Following the discovery of 14,000 bottles of fake Penfolds wine for sale in China in November, Wine Australia had to concede it can’t keep track of the extent counterfeit Australian wine is being sold in the country.
“We don’t have any data which makes it the perfect crime,” says Wine Australia’s general counsel Rachel Triggs. “It is extremely hard to work out how much is going on.”
One solution to the problem has been developed by Australian business YPB which has created a specially designed serialised QR code with an embedded covert tracer.
The ProtectCode covert tracer enables wine producers to track and trace every bottle and batch of wine throughout the entire supply chain using a small handheld scanner.
At the point of sale the QR code is readable by any smartphone and when scanned takes the customer to a quick digital authentication process.
If the wine is genuine they see a screen that says its authentic; if it’s fake they are taken to a screen where they can report it back to the wine producer.
John Hewson started YPB in 2011 and the business is now listed on the Australian Securities Exchange with a market capitalisation of $11.19 million.
YPB reported a post tax loss of $4.3 million in August however Hewson says the business has significant growth potential with the global counterfeiting industry projected to be worth about $4.3 trillion by 2022.
“As an industry it is an enormously big problem because there is so much organised crime involved in it and the cost to brands is enormous,” he says.
“Anecdotal stories are that for some products 50 per cent of the wine in China is counterfeit.”
YPB has inked a deal with Accolade, Australia’s largest producer of wine by volume to apply ProtectCode to its Grant Burge range of wines.
“It’s a breakthrough for YPB as it is the largest wine opportunity we have ever had. It will validate the need for this solution in the China market,” Hewson says.
Accolade declined to comment on the deal.
China is a growing market for Australian wine with Wine Australia reporting exports to China grew by 51 per cent for the year to March 2018 reaching $1.04 billion.
However China’s wine thirst is also driving the counterfeit of Australian and other premium wines in Asia.
Triggs says the Chinese market is “extremely important” for Australian wine producers.
“Anything that potentially could jeopardise consumer confidence in Australian wine could be extremely detrimental to the reputation of Australian wine,” she says.
Wine Australia conducts around 300 audits a year of wineries in Australia and enforces strict export controls however the sale of counterfeit wine in China is outside its jurisdiction.
Triggs says copy cat brands are also an issue in the Chinese market.
“Counterfeit is an exact replica of a wine made but in Australia we have seen brands developed for the Chinese market that clearly aim to confuse the Chinese customer that aim to look like an established winery,” she says. “The brands look similar to an Australian brand but not similar enough for there to be a copyright or trademark issue.”
Triggs says Wine Australia receives calls on a weekly basis from Australian exporters expressing concerns that their brands are being ripped off in China.
She says QR codes are increasingly popular in China and many Chinese consumers expect to see QR codes on wine bottles.
“There are a range of anti counterfeit technologies available to exporters,” Triggs says. “Wine Australia doesn’t support any particular solutions because we see there is strength in diversity.”
By Cara Waters