Napa Valley right now plays a big role in counterfeit wine: as the impostor.
For example, Rudy Kurniawan – currently in jail facing charges for wine forging – allegedly used this formula to create 1945 Mouton-Rothschild: 1/2 bottle of 1988 Pichon-Lalande, 1/4 bottle of oxidized Bordeaux (for that "old" flavor), and 1/4 bottle of Napa cabernet for freshness and body.
The recipe was revealed by wine counterfeiting expert Maureen Downey, who is training the FBI to chase wine fraudsters. The San Francisco-based head of Chai Consulting made the final presentation on Wednesday at Napa Valley's first Wine Anti-Counterfeiting Seminar.
After a group of high-tech wine-security entrepreneurs used slides to demonstrate their micro-printed codes and computer chips that fit under labels and the like, Downey put the current wine counterfeiting situation in perspective.
"Your Napa Valley wines go to become counterfeits, rather than being counterfeited," she said.
But that may not always be the case. She warned wineries that they must think decades into the future, and consider that technology which seems cutting-edge now may be easy to defeat in 50 years.
"Time is the enemy of today's technology," Downey said. "Always have a low-tech aspect to your security plan," such as unique glass for the bottles.
China is the world capital of wine counterfeiting and trademark infringement, and it's the latter which is a bigger problem at the moment for California wineries. But wine fakery is an international business with some surprising participants.
Opus One CEO David Pearson showed several slides of wines made in Asia that mimic the winery's iconic label design of two heads with a blue squiggly line beneath them. The most convincing of all – a merlot called "Sweet One" – was made in Lodi, California for sale in Asia.
"Our attorneys said we couldn't do anything about that," Pearson reported.
Opus One exports 52 percent of its wine, and half of that goes to Asian markets.
"Truth be told, for the last 10 years, I've been waiting for more counterfeited Opus One in China," Pearson said. "It's a recognition of your brand."
However, rampant counterfeiting eventually has a cost for the brand. Pearson told how he recently went to a high-end wine shop in Shanghai where staff told him they couldn't sell Château Lafite Rothschild any more because nobody trusts it to be the real thing. Yet clearly there's still a market somewhere. According to Pearson, Lafite urges restaurants to destroy empty bottles. "But empty bottles of Lafite-Rothschild sell for $200 to $300 in China," he said. "That's throwing money away."
Several of the technologies introduced at the seminar would address bottle reuse with unique QR codes, allowing consumers to register the fact that they have drunk the bottle. If a subsequent consumer was to scan that same code, he would get a message saying the bottle had already been drunk – which would look pretty dodgy if the bottle was full.
However, Downey said many of her clients – wealthy people with big wine cellars – probably wouldn't bother scanning the code. "We can't even get consumers to use their eyes" to spot obvious fakes, she said.
California state assemblyman Curt Hagman, who also owns a wine verification business, said many Chinese consumers don't really care if the wine is counterfeit. He compared it to buying a $20 Rolex on the street: the buyer wants the name brand and doesn't believe it's genuine.
Hagman reported that at a dinner for government officials in China he was served Opus One that was obviously not the real thing. "Nobody noticed," he said. "It didn't taste anything like Opus One, but nobody missed a beat."
Downey believes that despite the high-profile arrest of Kurniawan, there are still far more counterfeit bottles in circulation than anyone realizes. She pointed out one case where a counterfeiter went to jail in 2003 for making fake 1900 Château Margaux, yet retailers were still selling the fakes in 2005.
Downey is currently involved with a lawsuit against the Chicago restaurateur Charlie Trotter, who she alleges knowingly sold one of her clients a $46,000 bottle of counterfeit wine.
In Downey's view, wine counterfeiting is not restricted to high-priced rare wines.
"I've seen a lot of $150 bottle fakes," she told the seminar. "One thing I saw a lot was retailers would get a case of first-growth Bordeaux and pull out four and make four fakes. They'd sell a case and a guy would get it home and open a bottle and say, 'This one's great.' Then he'd open another bottle and think, bottle variation."
According to Downey, it took years for the fraud to be uncovered: "It wasn't until wine auctions became legal in New York that we found out about this. It was a few retailers."
Downey's view is that the arrest of Kurniawan, and the conviction in absentia of Hardy Rodenstock, will do little to stem the flow of counterfeit wine.
"Rudy's in jail. Whoever his partner was is still out there working," Downey said.
|Chai Counsulting's Tips to Protect Your Brand from Fraud|
|1. Use unique glass and notate lots|
|2. Use and track serial numbers|
|3. Correlate front and back labels, and neck tags|
|4. Keep records|
|5. Anti-fraud technology|
|6. Get your distribution chain involved|
|7. Ask customers to be involved in the solution|
|8. Be discreet about what you are doing|
|9. Help by admitting there is a problem|