In China, fake European wine more worrying than tariffs

In China, fake 

European wine 

more worrying 

than tariffs

Bruno Paumard, the cellar master at a vineyard in China, can't stop laughing while describing a bottle of supposedly French wine a friend gave him two years ago.

It's white wine, with a label proclaiming it is from the vineyards of Romanee-Conti, the bottle bearing the logo that is on bottles of Chateau Lafite-Rothschild, and declares its origin as Montpellier in southern France.

Domaine de la Romanee-Conti, better known for highly prized and highly priced vintages from France's Burgundy region, makes only a tiny amount of white wine, labeled Montrachet. It has nothing to do with the equally prestigious Lafite, which is from the Bordeaux region, and neither brand is produced anywhere near Montpellier.

"It's the most magnificent example of a hijacked brand of wine I've ever seen," says Paumard, who works with Chateau Hansen in China's Inner Mongolia. "It doesn't get better than that."

Liquor stores, restaurants and supermarkets in China, the world's most populous nation and fifth-largest wine consumer, wage a constant battle against fake wines. The amount of knock-offs on the market may increase as Beijing investigates wine imports from the European Union, threatening anti-dumping tariffs or import curbs.

It announced the investigation after the EU slapped anti-dumping duties on Chinese solar panels.

"More expensive wine is okay, I just don't want any fakes," said Helen Nie, a Beijing housewife sharing a bottle of the Italian house white at a restaurant with a friend.

"If the cost goes up I'd still buy wine, though some people wouldn't - the price makes a difference. But the quality is important; it's a health question."

EU wine exports to China reached 257.3 million liters in 2012 for a value of nearly $1 billion, more than a ten-fold increase since 2006 as rapidly increasing wealth transformed lives and tastes in the world's fastest growing major economy. More than half of the 2012 total - 139.5 million liters - came from France.

Nobody knows how much of the market is cornered by fakes and copycats, says Jim Boyce, who follows China's wine industry on his blog, grapewallofchina.com.

"Things that are faked tend to be things that are very popular," Boyce said.

And wine, especially expensive wine, is popular in China, sometimes more for bragging rights than taste.

"Those expensive wines are where you see more fakes," said Maggie Wang, who was sharing the house wine from Sardinia at the Beijing restaurant with Nie.

"But there's lots of phony wine. Everything's faked in China," she said. "For a lot of Chinese consumers, the more expensive it is, the more they'll buy it. Chinese like things like that - they'll buy the most expensive house, drive the most expensive car. They don't want the best, they want the most expensive."

CHATEAU WHAT?

Given the high margins and the demand, the counterfeiters tend to focus on European fine wines.

The iconic Chateau Lafite has become the poster child for wine forgery. A bottle of Lafite from 1982, considered one of the greatest vintages of the 20th century, can cost upwards of U.S. $10,000.

That has led to a thriving industry in Lafite knockoffs in China. Aficionados say there is are more cases of 1982 Lafite in China than were actually produced by the chateau that year.

Christophe Salin, president of Domaines Barons de Rothschild, which owns Lafite-Rothschild, says fake Lafite however isn't the major problem.

"I have never seen a bottle of fake '82 Lafite," says Salin, who has been travelling to China for 20 years.

"The problem we have is the creative attitude of some Chinese. They sometimes use our name in funny ways," he told Reuters in a telephone call from Paris.

Several wines on the market are branded with names close to Chateau Lafite, including "Chatelet Lafite". Chatelet is the name of one of the busiest subway stations in Paris.

Lafite "is such a generic brand in China that it has widespread appeal as a name and as a status symbol," says Boyce.

The mystique extends beyond the wine -- in Beijing there is a "La Fite British Exotic Bar" and the "Beijing Lafitte Chateau Hotel."

The first step for anyone counterfeiting wine is to find or manufacture a bottle that is close to the original.

"People will also use real bottles with something else inside, or make labels that are spelled differently," says Cheng Qianrui, wine editor for the Chinese lifestyle website Daily Vitamin. "If you know wines, you can tell, but not a lot of Chinese do."

Last year's 10 percent surge in wine imports over 2011 was led by Spain, which accounted for 36 percent of cheaper bulk wine imports to China in 2012, according to Chinese customs figures. Bulk wine accounted for just under half of all wine imports last year.

The copyright problems however tend to focus on the better-known marques.

Importer Torres Wines includes Chateau Mouton-Rothschild, another top-ranked Bordeaux, in its portfolio. Sales Director Sun Yu says phony wine brands such as "Mouton & Sons" or "Edouard Mouton" pop up in the Chinese market.

"It happens in secondary or third-tier cities where they don't have much wine knowledge," Sun says.

SMASHING BOTTLES

Elite wine makers are trying to fight back, sometimes by smashing bottles after tastings, to prevent their being refilled for resale.

Anti-counterfeiting measures by major international spirits brands, which also fall victim to fakes in China, include bottle buyback programs, tamper-proof caps and covert tagging of bottles. But such measures are less common with wine brands, according to an executive at an international beverage company in China.

Domaines Barons de Rothschild has been putting tamper-proof tags on bottles of Chateau Lafite and its second label, Les Carruades de Lafite, since the 2009 vintage.

But the producer has been protecting its elite bottles since 1996, company president Salin says, with four other identification techniques that he won't reveal.

"If you show me a bottle of Lafite, I can instantly tell you when it was bottled, a lot of things," he says. "To counterfeit it is not easy."