HONG KONG (Reuters) - Master of Wine Jeannie Cho Lee could tell instantly when she tasted fake wine at a Hong Kong dinner party.
“Just from colour and the nose, once you taste it, it was confirmation that it wasn’t the genuine wine,” she said.
But not everyone possesses Lee’s acumen. China’s booming appetite for fine wine in recent years has fuelled a rampant counterfeit market that industry insiders fear could be turning local buyers off.
“What we’re seeing across the country is a proliferation of knock-offs and copycats and outright counterfeit as the imported wine industry really explodes in this market,” said Ian Ford of Summergate Fine Wines in Shanghai, adding that counterfeiters are taking advantage of inexperienced Chinese consumers.
China has become the world’s fifth-largest consumer of wine, ahead of Britain, according to an International Wine and Spirit Research study. It forecasts 54 percent growth from 2011 to 2015 -- the equivalent of a billion more bottles.
That means supply and demand in the Chinese market can have a significant impact on global prices.
The cost of high-end wines was down more than 20 percent year-on-year in late February, according to the Liv-ex 50 Index, which tracks Bordeaux wines. The plunge has been attributed to a range of factors, including a pull-back following a strong surge in prices and market turmoil in Europe.
Some believe fake wine may have played a role by denting Chinese consumers’ confidence in the product.
“It has definitely been a contributing factor because there has been a drop-off in demand for some of the wines which have been particularly affected by counterfeits -- for example Lafite Rothschild,” says Thomas Gearing of Cult Wines, a London wine investment firm.
“As someone has their fingers burnt by buying counterfeit wine, they are going to lose their desire to continually buy that wine.”
A particularly popular label in China, Chateau Lafite Rothschild is a case in point. Favoured as an expensive gift on the mainland, a bottle of the Bordeaux red can retail anywhere from $1,000 to $100,000 per bottle, depending on the vintage.
The price of 2008 Lafite fell 45 percent from peak to trough in 2011, according to Liv-ex, with many pointing to a drop-off in Chinese demand.
“I think there’s been concern about the integrity of some of those wines in the marketplace. You hear a lot of stories about the amount of ex-vintage of Chateau Lafite consumed in China is five times the annual total production,” said Ford.
Despite the rumours, it’s impossible to tell how much bogus booze there really may be in China. Many brands have been affected by counterfeits, with the government detaining six people in 2010 after companies were found producing forgeries of local tipples Dynasty and Great Wall.
Rothschild, the maker of Chateau Lafite, declined to comment.
But some see a positive effect on the real thing at auction houses, with bidders at Hong Kong auctions willing to pay a premium for guaranteed authenticity, Gearding said.
“It shows the problem which is associated in the Far East region with counterfeit bottles ... people are willing to pay so much over and above the market prices for what they consider to be perfect stock as it were,” Gearding said.
Vintage wines with the best provenance have broken multiple records in Hong Kong in recent years, including a Sotheby’s 2010 auction of 1869 Lafite, Acker Merrall & Condit’s Don Stott Collection in 2011 and, more recently, Christie’s auction of Henri Jayer Burgundy.
This could be part of a wider trend, Ford said, where consumers are becoming more savvy about the wine they buy.
“I think there’s a very rapid evolution taking place, so hopefully the days of these crazy copycats and knockoffs are numbered.”
Editing by Jonathan Hopfner and Elaine Lies