The Pinotgate scandal reminds many that the world of wine has its share of scams, and revives the debate about the inability of wine producers and traders to detect irregularities in time.
By Marta Lillo and Sandra Vargas, AndesWines.com
(Santiago, February 2012) Even the most renowned wine critic in the world has tasted fake wine at one moment in life. Without noticing it.
Wine is not only easy to drink, but also to fake. Technology, globalization of prices and produce, an international market increasingly expensive, a limited offer of fine wine bottles, the subjectivity in wine tasting, and the fact that the older the vintage, the harder is to prove its authenticity, are all variables that make this business an easy target to counterfeiting.
Although difficult to measure, Wine Spectator magazine projected that about 5% of the wine traded in the international secondary market is fake (bottles that collectors keep for more than a decade). The figures on the sale of fake wine in specialized stores and gourmet corners at supermarkets could be even greater. The numbers for alcohol counterfeits in general speak of nearly US$ 1 billion in annual losses for the alcohol industry worldwide, according to data by the International Federation of Spirits Producers.
This is a complex situation for a business to which public image is everything. It should not come as a surprise, then, that only a few cases see the light of day, as their victims fear to be branded inefficient and have their prestige compromised.
However, among the scandals that have made it through this pact of silence, the most notorious ones involve some of the oldest denomination of origin wines from Spain, France and Italy. The illegal practices range from bottling and labelling of low-quality wines as fine wines at the wineries themselves, the substitution of bottles during transport, and exorbitant auctions of fine and rare wines that turned out to be the contrary.
A never-ending old story
Compared to the millenary story of wine, which dates back to 20,000 AD, fraud and counterfeit detection is recent.
Among the first known cases in the modern world is the forgery of Portuguese port between the XVI and XVIII centuries. Original from the Duoro River valley, this wine fortified with brandy became a favourite in England when the constant warring with France limited the access to European wine. However, the competition with other Iberian wines and the copies by other Portuguese wine regions gave way to overproduction, which reached critical levels by mid 1700s.
As a result, exports to England came to a stall and the prices began to fall as British merchants started to discover the forgeries. To protect the origin and quality of this emblematic product, and at the request of the producers from Duoro, the Portuguese crown founded the Companhia Geral dos Vinhos do Alto Douro to secure the balance between quality, production, trade, and prices.
This initiative gave way to the first denomination of origin in Portugal, the first mountain demarcation related to wine, and one of the first vine registries in the history of wine.
But these efforts did not keep the counterfeits at bay. Port began to be produced from elderberry extracts, for example; the Companhia decided to uproot the problem, literally, by ordering the complete destruction of elderberry plans in the north of Portugal.
Three centuries later, scandals from forgeries and frauds continue to add up.
Since mid 2000s, energy tycoon and fervent wine collector, William Koch, maintains a real crusade against counterfeits while suing many wineries, traders and suppliers, claiming that he has lost about US$ 4 million because of wine that turned out to be fake.
Among the most relevant cases linked to Koch involves the mystic Château Pétrus, which wines are a symbol from the wine region of Pomerol, in Burdeaux. Many of the 1921 Château Pétrus that Koch owns were filled with cheap Cabernet from California; the winery claims that it never bottled magnums from its 1921 vintage.
The wine region and denomination of origin of Bordeaux is at the heart of many of these scams, as well.
In 2002, a former employee of the Belgian group Geens Benelux claimed that not all wines imported by the company from Bordeaux were of such origin. The wine allegedly came from other wine regions and countries, fixed with aromas and chemicals, and sold under false châteaux names at supermarkets and specialized wine stores in Belgium and France.
Then director general Willy Frederick and his predecessor, the founder of the Belgian firm, Roger Geens, were placed under custody. But the case never made it to a French court after Geens suffered a brain stroke in 2006. The Belgian side kept on and in 2007 then director general Gillaume Berckmans and three other executives were sent to jail and a court administrator was appointed to run the company. However, even though the enquiry continued, the trial was postponed in 2007.
Meanwhile, another scam was beginning to take form at another French wine region, but this time the responsible agents would be legally convicted, in 2010.
It all began when French producers in the Languedoc-Roussillon region decided to sell nearly 3.5 million litres of fake Pinot Noir, equivalent to nearly 18.5 million of bottles, to the world´s largest wine producers Constellation and Gallo, both from California, between 2006 and 2008.
The wine in question was a mix of Syrah and Merlot, much cheaper to produce but for which the French wineries turned a profit of about 7 million euros.
Consumer complaints gave way to investigations both in France and in the United States. Finally, in February 2010 executives from the French producers Ducasse, Vignobles, Alain Maurel, Sieur d’Arques, Montblanc and Caves Pierre Fabre, and from both American firms, were charged fines and convicted to jail, sentences that would later be reduced to conditional release.
However, the scandal did not end here. Constellation and Gallo claim that they were never aware of the sham because the French purchase orders always read Pinot Noir. Nevertheless, in 2011 they decided to reimburse the misled consumers, compensations that rise up to US$ 2 million, after an off-court settlement.
But three consumers were not satisfied by this and decided to launch a class action against Gallo and Constellation, accusing them of unfair competition and misleading advertising.
In 2008, also in Bordeaux, the Customs Office raided the cellar of a businessman planning to sell 5 thousand bottles of cheap wine fake fine wine labels.
New markets, new victims
Counterfeiting is taking advantage of the growing popularity of wine in non-traditional markets such as Asia.
Wine consumption has grown hand in hand with the economic boom in the region, particularly in China. Multimillionaires in Hong Kong, Shanghai, and Beijing are starting to better their Western counterparts in collecting fine and rare wines, hungry for the image of sophistication that this practice bestows, opening a new window of opportunity for counterfeits. Projections value the fake wine market in China in nearly US$ 685 million yearly, about 5% of the country’s total wine market.
In 2011, the founder and director of the Independent Wine Centre in Hong Kong and Shanghai, Simon Tam, sounded the alarm about a buying network of empty fine wine bottles discarded after tastings and at expensive restaurants. These would later be refilled with low-quality red wine.
Reports speak of empty Châteaux Lafite bottles bought for as much as 900 euros each to judges and restaurant administrators, refilled with cheap French wine, and sold after in nearly 4,000 euros.
Also, the vice chairman of the realty subcommittee of the Asia-Pacific Urban Development Association revealed on his microblog in late 2011 that the largest agent of Lafite in Beijing had told him that he had converted two ocean-going cargo ships into factories producing counterfiet.
As a result of this trend, Chinese traders and wine agents have begun to shatter the empty bottles once tastings and special events are done, so to reduce the possibility of forgery.
Meanwhile, denominations of origin in France have begun to register their brand in China, thus to be able to launch legal actions.
Latin America does not fall behind. A recent case concerns five wineries in Argentina with inflated wine stocks. The Federal Justice and the National Institute of Viticulture (INV in Spanish) began to investigate after the companies, which belong to the same group, turned an employee over to the authorities, accusing him of fixing the accounts, thus claiming no responsibility on the matter.
Many solutions to a common problem
The Pinotgate scandal continues to generate debate because of the high profile of the guilty parties, the multimillion dollar lawsuits and reimbursements involved, the damage to the public image of French wine, and the endless questioning about the capacity of winemakers and traders to detect irregularities and forgeries in time.
Current technologies account for the authenticity of the wine at its point of origin, but once it leaves the wineries the monitoring becomes difficult and expensive, leaving the wine and the label exposed to wrong doings.
The industry is coming up with new tools to prove counterfeits. An investigation at the University of Adelaide, in Australia, claims that the radioactive isotopes from atomic bomb tests left in the atmosphere in the past century could help date wine. The study found that the carbon-14 isotope ratio of the wine alcohol can be used to determine the vintage with precision.
Another crusader against counterfeiting, wine collector Russell Frye, began a listing of all legitimate bottles worldwide, which can be registered in the web page Wineauthentication.com, so to facilitate legal claims once fakes have been discovered.
Andes Wines
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