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Pricey counterfeit labels proliferate as China wine market booms

China's resourceful knock-off artists have uncorked a lucrative business: phony high-end wines. Bootleggers douse the market with fakes, refilling bottles from famous chateaux with inferior vintages.

January 14, 2012|By David Pierson, Los Angeles Times
  • Product tasting attracts a visitor to a wine and spirits fair last fall in Hong Kong, the third-largest importer of California wine.
Product tasting attracts a visitor to a wine and spirits fair last fall in… (Vincent Yu, Associated…)

Reporting from Beijing — The lamb chops were cooked to perfection. Fine wines flowed. Then came the piece de resistance: a 1997 Chateau Petrus Pomerol that can fetch about $2,000 a bottle.

Wine consultant Frankie Zhao was dining with a group of well-to-do Chinese businessmen at an exclusive private club in the capital. Their host was eager to share — and show off — the prized French Merlot.

But after the first sip, veteran taster Zhao knew the collector had been duped.

"I could tell immediately it was a fake," said Zhao, who kept silent rather than embarrass his unwitting friend. "It was too fresh and soft and didn't have any complexity."

Seizing on exploding demand, China's ever-resourceful knock-off artists have uncorked a lucrative new business: phony high-end wines.

Bootleggers are dousing the market with fakes, refilling empty bottles from famous chateaux with inferior vintages.

The problem is so widespread that auction house Christie's concludes its tasting events in Hong Kong and China by smashing empties with a hammer, lest the glass containers end up on the black market.

"We have to protect provenance," said Simon Tam, head of wine in China for Christie's. "Even if you scrape off the label, there are still channels for the bottles to be misused. It's really about being responsible."

As recently as a decade ago, such precautions weren't necessary; Chinese largely stuck to fiery grain alcohol. But upwardly mobile Chinese, eager to display their wealth and sophistication, have since developed a taste for imported wine along with other foreign luxuries.

Wine consumption here has more than doubled since 2005 to about 100 million cases a year, making China the seventh-largest market in the world, according to Vinexpo, a French wine industry organization.

Though cheaper domestically produced wine commands three-quarters of the market, Chinese brands such as Great Wall and Dragon Seal lack the quality and prestige to satisfy local connoisseurs.

That has created an opening for foreign producers who are increasingly counting on China for growth. Hong Kong was the third-largest foreign market for California wine in 2010 with $116 million in shipments, according to the San Francisco-based Wine Institute. Mainland China ranked fifth at $45.2 million.

Former NBA hoops star Yao Ming recently announced that he was jumping into the wine business by importing a Napa Valley Cabernet Sauvignon that retails in China for $289 a bottle, including taxes and duties.

But the real clamor in China is for high-end French reds, which enjoy unparalleled cachet. A Chinese buyer spent an astonishing $540,000 in September on a single lot of 300 bottles of Chateau Lafite Rothschild at a Christie's auction in Hong Kong.

Prices like that have proved irresistible for counterfeiters. Knock-off hooch can be found almost anywhere in the world alcohol is sold, but China is fast becoming the market of choice for pirates.

"China's where the big-money wine boom has moved," said Benjamin Wallace, author of "The Billionaire's Vinegar," which delves into the underworld of wine forgery.

At a wholesale alcohol market in the northern Beijing suburb of Huilongguan, buyers can easily find sellers of purported Chateau Lafite Rothschild. The real deal can cost $8,000 a bottle, but even fakes aren't cheap.

"A good one can cost [$160] because they use an original bottle," said a storekeeper who gave only his surname, Zhou.

Indeed, a cottage industry of bottle scavengers has sprung up to serve the trade. One broker solicits online as a "professional bottle recycler," offering up to $320 for an empty Lafite bottle, depending on the vintage.

Copycat producers benefit from the relatively undeveloped palates of many local consumers. For some businesspeople and government officials, the value of sharing a Lafite lies in how much face it bestows, not how well it pairs with a meal.

"It's an immature market," said Zhao, the consultant. "The first thing people care about is the label on the bottle, not the taste of the wine."

Though Chinese authorities condemn the trade in spurious wine, enforcement has been episodic at best.

Investigators reportedly cracked down on widespread illegal production in Changli, a wine-growing region east of Beijing, but only after state television broadcast an expose in late 2010.

A reporter found legitimate winemakers producing counterfeits on the side using a concoction of "citric acid, sodium citrate, tanning, flavoring essence, and coloring." The crudely made beverage was being sold with both Chinese and foreign labels, including Lafite, and appeared to be aimed at inexperienced consumers.

The most common form of deception consists of tweaking a label ever so slightly to trick consumers into thinking they're buying a name brand. Makers of these impostors sell in the open at wine exhibitions, renting booths alongside the legitimate competition.

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