Proctor : September 2018
49 PROCTOR | September 2018 Recent reports of ‘copycat’ wines offered for sale online in China may be a new headache for Australian wine exporter Treasury Wine Estates, but wine fraud is as old as the vines in the hills. ABC News last month reported1 that bottles of “Benfords Hyland” wine – looking distinctly like Penfolds wines – were all over China’s third largest online sales platform, Pinduoduo, which has only recently listed on the NASDAQ with a value of US$24 billion and is regarded as a part of the Chinese online sales troika, along with Alibaba and JD.com. The Benfords wines, with labels deceptively similar to Penfolds, were reported to be genuine Barossa Valley wine but sold for a fraction of the price the Penfolds brand sells for in the Middle Kingdom. This development in the high frontier of online retail is a further problem for Treasury Wine Estates, which owns the Penfolds brand, among many other fine Australian wine labels. The popularity of the Penfolds product and the hype surrounding its Grange name here and overseas makes these wines easy targets for scammers and fraudsters. As recently as March this year, Chinese police swooped on 50,000 bottles of fake Penfolds wines in Zhengzhou, the capital of China’s Henan province.2 Reports indicated the fake wines were copies of the renowned Bins 2, 8, 28, 128, 389, 409 and 707. This seizure followed a similar raid in November 2017 by Shanghai police, who found 14,000 bottles of fake Penfolds which were being sold through a marketplace app related to Alibaba.3 In this instance it was Treasury Wines Estates itself which complained to the ecommerce giant when its wines were being regularly sold for as little as 200 yuan ($39) when retail prices were actually between 600 to 3000 yuan ($119 to $594). China has emerged as the new giant of wine consumption due to the growing wealth of its middle class. Wine Australia, our export marketing body, publishes statistics which put this into some context and also suggest why it’s a big deal for Treasury and others when fakers bite into the market. To March 2018: • Australian yearly wine exports were valued at $2.65 billion. • Annual Australian wine exports to China have increased 51% (as a result of the Free Trade Agreement and other factors) to a staggering $1.04 billion. • Australia’s second largest wine export market, the United States, has shrunk 7% and is only valued at $439 million. To get a sense of the scale of the wine market in China, in January to March this year China imported a massive 200.57 million litres of wine with a value of around $1.07 billion.4 The largest exporter to China was France with stock worth $369 million and second place was Australia at $271 million. This is undeniably big business. In 2017 Forbes magazine said: “The Interprofessional Council of Bordeaux Wine boldly estimates that 30,000 bottles of fake imported wine are sold per hour in China. Jeremy Oliver, an Australian wine critic, was quoted by The Weekly Times saying he was told stories that the average bottle of Champagne in China is filled seven times. He estimates that 50% of wines retailing for $35 or more in China are bogus.” 5 Whether such alarmist estimations are true or not, it was reassuring to see Forbes also admit in the same article to being duped: “In 1985, a single bottle of wine was sold for a record-breaking $157,000 at Christie’s in London. The purchaser was Christopher Forbes, who was bidding on behalf of his father, Malcolm Forbes, the founder of this publication. The bottle was the so-called Thomas Jefferson bottle, a 1787 Lafite. It was thought to have the founding father’s initials ‘Th.J’ carved on to the amber green glass. Other circumstantial evidence had also suggested the third president of the United States was once the owner. “It was later proven to be a fake.” This vignette is a reminder that nothing presently occurring in China is new. Even Pliny the Elder complained about the plethora of fake wine available in ancient Rome. The Forbes case was the handiwork of one of the two biggest names in label fraud, Hardy Rodenstock, a German pop music manager and collector of rare wines. The story goes he hosted decadent wine tastings of unique vintages and invited all the great wine writers and experts to sample. The most famous of these was the 1998 tasting of 125 vintages of uber-Sauterne Château d’Yquem dating back to 1784. The Jefferson bottle was said to have come from a chance discovery of a walled-up cellar in Paris in 1985. Curiously, Rodenstock never said who he bought it from or where the cellar was. More recently, another great name in label fraud was Rudy Kurniawan, who was arrested in 2012. He had a similar scam to Rodenstock, except his focus was old Burgundy. From the early 2000s the previously unknown Kurniawan made a name for himself buying and selling rare wines at auction. Kurniawan only came undone when it was realised that bottles he had put up for auction were found to be ‘non-existent’ vintages. For example, in 2008 he consigned several bottles of Domaine Ponsot Clos St Denis Grand Cru from between 1945 and 1971. The estate itself advised the auction house that it had only started making that wine in 1982. Kurniawan’s simple technique was to buy old burgundy from lesser producers, relabel with a grand name and old vintage, and resell. Arrested and convicted, he was sentenced to 10 years’ jail and is scheduled for release on 9 January 2021.6 Wine, especially fine wine, is big business, and it is all too easy to misrepresent provenance. When a new label increases the price handsomely, no wonder scammers flock in. Be careful out there! Matt Dunn is Queensland Law Society policy, public affairs and governance general manager. Wine Fakery by the bottle with Matthew Dunn Notes 1 abc.net.au/news/2018-08-04/australian- lookalike-wines-big-sellers-on-chinese-online- giant/10064836 . 2 afr.com/news/world/asia/chinese-police-seize- 50000-bottles-of-fake-penfolds-20180327-h0y19c . 3 smh.com.au/world/chinese-police-find-14000- bottles-of-fake-penfolds-wine-in-counterfeiting- scam-20171116-gzmnh3.html . 4 thedrinksbusiness.com/2018/05/chinas-wine- imports-soar-in-q1 . 5 forbes.com/sites/pamelaambler/2017/07/27/ china-is-facing-an-epidemic-of-counterfeit-and- contraband-wine/#2c69ad8f5843 . 6 Look up Rudy Kurniawan at bop.gov/inmateloc .