500 jobs from the region, of which 8,600 are in the agriculture sector and 6,100 in the food industry.
The total yearly loss of government revenue from various taxes on wine and spirits across the EU-28 totals an estimated €1.2bn.
The top countries affected by the fakes include Spain (losing €263m annually), Italy (€162m), France (€136m), Germany (€140m), and the UK (€87m).
The increasing of taxes on alcohol in some countries, such as Greece, is believed to contribute to demand in the cheaper counterfeits, with a knock-on reduction in government revenue.
Antonio Campinos, executive director of the EUIPO, said the report highlights the consequences of counterfeit wine and spirits on the industry and the EU economy as a whole.
"The spirits and wine manufacture sector in the EU is overwhelmingly made up of small and medium enterprises, with an average of 10 workers per firm. Our findings are intended to help policy makers as they respond to the challenges of counterfeiting in this crucial economic sector."
The report is one of several sector studies by the EUIPO, which aims to quantify the scope, scale and impact of IP infringements in the EU. Previous reports have reviewed sectors including music, watches and jewellery, handbags and luggage, toys and games, sports goods, clothing and cosmetics.
The report notes the challenges of identifying the scope and scale of the counterfeit problem, and says this has in turn hindered the enforcement of IP rights.