How much fake fine wine is in the market?
Just how much fake fine wine is circulating the market? Maureen Downey has an idea – and it’s much more than the trade thinks.
Last month, when speaking at a wine fraud masterclass in London, Maureen Downey, who runs Chai Consulting – a business that specialises in wine authentication and valuation – made it clear that fake bottles were prevalent in the secondary market, particularly in Asia.
Suggesting that the fine wine trade is either ignorant about the amount of counterfeit bottles circulating the market, or deliberately choosing not to publicise the extent of fraudulent wine that could be going through merchants and auction houses, she said that the scale of the problem has not been properly publicised, and said that estimates were likely to be way short of the reality.
“The pervasiveness of counterfeit wines in the fine wine world is a lot larger than people know, or are willing to admit to,” she stated, addressing attendees of the masterclass, which was held at London private members’ wine club, 67 Pall Mall, on 23 November.
Taking the global wine industry to be worth US$304 billion, she claimed that the fine wine market – which she defined as all wines that are traded on the secondary market – was 5% of that total, which would amount to $15bn.
Continuing, she said that credible sources have said that as much as 20% of the fine wine worldwide is fake, which would make fraudulent wine worth as much as $3bn at current market prices.
Noting that counterfeit wine was “more likely” to be sold through auction houses than merchants, she said that if you applied that proportion to the auction market alone, which sold $346m of wine in 2015, then as much as $69m of counterfeit wine went under the hammer last year.
Speaking further about the amount of fraudulent wine in the system, she said that the problem was acute in Asia, and had not gone away with the capture of famous counterfeiters, such as Rudy Kurniawan, who has been in jail since his arrest in 2012.
“We are in thick of it,” she said, before saying that “sources” have told her that “counterfeits are pouring into Hong Kong from Europe; it’s worse than when Rudy was around.”
By way of example, she stated that the wines from prized Burgundian producer Henri Jayer – who died in 2006 – “are being counterfeited in mass quantity in Switzerland, now”.
Meanwhile, she said that she has personally handled “more Domaine de la Romanée-Conti Romanée-Conti 1945 that has been made” – noting that just two barrels were produced of this vintage, which has taken on legendary status as the last harvest made from ungrafted vines before the vineyard was replanted using American rootstocks due to phylloxera.
She also said that it wasn’t just the best Burgundy growers that were being faked, noting that the range of fine wines being fraudulently reproduced was wider than ever.
“Now we are seeing other stuff,” she said, mentioning California cult Cabernet Screaming Eagle, before stating that Château Miraval – the Provençal rosé owned by Brad Pitt and Angelina Jolie – “is now one of most counterfeited wines in the world.”
Concluding the discussion, she said, “Not enough people recognise that this is a huge problem for the industry… or they internalize their feelings.”
Not only did she ask attendees to “publicise the bad actors” – noting that “counterfeiters need accomplices and vendors” – but urged the trade and private collectors to “support the good actors and be vocal about why you are supporting them.”
As reported by the drinks business back in 2012, former head of Sotheby’s wine department Serena Sutcliffe MW said that allegations concerning counterfeiting were “the tip of the iceberg”.
Speaking shortly after the capture of counterfeiter Rudy Kurniawan, she said that there was still a “huge amount” of fake wine being sold through dealers or “some auction houses”.
“There is a lot under the radar,” she stated.
She also said that she had insisted Sotheby’s only handle wine which had a clear and traceable history.
“The seller has to prove to you [that the wine is genuine],” she said, adding, “Which often means we can’t take the wines.”
“It’s a decision I took a long time ago,” she continued, referring to the need for a proven record for any wine collections handled by the auction house.
And, as a result, she said Sotheby’s had lost “millions” in terms of rejected potential sales.
“Great collections of wine don’t come out of nowhere, they have a track record, and that has to be investigated right back,” she concluded on the subject.
Meanwhile, speaking at the HKTDC Wine & Spirits Fair in November 2013, Downey said that one of the most regularly faked wines in the world is 1945 Mouton-Rothschild, and explained that Kurniawan allegedly had a “recipe” for this particular prized wine – apparently he mixed 50% Pichon-Lalande 1988, 25% young Napa Cabernet and 25% oxidised Bordeaux.
Although Downey said that the problem concerning counterfeit fine wine was global, she stressed in Hong Kong three years ago that the quantity of fake bottles in Asia was especially high because it is “a nascent market” with collectors “chasing trophy wines”.
Finally, it should be noted that Downey’s estimate regarding the size of the fine wine market could be high compared to other industry valuations.
For example, according to Liv-ex, the worldwide secondary market for wine is believed to total approximately $5 billion. So, if as much as 20% of that wine was fake, the trade in counterfeit wine would be currently worth $1bn – one third the total suggested above.