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As wine fakers get sharper, industry fights back

Monday - 12/9/2013, 5:36am  ET

In this photo dated Tuesday, Nov. 12, 2013, an unidentified lab worker tests wine for authenticity in a lab run by the French Finance ministry in Bordeaux, southwestern France. Counterfeiting has dogged wine as long as it has been produced, but it is getting more sophisticated and more ambitious, particularly as bottle prices rise due to huge demand in new markets, mainly in Asia. (AP Photo/Bob Edme)

SARAH DiLORENZO
Associated Press

SAINT-EMILION, France (AP) -- An FBI agent recently showed Arnaud de Laforcade a file with several labels supposedly from 1947 bottles of Chateau Cheval Blanc, one of France's finest wines. To the Saint-Emilion vineyard's CFO, they were clearly fakes -- too new looking, not on the right kind of paper.

But customers may be more easily duped.

Regardless of his skill, the counterfeiter had ambition: 1947 is widely considered an exceptionally good year, and Cheval Blanc's production that year has been called the greatest Bordeaux ever. The current average price paid for a bottle at auction is about $11,500, according to truebottle.com, which tracks auctions and helps consumers spot fakes.

Counterfeiting has likely dogged wine as long as it has been produced. In the 18th century, King Louis XV ordered the makers of Cotes du Rhone to brand their barrels with "CDR" before export to prevent fraud.

But it is getting more sophisticated and more ambitious, particularly as bottle prices rise due to huge demand in new markets, mainly in Asia. After decades of silence, producers across the $217-billion industry are finally beginning to talk about the problem and ways to combat it.

The astronomical prices paid for fine wine these days makes the bottles "more than just a luxury item," said Spiros Malandrakis, senior analyst of the alcoholic drinks market at Euromonitor, a research firm. "They become a currency in themselves. And as with every currency, at some point, people want to find ways to manipulate that and make more money."

SIZING UP THE PROBLEM

Experts say it's impossible to know the size of the counterfeit market. Partially that's because many sales happen privately and because it is woven into a legal market, unlike, say, cocaine trafficking. Many known counterfeits likely go unreported because the victims are embarrassed -- and chagrined to lose their investment. Industry insiders, meanwhile, have long ignored the problem collectively as producers were afraid of scaring customers.

But many experts agree on one point: the quantity of rare bottles from illustrious vineyards being auctioned is just too high to not include fakes.

"I think it's pretty obvious to everybody that there is a relatively large amount of counterfeit wines from these top wineries that is on the market," said Leonardo LoCascio, founder of Winebow, a leading U.S. importer of wine.

Maureen Downey, an expert wine appraiser and authenticator who founded Chai Consulting, says it is important not to overestimate the problem, guessing it is still probably a very small proportion of the global wine trade, but she added that many producers think that recent publicity on the problem means it's been solved.

Not so, she and others said. In fact, it will likely simply get more sophisticated and even harder to track and estimate.

China's case is a good illustration of the evolution of counterfeiting. Initially, criminals took advantage of the country's twin weaknesses: consumers who were new to wine but had the money to buy it for show. That led to flagrant fakes, whose labels simply piled on the names -- or near names -- of as many famous vineyards and locales as possible, claiming, for example, to be a great Burgundy wine from a famous Bordeaux chateau.

But in the past two years, as more Chinese became connoisseurs, there has been an explosion in Asia of more refined counterfeits, says Mark Solomon, who co-founded truebottle.com.

Experts fear this problem will only continue to grow and won't be confined to Asia, as technology makes it possible to make better fakes and steadily rising auction prices make it worth the while.

"It's kind of an arms race" between the increasing sophistication of the methods used to authenticate bottles and the increasing sophistication of counterfeiters, said Solomon.

FIGHTING BACK

On the front lines of that race is Bernard Medina, who is the director of a lab run by the French Finance Ministry in Bordeaux devoted to sniffing out fake wine. He recently laid out at least 15 bottles when journalists came to visit that ran the gamut from the silly to the serious. Some were outrageous amalgamations, like the bottle that had "Luxembourg" on the label and "produit de France" below that. Others were trying to give consumers just a soupcon of glamour: Chatelet Cheval Blanc, another attempt to copy the illustrious Chateau Cheval Blanc. Most of the bottles were picked up in China by French customs or fraud agents and would easily be sorted out.

But Medina also sometimes receives bottles from chateaux in the surrounding area, which is home to many of the world's best wines. These are suspected fakes but so well done that even the owners aren't quite sure if they might be real.

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