The vulnerability of Australia’s wine industry to counterfeiting has been exposed by a raid in China which uncovered more than 14,000 bottles labelled as being Penfolds’ top-shelf products but filled with cheap substitute.
Parent company Treasury Wine Estates lodged an official complaint in August, which came to fruition on Wednesday police arrested thirteen people in connection with the scam after a three-month investigation.
Bottles with fake Rawson’s Retreat and Bin 128 labels – as well as iconic top-of-the-line Grange labels that can retail for upwards of a thousand dollars – were being sold on Taobao for as little as $40.
Shanghai police have arrested and detained 13 suspects accused of selling fake Penfolds wine
Police in Shanghai have seized over 14,000 bottles of fake premium Australian Penfolds wine
Alibaba – the company that owns the consumer-to-consumer sales site Taobao – tipped off the authorities, the Herald Sun reported.
Subsequently, police discovered about 2000 bottles of wine in a Shanghai warehouse belonging to a Mr Dai.
Authorities also found 10,000 more bottles in two separate warehouses in the port city of Xiamen, owned by Mr Dai’s supplier Mr Su.
Fairfax Media reported that police located another 2000 bottles during the arrests of five online retailers who were selling to pubs, according to the Sydney Morning Herald.
Treasury Wine Estates have applauded Chinese police for their role in helping bring down the fraudulent operation.
‘This is a significant step forward in helping combat illegal operators,’ Treasury Wine Estates said. ‘Importantly, legitimate sales of Treasury Wine Estates’ quality wines remain to be extremely strong.’
This isn’t the first time that Penfolds has run into difficulties in the Asian market – ‘Benfolds’ wine, with similar packaging to Treasury Wine’s Penfolds brand, was found in China in 2010.
But Penfolds is not the only brand to have issued with counterfeit products bearing their brand name being sold in China.
The wines were being sold on a consumer-to-consumer online marketplace called Taobao
The Penfolds brand has had problems with counterfeit in the China market since at least 2010
In 2012, Barossa Valley’s Henschke Wines was forced to contemplate legal action over fake ‘Hill of Glory’ brand that was being promoted.
‘Hill of Grace’ retails in Australia for more than $300 a bottle, but the company was told that Chinese law did not recognise intellectual property.
Grope Hamilton Lawyers intellectual property specialist Michael Hamilton told Adelaide Now that small and medium Australian wineries such as Henschke would find it ‘absolutely impossible’ to contemplate taking legal action in China.
The Export Group’s chief executive for Greater China, Shanghai-based marketing consultant Matthew McKenzie, said that fakes were an ‘absolutely critical issue’ for Australian brands because they risked brand integrity.
He advises high-risk companies to put a unique QR code on the product before it arrives in China.