Is your wine as fine as it looks?

It's hard to fake wine, but easy to fake labels. And with 'trophy' wine sales soaring, forgers are becoming ever more sophisticated. So how can you spot a fake?

It's hard to fake wine, but easy to fake labels, and with trophy' wine sales soaring, forgers are becoming ever more sophisticated. Now, the FBI is cracking down, says Simon Wilson

Why are fine wines in the news?

Last year, worldwide sales of fine and rare wines continued to surge as cash-rich bankers and business people boosted demand for trophy' wines in the $1,000-plus bracket. But as demand and prices have soared, fine wines have become an increasingly attractive target for counterfeiters, and now the FBI and US Justice Department have launched a criminal investigation into alleged fraud in the international fine wines market.

The FBI's investigation will focus on whether auction houses, collectors and importers have knowingly sold counterfeit wine and ignored, or suppressed, doubts about its provenance.

What sparked the FBI investigation?

Complaints from several high-profile wine collectors, including software entrepreneur Russell Frye and billionaire businessman William Koch. Last year, Koch launched a civil suit against German wine merchant Harry Rodenstock over four bottles of 1787 Lafite supposedly owned by Thomas Jefferson, the third president of the United States. In 1985, Rodenstock sold one bottle of the Lafite to billionaire Malcolm Forbes for £80,000, after the wine's provenance was authenticated by a director of Christie's in London. Three years later, believing that a Christie's-backed provenance was good enough to rely on, Koch bought three more bottles all inscribed with the initials Th. J' for almost $500,000.

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So what's the problem?

The wine is almost certainly a fake. Rodenstock's claim seemed plausible. Jefferson, principal author of the US Declaration of Independence, was also the new nation's first ambassador to its great ally, France. A famous wine-lover "good wine is a daily necessity for me", he wrote Jefferson often visited the Bordeaux vineyards and kept copious notes of his purchases.

But in 2005, as Koch was preparing to lend some of his art collection to the Boston Museum of Fine Arts, authentification checks on the wine with the Jefferson estate threw up disturbing questions. There was no record in Jefferson's catalogue of the Lafites that Rodenstock claimed had been discovered in a bricked-up cellar in Paris. Koch's investigators also discovered that Rodenstock had given other purchasers of the wine different accounts of how they had been discovered.

Worse, Jefferson's estate told Koch that the president never engraved his wine bottles with his initials. Finally, scientists hired by Koch found that the engravings were made using a modern high-speed diamond drill. It is this seemingly hard evidence that attracted the attention of the FBI.

Is is difficult to fake wine?

It's hard to fake wine, but easy to fake labels and rising prices have produced a better class of forger. In the simplest scenario, fraudsters (mainly in Europe and Asia) copy labels from, for instance, a £500 bottle and stick them onto a £50 bottle. The finished product may not be drunk for several years, and even then the drinker may not spot the deception. With wine, small gradations in quality mean huge differences in price. For vintage wines, expensively preserved paper is used to make convincing labels and corks are hand-marked with the maker and vintage.

How big is the problem?

According to trade magazines, about 5%-10% of fine wines are dodgy and the problem is getting worse. That's a significant slice of a rapidly growing business, heavily dependent on trust and authenticity. Last year, total worldwide sales of fine and rare wines rose 45% to $240m (£124m). America accounted for $167m, with Britain the second-biggest market at $40m. Fraudsters take advantage of the fact that, until remarkably recently, record-keeping by chateaux was (to say the least) lax. The fraudsters' favourites include vintages of 1900 Margaux, 1945 Mouton, 1947 Lafleur, 1961 Ptrus and 1982 Le Pin all highly valuable, rare wines. Meanwhile, fear of fraud means that prices for wines whose provenance is unassailable have risen even more spectacularly than the rest. Last week, Sotheby's sold 206 lots of Mouton Rothschild for $2.2m not far off three times the highest estimate direct from the cellars of Baroness Phillipine de Rothschild.

What can the producers do to prevent fakes?

Wine-fakers of the future are likely to find life harder thanks to security measures adopted over the past ten years. For example, Le Pin prints its labels on banknote paper, and Chteau Ptrus uses year-specific engravings on the bottle and a high-tech label featuring a random pattern of lines visible only under an ultra-violet scanner. At Chteau Mouton-Rothschild, the makers use an artwork on each vintage and etch the name of the estate on the bottom of the bottle.

How can I spot a fake fine wine?

It's not always easy, given the increasing sophistication of the fraudsters' efforts. But there are tell-tale signs to watch for most obviously, cork-tampering, the wrong bottle shape, or errors on the label. Some fraudsters have been known to make surprisingly simple spelling mistakes. Also, watch for bottles, capsules or labels that look too new. It sounds obvious, but unless a bottle has recently been redressed' by the chateau, some label damage or staining is normal in older wines. Other signs are unusually high fill levels, corks with an incorrect vintage stamp, bottle-markings that don't match the label, and for old reds an unusually deep colour, an unexpectedly young taste, or a wine that doesn't throw a sediment.

Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.   

Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.