Fraud in the Wine Business: The Good, the Bad and the Ugly

Two massive frauds have rocked the wine business this spring.  First, there’s the ongoing saga of Rudy Kurniawan, who’s alleged to have sold hundreds of counterfeit bottles at several auctions.  When authorities searched his suburban Los Angeles house, they found what was described as an “elaborate” facility to bottle and label counterfeit wines.

Since the beginning of the 2000s, the amount of money spent on fine wines at auction has increased fivefold.  Mike Steinberger’s Vanity Fair article describes younger wine enthusiasts, “new players … distinguished by their insatiable acquisitiveness and eagerness to flaunt their trophy bottles” as driving up auction prices.  Kurniawan found a ready market for counterfeit old wines he is said to have produced himself.

Then there’s the recent investigation of improper practices at the esteemed Burgundy negociant Labouré-Roi.  First reported in the French newspaper Le Bien Public, the story hit the English language press on Thursday.  The U.K.’s Daily Mail details a fraud investigation where this old, established Burgundy producer sold as many as two million bottles of fake Nuits-Saint-Georges over a period of several years.  The bottles were allegedly “topped off” with inexpensive plonk from the south of France before being sold to consumers.  Labouré-Roi exports 30 % of its production and the U.S. is one of their export markets.

Armand Cottin, a Labouré-Roi director, said, “We are three years after the period which was checked by investigators and we are now approaching a situation where we have an error rate of close to zero.  The management is taking responsibility for the situation we are in.”

Error rate of close to zero?

When I first read about this on Wednesday, I alerted a friend who works at Labouré-Roi’s NJ distributor.  He was unaware of these charges.  At present, it’s unknown how much, if any, of this wine made it to the U.S.

Kurniawan’s story makes fascinating reading.  I’m sorry that people were taken in, but I don’t have a lot of sympathy for the hubris and greed that seems to seep through all the cracks of this story.  There’s a sound reason to buy young wines at a traditional retailer and put them away to mature.

The charges against Labouré-Roi are much more distressing.  I sold this brand when I worked in retail.  When I was a sales rep and later a purchasing agent for Winebow, Labouré-Roi was marketed by a well-run competitor with good, knowledgable sales staff.

If what the French authorities allege is true, Labouré-Roi blended e.g. cheap syrah or grenache with pinot noir, labeled it as Nuits-Saint-Georges – one of the prestige appellations of Burgundy, and sold it with a commensurate price.  Error of close to zero?  This operation doesn’t sound like an error to me.

In the wine business, your word means everything.  From telling your customer, “Yes, we can deliver these goods on Friday” to “This is Nuits-Saint-Georges.”  The whole idea that a business would bottle fake wine from anywhere and allow their distributors to present it as the genuine article is abhorrent.  The damage to their reputation will take years to repair.

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About Peter, a/k/a sourdoughdaddy

Husband, dad, personal trainer, cross-country skier, trail runner, writer.
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