Fake Jake? Up the creek, but not probably not Chinese Cheek

The IPKat, who does not mind the odd tipple with his dinner, has been following with interest the discovery of counterfeit wines in the UK which purport to be from the very well-known Australian wine label of Jacob’s Creek. Reports as to the quantity of counterfeit wine vary, but it is believed that somewhere between 80 and 340 bottles of wine have been seized in London, Reading, Brighton, Hove and Cardiff.

The scheme came to light when consumers contacted the owner of Jacob’s Creek (Pernod Ricard UK) to complain about the poor quality and substandard taste of the wine. On closer inspect of one such awful tasting bottle, it could be seen that there significant inaccuracies on the label. The one most widely reported error is that, instead of ‘WINE OF AUSTRALIA’, the label reads ‘WINE OF AUSTRLIA’.

Trading Standards has now launched a criminal investigation. According to preliminary observations from Pernod Ricard UK and Trading Standards, the wine appears to have been distributed through independent and wholesale retailers, rather than through pubs, bars and supermarkets. It also appears that the counterfeit wines are being sold by middlemen to these off-licences for as little as £2 per bottle, when such bottles would normally retail in the £6 to £10 per bottle price range. So far, the wines seized include: Cabernet Sauvignon 2007, Merlot 2009, Semillon Sauvignon Blanc 2008, Chardonnay 2009 and Semillon Chardonnay 2009.

At the time of writing, the source of the wine or the extent of the problem had not been determined. However, many media outlets have speculated that the counterfeit wines originated from China. This made the IPKat wonder … Could the wine actually have come from China? And why was such a well-known Australian brand selected to be the counterfeit target?

Imported wine is subject to the payment of a duty to Her Majesty's Revenue and Customs (HMRC). As part of the latest budget, the current duty payable per bottle of ordinary still wine is £1.81 (excluding VAT, which would bring the total up to £2.17 per bottle). This amount does not include the other costs associated in producing a bottle of wine, such as delivery, freight, the glass bottle, the packaging/labels and the actual wine itself. As cases of wine are heavy and bulky items, it is unlikely that they could have been imported without anyone noticing or without the payment of duty to HMRC. Therefore, it seems to this Kat that the counterfeit wine was possibly produced inside the UK, rather than imported. The IPKat would also suggest that savvy independent merchants, well aware of profit margins on their wines, should have realised that middlemen offering bulk imported wine for as little as £2 per bottle cannot possibly be legitimate.

Why Jacob’s Creek? Australia is one of the largest suppliers of still wines to the UK market. Jacob’s Creek has had a market presence in the UK since the 1980s (its first trade mark in class 33 was filed in 1982) and its wines are stocked all over the country from supermarkets, to off licences, and to pubs. As such, it is a reputable brand which the British wine consumer has come to know and trust. According to statistics from Nielsen, the average retail price of a bottle of wine in the UK is about £4.70. Statistics from Wine Intelligence further suggest that consumers are willing to spend around £6 to £7 per bottle for wine to drink at home.

The average consumer also does not spend very long selecting a bottle of wine in a shop (this Kat remembers being told at a recent tasting that it was less than 10 seconds). Given the strength of the Jacob’s Creek brand combined with the price points for the wines involved and with the short time taken by an average consumer to select a bottle, this Kat speculates that the Jacob’s Creek wines were chosen because they could be sold quickly without very much scrutiny from the purchaser at the point of sale. Any entry level wines from other mass produced labels could have been selected, such as Blossom Hill, Gallo, Hardy’s or Lindemans. Unfortunately for Pernod Ricard UK, the counterfeiters this time just happened to choose Jacob’s Creek.

Further reading:
Jacob’s Creek Press Release here
Rates of Excise (from 28 March 2011) here
How to make your own cheap wine here

This item was researched and hand-crafted for the IPKat weblog by Catherine M. Lee