Château LaFake: Should Importing Counterfeit Wine And Other Luxury Goods Be Illegal?

When I was a teenager I loved to go down to Tijuana and by knockoff watches, a Bolex or Rolek for $5 (asking price may have been $50). Harmless fun, I know I’m not buying the real thing, but I still looked for quality: a sweeping rather than ticking hand from my fake Rolex, for instance.

I’ve never been keen on U.S. officials stopping importation of products that violate brand marks, either. That seems to me companies leaning on taxpayers to enforce their IP, a form of corporate socialism.

At the same time products which purport to be one thing, and are actually something else, and which are dangerous are another matter entirely.

Hotels in China, even high end hotels, have been known to offer guests counterfeits of the premium toiletries that are normally their brand’s standard. And fake shampoos and liquid soaps in China can have dangerous chemicals.

So where to come down on fake wine?

China’s Fujian province, where a law-enforcement task force raided warehouses in the Longhai district of Zhangzhou, uncovering a massive counterfeiting operation. More than 40,000 bottles of falsely labeled wine as well as packaging and labeling equipment were discovered; authorities estimated the fake wine’s “street value” to be more than $150 million.

…[A]mong the faked products seized were counterfeit bottles of Bordeaux’s Château Lafite Rothschild and Australia’s Penfolds; both brands are enormously popular in China (and equally as popular among counterfeiters).

Chinese authorities report these bottles of Château LaFake were “extremely realistic in appearance, making it difficult for most consumers to distinguish.”

Look, fraud is wrong. I’ll assume here there was no safety issue with the contents, just selling people a product that’s not what they think they’re purchasing.

Interesting in U.S. law you cannot protect the recipe for wine. You can only have intellectual property in its packaging. If the wine tastes identical, then customers are really getting what they expected right? And it’s just the famous brand that isn’t making profit off of it.

But the brand serves a purpose, to communicate the quality you expect. And if the brand isn’t protected, it isn’t something that can be invested in, and you lose a signal of quality.

On the other hand, if you look at once high quality brands that have been acquired and watered down their products… think Tumi in luggage, Dom Perignon in champagne (not every vintage should be released, and once wouldn’t have been!)… then the brand is actually what’s lying, communicating to consumers a quality that turns out not to be delivered.

In wine especially many people rely on the brand as a short hand for quality, and even trust that what’s inside is quality whether they can taste it or not. That isn’t to say that a bottle of Penfolds Grange isn’t lovely. It absolutely is! But not everyone is familiar with the taste or how it differs from (say) Penfolds Bin 389 (“Poor Man’s Grange” or “Baby Grange”).

What if the wine inside is the same or better, and the ‘fake’ label allows the consumer to try it with confidence and be pleased? Indeed, allows them to tell a story about themselves – they’re the kind of person who has tasted Romanée Conti (!) – at a discount?

We should be honest all the time, but should the government enforce honesty in brand marketing, even when it’s misleading about quality? I’m actually not sure. And should I feel badly that someone was ‘duped’ into paying $450 for a bottle of wine that might have sold for $100 without the misleading label? What about my $5 Rolek?

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. @Gary: “”You can only have intellectual property in its packaging.”

    Not so, If I claim my Pauillac is AOP Bees Cave, Texas I am guilty of fraud.

  2. Gary-it seems like you’re corporate socialism argument would seemingly apply to copyright, trademark and patent law. In all three cases, the government acts to protect the assets of private entities.

  3. There are restaurants that save the bottles of high-end wine and refill them with low-end wine then record the bottle. Reselling it to an unknowing customer.

  4. Why of course importing luxury fake good should be illegal. Let the scammers go to jail. Then get a real job and live honestly!

  5. There is a difference between counterfeiting and selling knock off bags and anything to do with food/drinks that are consumed or chemicals used like WD40 or rubbing alcohol. No, importing and selling counterfeit goods should not be illegal. It’s a civil issue that should be handled by the brand. Putting false product labels on drinks/foods and household or industrial supplies is dangerous and is and should be criminal. You don’t mess with what people consume. You don’t mess with materials used for construction. The fraud component of selling counterfeit goods is if they are advertised as real and the average person wouldn’t know otherwise. If you buy a bag from a street vendor, the average person knows it’s likely fake. We have millions of illegals coming over the border each year yet customs focuses on fake bags. Dangerous criminals roam cities yet it’s the people selling fake bags that will be targeted by the police.

    Most brands are anti freedom so pro freedom people shouldn’t be white knights for those that hate us. If a pro freedom person wants to do a big start up, he or she will face extreme regulatory scrutiny that is arbitrary and capricious from random government bodies not supported by the public and that only serve to keep people down. Any time a pro freedom company gets traction, they find some obscure regulation and shut it down. They’ll sue a company for not hiring a dangerous criminal or for not baking a cake. If you are from one tribe, you’ll be allowed to grow your start up into a 100 billion dollar market cap before any regulatory scrutiny or lawsuits so you can afford the fine or settlement that is the payoff to bureaucrats and politicians.

  6. I’m just puzzled by the stance.

    It’s not about brand quality. It’s about fraud. You don’t feel sorry for fraud victims?

  7. And Dom in top vintages is still among the very best- the analogy that they produce it in off vintages I’d a red herring.


  8. @Gary –

    I’ve never been keen on U.S. officials stopping importation of products that violate brand marks, either. That seems to me companies leaning on taxpayers to enforce their IP, a form of corporate socialism.

    There’s a big hole in your premise: Are you seriously proposing that every single company with intellectual property try to get for example, China, to suddenly abide by predetermined rules on treatment of that property? I’d like to hear the practical way that you think that could be managed. Like it or not, governments are the only entities with enough heft to push for changes with any real chance of success.

  9. IP protection is part of American law and very much the business of government in the US. And so of course law enforcement has a role to play in IP protection.

    That China is playing the IP game and helicoptering in for some IP protection is rather amusing; given the country is the biggest violator of IP around.

  10. @Gary —> Having spent 50+ years in the wine trade, I am rather surprised by your argument. Fraud is fraud, period. Your $5 “Rolek” or “Rolex” is obviously NOT a Rolex. But would you feel the same way if it was (e.g.) a $300 [fake] “Rolex” or a $200 [fake] “Prada” purse? Careful examination might reveal a shoddy job on the interior seams, or the font on the watch face may be different, but both these examples are an attempt to defraud the individual. A “Rolek” is a joke.

    Fraud in wine is a serious issue, and I’m not even talking about all of the fake Penfolds and other wines being sold in China. How many headlines have there been about wines being sold at auction that turn out to be fakes? How many Hardy Rosenstocks or Rudy Kurniawans do there need to be?

    What about the, bottles of the weaker 1991 vintage of Château Lafite Rothschild that were relabeled and sold as the acclaimed 1982 vintage in China? Or the some twenty thousand bottles of fake “Super Tuscan” 1995 Sassicaia discovered in a warehouse by Italian authorities, who arrested a number of people including the group’s salesperson, who was selling the fake wine out of the back of a Peugeot hatchback?

    Many wineries now attach QR codes to the capsules on their bottles — each one unique — so the consumer can verify the bottle in hand is a real one. It’s a serious issue, and certainly law enforcement has a role to play in stopping it.

  11. Hello Gary!

    Which airline did you fly that carried Chateau D’Yquem from the picture you use in this article?

    Thank you!

  12. I was under the impression that, to a libertarian, which you profess (if, to me, unconvincingly) to be, protection of property was the sole legitimate function of government. Is the problem here that you believe in a difference between “intellectual property” and real property?

  13. Watch “Sour Grapes”, the story of Rudy Kurniawan, for a take on this topic. One of his victims was a Koch brother.

  14. Hi Gary,

    Can you expand on this? I’m worried and should I be bringing my own toiletries to China from now on?
    “Hotels in China, even high end hotels, have been known to offer guests counterfeits of the premium toiletries that are normally their brand’s standard”

  15. @Gary – “ I’ve never been keen on U.S. officials stopping importation of products that violate brand marks, either. That seems to me companies leaning on taxpayers to enforce their IP, a form of corporate socialism.”

    You do know brand owners have to pay CBP to register their trademarks, right?

    @Jerry 329 – patents and copyrights (not trademarks, however) are provided for in the Constitution. Our Founders apparently deemed them important enough to include.

    The PTO more than covers its cost as part of the DOC.

  16. I just wonder about so many wines actually being what the label says. I have certain favorites that I have purchased routinely for 30+ years. In the last 10 years, these wines do not taste anything like they used to taste. I used to think it was me. But friends who have similar tastes in wine, tell me the same thing. Which leads me to believe that the wineries are substituting lower quality wine into their expensive wines. I love red zins as an everyday wine. The good ones like Ridge still taste good. But so many others do not. Ravenswood and Rosenblum, lately are awful. It just makes me wonder…

  17. @JohnB: Ravenswood and Rosenblum were mainly Zinfandel, which almost universally does not age. If yours are Zins that would explain it. Ridge Zin. is an outlier.

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