In a recent enlightening conversation with Dr. Sandy Strick and Karen Edwards from the University of South Carolina, we delved into a pervasive issue plaguing supply chains today: counterfeits. The impact of counterfeiting extends beyond financial implications. It poses risks to health, livelihoods and more—affecting manufacturers, retailers and consumers alike. 

Our discussion centered on the wine industry, a topic timely during the holiday season, yet representative of a larger, prevalent challenge. As someone passionate about the topic and a consumer myself, the idea that the wine I trusted might not be authentic, possibly produced elsewhere, fills me with disappointment. The documentary ‘Sour Grapes’ aptly illustrates this issue. The wine industry today has more than 4.5 trillion dollars in sales. Dr. Strick highlighted a staggering statistic: up to 30% of wines in the market are fraudulent globally, a figure that soars to an alarming 70% in countries like China. 

It’s important to differentiate counterfeits from knockoffs. The former involves deceptive branding or mislabeling, while knockoffs lack the official brand logo and are actually legal in many countries, including the US. By definition, wine fraud is any wine that might be adulterated with cheaper products or mislabeled regarding origin, quality, branding or age. In Europe, even with its stringent wine regulations, they face astonishing creativity for wine fraud with the bottles and the labels, along with the tools and techniques used to make it happen. In the US, the most widespread fraud is through Internet sales (shocker…), especially direct sales to consumers, meaning working with the right vendor and using legitimate sources is paramount. In China, a combination of weak IP enforcement, inadequate administrative apparatus, and unclear regulations in the wine industry has set up the perfect storm for the large Chinese market.  

So how do you identify what is authentic and fake? There is a real need for collaboration here, including companies like Systech, to help identify, trace and authenticate the right product. Consumer education is a big part of combating counterfeits, along with strengthening regulatory measures to minimize the harm they cause. Supply chain transparency is a huge issue in the beverage industry. There are several avenues to help, but many questions regarding authentication still need to be answered. This situation exists in other sectors as well.   

Dr. Strick and Karen predicted a trajectory for counterfeit wine similar to that of luxury products. The demand drives supply; hence, shifting consumer behavior towards verified, authentic products can mitigate this issue. Being loyal to legitimate vendors is crucial in dismantling fraudulent networks, eroding their profitability. Buying directly from a bottler and knowing who you’re dealing with is critical. Manufacturers and retailers can and should take measures to restrict counterfeits from the supply chain. At the granular level, the demand for such items and, eventually, the associated profit margins will die down and defeat the whole purpose of running this vast fraud network.   

Our guests answered some big questions on staying ahead of counterfeiters and our role as consumers in combating the supply chain threat for high-end or costly wine, medicines, skincare items and more worldwide. The conversation is insightful and worth watching.  Watch it on demand here.