Rare-wine prices leap, spurring liquid frauds

ST.-EMILION, France – An FBI agent recently showed Arnaud de Laforcade a file with several labels supposedly from bottles of 1947 Chateau Cheval Blanc, one of France's finest wines. The St.-Emilion vineyard's chief financial office said the labels were clearly fakes — too new looking, not on the right kind of paper.

But customers may be more-easily duped.

Regardless of his skill, the counterfeiter had ambition: 1947 is widely considered an exceptionally good year, and Cheval Blanc's production that year has been called the greatest ­Bordeaux ever. The current average price paid for a bottle at auction is about $11,500, according to truebottle.com, which tracks auctions and helps ­consumers spot fakes.

Counterfeiting has likely dogged wine as long as it has been produced. In the 18th century, King Louis XV ordered the makers of Cotes du Rhône to brand their barrels with "CDR" before export to prevent fraud.

But counterfeiting is getting more sophisticated and more ambitious, particularly as ­bottle prices rise because of huge demand in new markets, mainly in Asia. After decades of silence, producers across the $217-billion industry finally are beginning to talk about the problem and ways to combat it.

The astronomical prices paid for fine wine these days make the bottles "more than just a luxury item," said Spiros Malandrakis, senior analyst of the alcoholic drinks market at Euromonitor, a research firm. "They become a currency in themselves. And as with every currency, at some point, people want to find ways to manipulate that and make more money."

Experts say it's impossible to know the size of the counterfeit market. Partly that's because many sales happen privately and because it is woven into a legal market unlike, say, cocaine trafficking. Many counterfeits likely go unreported because the victims are embarrassed. Industry insiders, meanwhile, have long ignored the problem collectively as producers were afraid of ­scaring customers.

"I think it's pretty obvious to everybody that there is a relatively large amount of counterfeit wines from these top wineries that is on the market," said Leonardo LoCascio, founder of Winebow, a leading U.S. importer of wine.

Maureen Downey, a wine appraiser and authenticator who founded Chai Consulting, says it is important not to overestimate the problem, guessing it is still probably a very small proportion of the global wine trade, but she added that many producers think that recent publicity on the problem means it's been solved.

Not so, she and others said. In fact, it will likely simply get more sophisticated and even more ­difficult to track and estimate.

On the front lines of that race is Bernard Medina, who is the director of a lab run by the French Finance Ministry in Bordeaux devoted to sniffing out fake wine. He recently laid out at least 15 bottles when journalists came to visit that ran the gamut from the silly to the serious. Most of the bottles were picked up in China by French customs or fraud agents and would easily be sorted out.

But Medina also sometimes receives bottles from châteaux in the immediate area, which is home to many of the world's best wines. Some of these suspected fakes are so well done that even the owners aren't quite sure if they might be real.

None of these tests is definitive, but, taken together, they can generally sniff out the fakes. Medina warned, however, that over the past year he has been seeing fewer of the gross counterfeits and expects that professional criminals are focusing on producing harder-to-spot, more lucrative fakes.