Learning more and more about the international wine market shows that China is a booming wine market. Honestly, as the Chinese develop a middle class they are fueling a “Wine Rush.”
There have been up trends in demand for wine there for over a decade now. It is not surprising with this much demand, the wine market has grown considerably and there have been some challenges.
China’s “Wine Rush”
Think back to America’s “Gold Rush” and all this entailed for our country. Westward expansion, transcontinental railroads developed, new states were added to our union and Levi jeans were developed because of this “Gold Rush”. There were some negatives that also occurred with our nation’s push West including swindlers, Indian wars, territorial wars and lots of exaggerated news stories. The demand for folks to know what was going on out West fueled much fiction that was grounded in a grain of truth.
As things change over time, some things remain the same. Where there is great opportunity, there is also great opportunity for greed and corruption to profit. This is what has happened along with China’s “Wine Rush.”
Types of “Fake Wine”
On the China Policy Institute: Analysis site, they have a well written detailed account of what is happening in the Chinese wine market, Fake Wine in China from January 16th.
This paragraph sums up how the fake wine is created – “There are two types of fake wine available in China. The first is wine which makes unauthorised use of a distinct brand name. The wine may look identical to that of a well-known brand, such as Château Lagrange. The second is wine which has been made to resemble a particular brand. For example, the French wine Lafite may appear under the name La Fite or LaFeit. There are various methods used to make this fake wine. Refilling is one of them. Counterfeiters import cheap wine or use locally made wine to refill the recycled or mimicked bottles of genuine branded wine products. It has been found that buyers will pay as much as 300 US dollars for a used bottle of Lafeit. Re-packaging is another common method. The label on a bottle of Charles Shaw may be replaced with that of Castel. The fake Castel is then sold as the real. Realistic fake labels and other packaging materials are widely available on the black market.”
Much of the counterfeit wine efforts are focused on tricking new wine collectors or investors.
There are few wine authenticators to verify the wines and the history of wine is very detail oriented and complex. For example do you know the first year a certain winery in France began bottling a certain vintage? That ambiguity fuels the high end counterfeit markets fake labeling and claims.
Steps Chinese Government is Taking
The Chinese government does not view counterfeits lightly. The article goes on to say “China’s anti-counterfeiting laws are comprehensive, and the penalties for these breaches of the law can be harsh. Producing counterfeit alcohol may constitute two separate offences: the production of fake/counterfeit (jiamao) and/or substandard (weilie) products, and the unlawful use of a registered trademark. The maximum penalty for the former is a life sentence; for the latter it is seven years imprisonment. The sale of counterfeit goods is also a criminal offence, provided that a person has sold or offered counterfeit goods that exceed 50,000 yuan (£5,750) in value. A further criminal law provision may be triggered if the fake and substandard products concerned are toxic and have led to deaths or other serious health consequences. In this case, the offence is punishable by death.”
Enforcement is becoming much more common and busts are becoming more regular to stem the tide of the counterfeits and instill confidence in their wine market. As with anything in our own country, local enforcement can also become a challenge as region to region laws are not enforced equally.
Yes, China is experiencing a “Wine Rush” and it is a terrific export market. However, one must be careful and grow your business relationship with your importer. This will prevent issues from the beginning and incentivize them to develop trusted channels of distribution. The benefit to them can be exclusivity of distribution of quality wine in their area.
More on this market and developments to counter the counterfeiters –
Born a Southern girl, I was transplanted a few times as a Navy wife! Now, our “retired” USN family, calls CA home. As UNC business school grad, I gained lots of useful insights by finding different opportunities and challenges along our military life’s path. Love of traveling, making friends, experiencing other cultures and sharing the best of all that with everyone are now all part of me.