Counterfeit wine : A loss for the European economy

Whatever the targeted sector, counterfeiting is a plague for the economy. Concerning the wines and spirits sector, counterfeiting costs companies in the European Union nearly 1.3 billion euros each year ! Even better, it also costs us more than 20’000 jobs, mainly in Spain, in France, and Italy, in Germany and the United Kingdom.

The report of the European Union Intellectual Property Office (EUIPO) published on Tuesday 26 July 2016 reveals to us that " 4,4 % legitimate sales of spirits and 2,3 % of legitimate wine sales are lost every year due to counterfeit alcoholic beverages ”.

Beyond the significant negative impact for the companies concerned, do not forget that alcohol is taxed by the state. Result, 1,2 billion euros in public revenues go up in smoke. The authors of this study take income tax into account, social security contributions, corporate income taxes, VAT and excise. This scourge of counterfeiting also destroys jobs : 4800 direct jobs in the spirits and wine sectors, as well as 18,500 indirect jobs, half of which in agriculture and the food industry.

"Legitimate industry selling less products than they would have sold in the absence of counterfeiting, it also employs fewer workers ”, summarizes the report, devoted only to the economic consequences of this phenomenon.

Spain loses big

Spain is the country most affected by counterfeiting in absolute terms. So, companies lose every year 263 million euros and the Spanish Treasury has a shortfall of more than 90 million euros in uncollected excise duties.

Come next :

• Italy, with 162 million losses and 18 million euros of uncollected excise duties

• Germany, with 140 million losses and 65 million excise duties

• France, with 136 millions and 100 million excise duties

• the United Kingdom, with 87 million euros of loss and 197 million excise duties

By changing the method of calculation to take into account the percentage of lost sales compared to total sales, that is to say in relative value, the ranking is somewhat different. Indeed, the most affected countries are then Bulgaria, Cyprus, Greece, Latvia and Romania who lose 8 to 10 % of sales due to counterfeiting.

Regarding the impact of counterfeiting on employment, first place goes to Spain with nearly a thousand jobs lost, Romania, Bulgaria and our sweet France.

Counterfeiting : a sharp loss in export sales

Delphine Sarfati-Sobreira, Director General of the Union of Manufacturers for the International Protection of Intellectual Property (Unifab), French anti-counterfeiting association, explains that counterfeiters most often sell genuine bottles filled with low-end alcohol, to copy the model and label of a real bottle or to cut the product with water or other substances.

These practices are common in Asia and - oddly - especially in China, where the majority of counterfeit alcohol in the world is produced. The losses recorded by European companies are therefore mainly due to a shortfall in their exports.. In France, "There is no risk of a counterfeit product being sold in conventional consumer channels", restaurant or store, assures Ms. Sarfati-Sobreira. On the other hand, "If a consumer ventures to buy on the internet outside the official site, it's possible ", and to remember that we must be particularly vigilant in the countries of the East, where the traffic in adulterated alcohol is important.

Thank you China !

Between November 2015 and february 2016, the major clean-up operation organized by Interpol and Europol had made it possible to seize 10’000 liters of adulterated alcohol in the UK : wine, whisky, vodka… everything went there. In Greece, three factories that produced counterfeit alcohol were discovered and closed with the seizure of more than 7,400 illicit bottles and labels.

Let us not forget that the wine and spirits sector in France is one of the leading French export activities. In 2015, a report from the Federation of French Wine and Spirits Exporters (FEVS) announced that with a positive trade balance of 10,4 Billions of Euro's, wines and spirits thus regained their rank of second French trade surplus behind aeronautics, but ahead of perfumes and cosmetics (9,2 billion).

The wines and spirits sector represents 5,500 companies in the European Union. Despite what one can imagine, the majority of these companies are SMEs employing an average of ten people.

Jean-Nicolas Mouretin