John Kapon was staring intently at the labels on a consignment of 12 large-format bottles of 1982 Chateau Petrus and something just didn't look right. He knew from his years as a fine-wine auctioneer that the details on labels of counterfeits of the prestigious Bordeaux wine were often imprecise. He examined the whites of the eyes in a face on the label, the first thing he does when inspecting Petrus wines for sale. He also looked at the grey edges as well as the red outline of the word 'Petrus'. The branding on the cork was correct but appeared to use a thinner font. He felt uncomfortable. There were other telltale signs that some bottles of the 1982 Chateau Lafleur he was inspecting did not contain what was claimed. The labels appeared too new and too glossy for a wine that was more than a quarter of a century old. The corks also looked as if they had been rewaxed or tampered with. The doubts were enough to spook Mr Kapon, president and auction director of New York-based wine merchant Acker Merrall & Condit, and he decided not to include the wines in the company's inaugural fine wine auction in Hong Kong on May 31. 'I must say in all fairness to the consigners that these were isolated problems and that there is always the possibility that something rejected is actually real,' he said. 'The biggest collectors in the world are also the most prone to have some lemons in their garden. When you deal with some of the best collections in the world, these buyers, who spend perhaps US$50 million on wine, are not checking every bottle themselves.' No one can say for certain how serious the problem of counterfeit wine is, but few dispute that it will worsen, given the rapid growth of wine sales on the mainland. Chinese demand for imported wines is projected to rise from just over 2 million cases to about 50 million by 2017, the Hong Kong Wine & Spirits Industry Coalition said. The mainland is the world's 10th-largest wine market and is expected to be the eighth-largest by 2012. Hong Kong, which earlier this year scrapped a 40 per cent wine duty, hopes to tap into the mainland growth by becoming the region's wine-trading hub. 'If you have a huge number of naive people who don't care where they are buying their wines from, then you are going to see more fakes,' said Jo Purcell, managing director of fine-wine distributor Farr Vintners (Asia). She said there was a huge possibility of counterfeit wines on the mainland. The combination of a booming economy and new money chasing a finite and diminishing supply of wines is especially attractive to counterfeiters, who will fake anything they can profit from. There is a standard joke in the industry that Las Vegas sells more bottles of 1982 Petrus than were ever made. On the mainland, Chateau Lafite, of any vintage, is the preferred tipple, largely because of the estate's renown. According to Farr Vintners, Chateau Lafite prices on average doubled between August 2006 and June last year and had generally risen since. Big bonuses helped fuel demand for wines, and wine funds looked to capitalise on mainland consumption, pushing up prices. 'At this time, I cannot see any reason for prices to fall,' said Ms Purcell. Demand has been so strong that Carruades de Lafite, the chateau's second wine, which bears a similar-looking label to its more exceptional cousin, is also experiencing price increases. About two years ago, a case would go for between GBP175 and GBP200 (HK$2,685-HK$3,068). Today, it sells for between GBP800 and GBP1,400 a case, according to Farr Vintners. All this bodes well for counterfeiters. Doug Rumsam, managing director of Bordeaux Index's Hong Kong office, said that as growth in wine consumption on the mainland continued to pick up in the coming five years, it was logical that the proliferation of fake wines would increase. Mainland consumers would most likely chase after their second choice, Chateau Latour, when Chateau Lafite stocks could no longer be found or prices became exorbitant, possibly as soon as next year, Mr Rumsam said. However, not everyone is convinced of the gravity of the fake wine threat. Despite the mainland's association with knock-off merchandise, Robert Beynat, chief executive of Vinexpo Asia-Pacific, said he believed the problem of counterfeit wines was limited and was already plateauing on the mainland. 'For the Chinese in China who are in the wine business, it is in their interests to fight counterfeiters. It is not in the interests of importers, exporters or consumers' to have fake wines, Bordeaux-based Mr Beynat said, amid preparations for the Vinexpo Asia-Pacific wine and spirits trade fair next month. 'The only way to crack down on counterfeits is to encourage governments to take action. There is a common interest to protect products and educate consumers.' But this is easier said than done. Experts point out that determining the provenance, or history, of a bottle of wine is not an exact science, providing a loophole that counterfeiters can exploit. Mr Kapon said there was a substantial grey area in authenticating wines, particularly older vintages. For years, many chateaux and domaines were inconsistent in their record- keeping since the top names in winemaking today were basically farmers back when some of the wines were being made. There was also a lot of bottling and recorking by negociants, or merchants and wholesalers. Before 1923, merchants handled much of the bottling and not the chateaux. It was also a common practice to top up bottles of old wines and recork them with a fresh cork. This made it possible for genuine bottles of a wine to appear different. The situation improved in 1923, when the chateaux started bottling their own wines. Mr Rumsam said that most of the counterfeits were of top wines and outstanding vintages between 1921 and 1961 in rarer large formats such as magnums. They include the 1945 Chateau Mouton Rothschild, the 1947 Chateau Cheval Blanc and the 1961 Chateau Latour a Pomerol. Los Angeles-based Frank Martell, international director of fine and rare wines at auction house Bonhams, said he decided against including the 1947 Chateau Cheval Blanc in the company's Hong Kong auction on April 24 because of difficulties in authentication. Mr Kapon said the 1982 Chateau Petrus and the 1982 Chateau Lafleur were probably the youngest wines he had seen most frequently counterfeited. 'For many years, buyers had no recourse when it came to buying wines at auction. It was always 'buyer beware'. I know of other auction houses that refused to accept lots back and lost clients as a result. Today, it is a different market and one that's much easier to do business in, as the major auction houses have much better quality control than before,' Mr Kapon said. Acker Merrall sells between 30,000 and 35,000 lots a year in the US, of which about 100 are returned. The company rejects between US$3 million and US$4 million worth of wine annually because of concern about authenticity, Mr Kapon said. Acker Merrall's Hong Kong auction features 920 lots with an estimated value of more than US$6 million. The top lot is a case of 12 bottles of 1990 DRC Romanee Conti with a high-estimate price of US$240,000. Mr Rumsam said he recently sold two of these bottles to a customer in Hong Kong for GBP7,400 each. Buyers in Hong Kong accounted for between 20 per cent and 25 per cent of last year's US$300 million in fine-wine auctions worldwide.
