Sniffing Out Counterfeit Wine

By Annalisa Burgos
Friday, 23 Mar 2007 | 9:32 AM ET

The booming fine wine market is attracting more counterfeiting and it’s been something of a sobering experience for many high-end collectors.

U.S. authorities earlier this month said they are investigating sales of wine fraud. The move comes amid allegations by billionaire wine collector William Koch that wine dealers duped him out of $500,000 when he bought five bottles of extremely rare wine, which turned out to be fake. The incident is drawing attention to the ultra high-end industry, which is undergoing a revival of sorts.

There may be new life to the collecting market -- prices of the world’s top wines are up 50% over the past year -- but fraud is not a new problem for the industry, wine experts say. An estimated 5% of rare vintages sold privately or at auctions is counterfeit.

“It’s been serious for the last 15 years and especially the last five years and it needs to be cleaned up,” said Serena Sutcliffe, head of Sotheby’s international wine department. Sutcliffe said the auction house goes to great lengths to verify the wine’s “provenance,” or origin or source, a concept that is the backbone of the industry.

Which wines are the most likely to counterfeit? Bordeauxs that typically go for $20,000 or more a bottle, experts say, especially rare vintages of Pétrus, Mouton Rothschild and Lafite Rothschild.

“The producers should be more vigilant in preventing this,” said Nunzio Castaldo, senior vice president of imports for wine distributor Winebow, who can recount numerous instances of buying wine that was not up to snuff. “I hope this will not damage the beautiful inclusiveness that is in the market.”

The good news is that the problem really only affects a small group in the very high end of the market.

“For the majority of the business, this simply isn’t an issue,” Sutcliffe said. “Ninety-nine percent of the wine trade is fine.”

It’s been overplayed and will not have a major impact on the larger fine wine market, said James Miles, founder of the London International Vintners Exchange. “It affects collectibles, great wines from history, and those are not traded very often. They represent a tiny part of market.”

Still, experts urge all wanna-be wine investors and collectors to educate themselves as much as possible, especially with a wealth of information available on the Web.

“Buyers should be careful that they deal with absolutely reputable people and that they have complete, verifiable and absolute ‘provenance’,” Sutcliffe said.

Otherwise, you may be left with a bitter taste in your mouth.

Wine Fraud
It turns out many bottles of expensive wines aren't what they're advertised to be, with Ray Isle, Food & Wine Magazine senior editor and CNBC's Erin Burnett

Wine Fraud
It turns out many bottles of expensive wines aren't what they're advertised to be, with Ray Isle, Food & Wine Magazine senior editor and CNBC's Erin Burnett.
Tues. Mar. 6 2007 | 2:45:00 PM [02:35]

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