By Sarah DiLorenzo
SAINT-EMILION, France -- An FBI agent recently showed Arnaud de Laforcade a file with several labels supposedly from 1947 bottles of
Chateau Cheval Blanc, one of France's finest wines. To the Saint-Emilion vineyard's CFO, they were clearly fakes -- too new looking, not on the right kind of paper.
But customers may be more easily duped.
Regardless of his skill, the counterfeiter had ambition: 1947 is widely considered an exceptionally good year, and Cheval Blanc's production that year has been called the greatest Bordeaux ever. The current average price paid for a bottle at auction is about $11,500, according to
, which tracks auctions and helps consumers spot fakes.
Counterfeiting has likely dogged wine as long as it has been produced. In the 18th century, King Louis XV ordered the makers of Cotes du Rhone to brand their barrels with "CDR" before export to prevent fraud.
But wine fakers are getting more sophisticated and more ambitious, particularly as bottle prices rise due to huge demand in new markets, mainly in Asia. After decades of silence, producers across the $217-billion industry are finally beginning to talk about the problem and ways to combat it.
The astronomical prices paid for fine wine these days makes the bottles "more than just a luxury item," said Spiros Malandrakis, senior analyst of the alcoholic drinks market at Euromonitor, a research firm. "They become a currency in themselves. And as with every currency, at some point, people want to find ways to manipulate that and make more money."
Sizing Up the Problem
Experts say it's impossible to know the size of the counterfeit market. Partially that's because many sales happen privately and because the wine market is legal, unlike, say, cocaine trafficking. Many known counterfeits likely go unreported because the victims are embarrassed -- and chagrined to lose their investment. Industry insiders, meanwhile, have long ignored the problem collectively as producers were afraid of scaring customers.
But many experts agree on one point: the quantity of rare bottles from illustrious vineyards being auctioned is just too high to not include fakes.
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics
while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a
reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a
comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and
strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV