Counterfeit wines — a real and pressing issue in the Hong Kong wine market

In 2017, I attended a seminar organized by the Hong Kong General Chambers of Wine & Spirits on the means to identify counterfeit fine wines. In a brief discussion with an unnamed HK Customs officer after the seminar, he explicitly stated that there is no evidence of any counterfeit bottles in Hong Kong. Afterwards, I joined the TCM Authentication course, where I had opportunities to inspect wines from Hong Kong collectors and importers. Regretfully, we learned that almost 90% of the inspected bottles were confirmed counterfeits.  

Counterfeit wines exist. Cases of wine fraud are no longer isolated. It is a plague running rampant – right here, right now.

Why is it then, that some, such as this Customs officer, deny the existence of counterfeit wines in Hong Kong? I believe that this is due to the, negative cultural stigma linked to the ownership of a counterfeit. This in effect deters individuals who unknowingly purchased counterfeit bottles from reporting to the authorities. Said stigma is especially prevalent in Asian communities, who believes that owning a counterfeit product denotes stupidity, naivety, and ignorance on part of the buyer. With the blame placed on the buyer as much as the counterfeiter themselves, the most preferred solution in situations where buyers find out about their product being a counterfeit is simply to ask for a refund without calling out the counterfeiters. I believe this response is beneficial to counterfeiters and thus harmful to the Hong Kong wine market in two ways: first, they need not to worry about the consequences, as the worst outcome would simply be a refund; and second, they can reuse counterfeit bottles that were sent back, and sell them to another buyer. The reluctance to report cases of counterfeit wines partly explains the disparity between our findings at the TCM Authentication course, and that of the Hong Kong Customs. In a wider sense, the unwillingness of counterfeit victims to speak out openly about counterfeit bottles suppresses the awareness of this topic, and serves to lessen our guard against counterfeits by creating a false impression of security.

I have worked in the wine industry for 21 years, starting from 1st July in 1997 – the day of the turnover. Over these years, the wine market experienced many speculative bubbles such as those in 1997, 2000, 2003, and 2009. The huge demand for fine wines led to significant price hikes over short periods of time. With the wine industry being increasingly lucrative, corporate investors and ‘wine funds’ entered the market, causing huge inflows of capital, further inflating the price of wines and droving the demands of particular labels up to unprecedented levels. Initially, they focused on the Bordeaux ‘first growths’ and some of the Burgundy's finest labels such as Domaine de la Romanée-Conti. At the time, some rumors claimed that the number of Lafite Rothschild 1982 in circulation was far greater than that was released by the vineyard. Despite so, the price kept rising, until it plateaued at HK$50,000 (USD6,400) per bottle in 1998. This indicates that many who come into the wine market either lack knowledge in recognizing counterfeit wines, lack awareness in the existence of counterfeit wines, or simply do not care about the risk of buying or selling a counterfeit bottle.

We must combat this epidemic of counterfeit wines. Here are six barriers against counterfeit products, which can be used as a blueprint for plans combatting counterfeit wines: 

1. Ethical responsibility
2. Knowledge of sellers on counterfeit wines
3. Regulation on the means of distribution of wines
4. Costs of counterfeiting
5. Penalty of counterfeiting 
6. Knowledge of buyers on counterfeit wines

Firstly, the most effective yet also the most difficult mean to enforce, is the ethical responsibility of the community. The evil of avarice is the entire reason why counterfeit wines exist. To paraphrase Gordon Gekko’s infamous quote in Wall Street (1987): “Greed is good.” The intense desire for wealth glorified lucrative industries such as investment banks. In order to take part in the get-rich-quick fever, many became indifferent to the means by which this is achieved. Words such as corporate responsibility and the greater societal good lost their meaning.  Ethical responsibility should therefore be promoted in order to create an industry of ethically upright buyers, sellers, and winemakers.

To be continued.