Supermarket wine fraud: Yes, it’s a thing, pt. 3: The rise of fake wine in China
In the third installment of my supermarket wine fraud series, I’m going to talk about one of the hottest markets for fake wines: China. With exploding demand, sparse enforcement, and a vast knowledge vacuum, it’s no surprise fraud has started to take hold.
Why China, and why now? (Plus, a bit of wine history, because I’m me)
Wine fraud booms tend to happen when four factors coincide: increased demand for wine, inadequate supply of wine at prices consumers are willing to pay, underinformed consumers who may not detect fraud readily, and lax enforcement of laws against fraud.
China today is a lot like the United States in the late 19th century. (Bear with me. This is going to get old-timey.) With the devastation phylloxera brought to European vineyards, and U.S. domestic supply inadequate to meet demand, someone had to supply wine to eager Americans. And that someone was often fraudsters.
From an American periodical of the time:
The consumption of wine in the United States […] is large and increasing. […] Though the vineyards of Bordeaux and Burgundy have been seriously affected by unfavorable weather and the phylloxera, there is no decrease in the consumption and exportation of those wines. […] The inference is inevitable that the deficiency of production is made up by the manufacture of “wine” from other substances than grapes, or by the exportation of wines imported from other countries. […] Raisins, glucose and potato spirit are the materials most employed in the manufacture of bogus wines, while cheap, thin, acid wines from Italy, Algeria, or Russia are mixed and doctored, and sent abroad as the growth of Bordeaux or Burgundy.
Excerpt on wine fraud from The American. Available for free on Google Books.
As with Chinese wine drinkers now, American wine drinkers back then were the perfect targets for fraudsters. At the time, the domestic supply of wine was comparatively small, and wine drinking—though growing rapidly—wasn’t yet as popular or culturally ingrained as it was in Europe. Plus, laws regarding false geographical appellations on wine labels weren’t well established (and wouldn’t be for another century-plus), and states were slow to adopt anti-adulteration laws.
In the last two decades, higher disposable incomes and the influence of Western drinking culture have drastically increased the demand for wine in China. And with grape wine not being a traditional part of Chinese culture, consumers have a lot of catching up to do. But let’s not pretend that’s unique to China. Just as Americans wised up to wine and the British will eventually get s’mores right, Chinese consumers will someday adjust to wine’s omnipresence. So let’s leave the cultural stereotypes about Chinese wine drinkers behind.
Is Chinese wine fraud a problem for Americans?
In short: no. There is little evidence that much or any counterfeit Chinese wine of the kind we’re talking about in this article is making its way to the United States—or anywhere outside of China, for that matter. As wine fraud investigator Maureen Downey succinctly puts it, “Most of the wine fraud in China and coming out of China is a problem only for China.”
So if you’re reading this from anywhere but China, don’t worry about fake Chinese wines coming to a grocery store near you. (But if you’re interested in wine fraud that might be happening in your own country, read part 1 and part 2 of this series.)
How do Chinese wine fraudsters do it?
A screengrab from Shandong TV showing fake Bordeaux.
Chinese supermarket wine fraud largely falls into two categories: mislabeling and adulteration. The first method involves labeling wine from X region as wine from Y region to fetch a higher price. The second involves adding water, sugar, or other chemicals to wine to change its flavor, color, or consistency—or just to create more of it.
While mislabeled bottles aren’t always adulterated, adulterated bottles are always mislabeled just by being called “wine,” and are usually mislabeled in other ways, too. Other fraud methods exist, like bottle refilling, but they’re usually used for higher-end and rare wines, not mid-priced and inexpensive ones, so they’re outside the scope of this article.
We’ll take the first two methods one by one.
Adulterated (and outright fake) wines
Many fraudulent Chinese wines appear to be cocktails of wine, water, alcohol, sweeteners, and colorants. Some are harmless to human health, while others, like methanol, are highly dangerous. Here are some of the substances that have been mentioned in recent news stories about adulterated Chinese wine (with sources linked):
In fact, many adulterated wines don’t even contain, uh…wine. In one recent case, a lab hired by Chinese law periodical Legal Evening News found that two out of nine samples they’d purchased in local shops and online contained no anthocyanins (pigment derived from plants) at all.
Police inspect counterfeit wines in Xi'an before they are destroyed. Photo credit: Reuters/Springer
This type of fraud is only possible in areas of the world where wine isn’t an everyday beverage. (Compare 19th century America and its fabulous gooseberry “Champagne.”) In wine-drinking countries, even an occasional drinker could probably tell that something was wrong with these manufactured “wines.” But Chinese drinkers don’t typically have the frame of reference that comes with social wine drinking. Also, as travel writer Jeff Hays notes on his blog, Chinese wine drinkers often mix it with Sprite or down it like a shot, barely tasting it on its way down.
In other words, it doesn’t need to be good, both because its drinkers haven’t tasted many wines and because they’re not necessarily drinking it for the flavor. It’s a bit like the crappy takeout “Chinese” dishes you find at takeout restaurants the United States. Anyone who’s tasted the real thing can tell the difference, but the people buying the fake stuff often haven’t had that opportunity, or just don’t care.
Mislabeled wines
Chinese wine firms appear to be purchasing domestically produced wine and bulk wine imported from other regions and applying fake labels, typically branding these bottles as prestigious wines from producers and regions that Chinese consumers recognize. France, Italy, California, and Australia are all common faux origins for these wines. However, even popular domestic brands, such as Great Wall, are often counterfeited.
Though the origin of the wine itself is sometimes a mystery, at least some of it is said to come from South America, as in a case in 2010 where nearly half a million bottles of fake Fitou were discovered to be filled with cheap South American wine. Speaking to Forbes, wine entrepreneur Louis de Surrel notes that Chile benefits from generous 0% import tariffs, making it lucrative for Chinese entrepreneurs to import it in bulk and fill mislabeled bottles. I’ll note that the same was true of Australia until 2020—the only other country to share that distinction—so I’m guessing that many fraudulent bottles were filled with cheaply imported bulk Australian wine at some point.
Chinese authorities patrolling the Chengdu Wine Fair for counterfeit products. Photo credit: CIVB.
While counterfeiting wine is illegal in China, one factor that may be hampering enforcement is that many of these wines aren’t exactly pretending to be other wines. Well…they are and they aren’t. While these wines often adopt the look of famous labels like Chateau Lafite Rothschild or Penfolds (and sometimes contain almost-certainly-untrue statements about their origin like “Bordeaux,” “Wine of Australia,” or “Vino Rosso Italia”), the names on the labels are wholly made up.
On his blog, Grape Wall of China, Jim Boyce maintains a hilarious gallery of knockoff wine labels, with Penfolds knockoffs like “Benfolds” and “Penfriends” making prominent appearances alongside Lafite-esque “Chateau Officiallafite” and “Leiftie Family.”
Behold, “Chateau Laffey Pope.” Image credit: Jim Boyce. (Click the image to see the entire gallery of fakes.)
While these labels are clearly intended to mislead consumers into believing they’re buying a specific high-quality wine, local authorities seem to care about as much as your local police would care if you reported the “Crast” toothpaste and “Power Rongers” figurines at the dollar store.
Chinese intellectual property laws also hinder foreign wineries’ efforts to protect their labels from counterfeiting. Chinese firms routinely—and legally—register trademarks in China for foreign wine brands before the wineries themselves can register them, a practice known as “trademark squatting.” As wine law firm Dickinson, Peatman & Fogerty notes, Chinese law doesn’t allow trademarks to be established through use, and the first person to register a trademark in China generally has the right to use it, regardless of whether someone else was using it already.
This means that it’s perfectly legal for a winemaker in China to make a fake version of a foreign wine as long as they registered the trademark first. In some cases, unscrupulous importers register the trademarks of the wine they’re importing under their own name rather than the winemaker’s. This means that if the winemaker stops working with the importer, the importer can legally sell whatever wine they’d like under that label.
In one example from the article linked above, a Chinese registrant trademarked the names of several large California wine producers, including Red Truck and Screw Kappa Napa. (The latter successfully sued to stop use of their trademark by the Chinese registrant, but only because it contained the geographically misleading term “Napa.”) Another individual registered the names of over 300 Bordeaux chateaux.
Who’s trying to stop it?
Legitimate wine producers, industry consortia, and importers have achieved limited success in taking on counterfeiters themselves. In 2018, a criminal complaint by the trade group that represents Bordeaux, the Conseil Interprofessionnel du Vin de Bordeaux (CIVB), led to a criminal conviction in China for fraudulently using a geographical indication (in this case, “Bordeaux”).
The case is notable for being the first criminal conviction based on the use of a collective trademark (i.e. the place name “Bordeaux”) rather than an individual one, though the CIVB had previously attained a legal victory over producers who fraudulently used individual brand names. This means that, theoretically, even manufacturers of lookalike “Lafeit” or “Penfuldr” could be prosecuted if the bottles bore a false indication of the region of origin.
A raid during the Chengdu Wine Fair. Photo credit: CIVB.
While these victories are encouraging for honest wine producers, it’s really only possible for large, well-funded organizations to track down enough evidence for a criminal complaint to be viable, and to demonstrate that the fraud reaches the ¥150,000 threshold (about $22,000) for criminal charges to be filed.
Suzanne Mustacich writes in Wine Spectator:
When there’s evidence of counterfeiting, the wine council, or in the case of a private trademark, the importer or grower, must undertake a costly investigation to track down the illicit supply chain, collecting evidence of the crimes to provide to Chinese authorities […]
Fighting counterfeiters is a cat-and-mouse game. A winery or importer must trace the supply chain to find the original seller. But the information on the back label, including the company's contact details, is usually false. If they do manage to track down the suppliers, the companies—facing fines and forfeiture of their assets as punishment for their crimes—declare bankruptcy. "Then they start under a new company," said [managing director of Torres China Alberto] Fernandez. "It's hide and seek."
In an interview with Jim Boyce of the above-mentioned Grape Wall of China blog, wine fraud investigator and intellectual property lawyer Nick Bartman reports that, while health and safety authorities do investigate counterfeiting, they’re not well-versed in telling real wine from fakes. Furthermore, as the CIVB found, authorities don’t get involved unless a complaint is made by a wine producer or importer:
Counterfeiting is a criminal offence but it’s a business crime and does not carry the same weight as such matters as public order offences. Business is perceived to be big enough to look after itself to the extent that if they have counterfeiting problems, then they should help and gather evidence and support the public authorities.
Bartman also notes that the criminal process seems to resolve counterfeiting faster than civil lawsuits; while a civil case may take years to make its way through the courts, raids and seizures in response to a criminal complaint can happen in a matter of days.
Who are the victims of Chinese wine fraud?
The most obvious victims are Chinese wine drinkers, especially those just getting into wine. It’s tough to learn to appreciate wine when you’re being told sugar water with colorant is Bordeaux. While I’m sure some wine purchasers in China care more about getting drunk or impressing guests with a knockoff “Petrus,” there are also plenty of budding Chinese wine enthusiasts out there who are doubtless struggling to avoid fakes. The Wine and Spirit Education Trust (WSET) has over 100 course providers in China, so there’s clearly an interest in wine appreciation in China beyond Sprite cocktails and business gifts.
Wine producers are the other major victims. Winemaking is an uncertain business to begin with, and many producers don’t have the resources to fight fraud while also keeping the lights on. Foreign producers lucky enough not to get shut out of the Chinese market due to trademark squatting are forced to compete with dozens of knockoffs. Even producers whose individual brands don’t get copied still get undercut by fake labels selling “Napa” and “Bordeaux” wines at prices genuine wines can’t beat. And I’m sure Chinese winemakers (other than the above-mentioned Great Wall, which already has its knockoffs) aren’t looking forward to the day their wines get enough name recognition to become targets of counterfeiting.
Technology saves the day (no, not really)
As we saw above, detecting a fraudulent bottle is just one small piece of wine fraud investigation. After all, many fake bottles in this category are obvious to English-speaking wine drinkers at first glance, and experts can see through even sophisticated fakes. But it’s a much lengthier legal process for a wine producer to figure out who’s responsible for a given fake and to stop them from making more. Given these challenges, wine producers often turn to anti-fraud technology to alert consumers and retailers that wine isn’t genuine.
A Penfold’s knockoff, “Benford’s,” on the shelves of Hainan spotted by journalist Patrick Fok. Photo credit: Patrick Fok.
These labels are common on high-end wines. For example, the oft-counterfeited Chateau Lafite has sported tamper-proof seals since 2009; the president of Lafite’s parent company Domaines Barons de Rothschild, Christophe Salin, claims that the company uses at least four additional secret anti-counterfeiting measures. Speaking to Reuters, Salin states: “If you show me a bottle of Lafite, I can instantly tell you when it was bottled, a lot of things.” Another frequently counterfeited wine, Screaming Eagle, has used similar seals since 2010, and allows you to authenticate your bottle on their web site.
Scores of other high-tech solutions based on RFID, NFC, QR codes, holographic labels, and blockchain technology have been proposed to combat wine fraud in China. Though wine producers often operate on razor-thin margins, the cost per bottle could be worth it given that the average wine buyer in China in 2022 spends about $40 on a bottle to drink at home, and about $128 for a gift wine.
The problem isn’t money. The problem is getting everyday retailers and consumers in China to actually use these technologies. Most technological solutions require a Chinese wine retailer or consumer to do at least some of the following:
Read English to some degree
Know that the wine they’re selling/drinking might be fake
Care that the wine they’re selling/drinking might be fake
Know what kind of authentication technology the brand uses
Figure out how to use that technology to authenticate a bottle of wine (e.g. using a smartphone app or company’s web site)
Be able to tell a fake authentication label from a real one (and of course, the fakes are already using them)
An image from marketing materials from lookalike “Benfords” highlighting their supposed anti-counterfeiting measures.
High-end wine producers include these features because the people buying these wines are much more invested in getting the real deal. But for wines destined for everyday consumers in China, it’s a non-starter, at least for now.
Though I think Nick Bartman’s suggestion of tracing wines using the dot code on glass bottles is brilliant—and while I think these kinds of authentication solutions could be useful to the currently small number of knowledgeable wine enthusiasts in China—technological solutions fail when consumers are easily suckered by “Ronghe Valley Latour” or “Catesl Granvindeboroeaux.” Even big spenders in China fall for bad fake bottles. What hope do moderately priced wine producers have of getting the word out to the general Chinese public about fraud?
The way forward
Only consumer education is going to quell the fake wine epidemic in China. While wine producers have achieved a few victories over fraudsters, new fakes pop up every minute. No technology is going to help if drinkers don’t care what they’re drinking as long as the label looks good.
Fongyee Walker MW, wine consultant and educator. Photo credit: Dragon Phoenix Wine Consulting.
Luckily, wine itself isn’t the only thing that’s in high demand in China. Demand for wine education is also soaring. Fongyee Walker MW’s wine school in Beijing enrolls over 3000 students a year. The Asia Pacific region represents 31% of WSET’s total business. These professionals will no doubt go on to hold their own wine classes, write books and articles for Chinese audience, and demand higher anti-counterfeiting standards from wine retailers. It’s going to be a tough road, but hey—we Americans aren’t drinking logwood-and-brandy wines anymore, are we?
