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Battling counterfeits in the supply chain
IMW Symposium 2018
James Miles
Managing Director, Liv-ex Ltd.
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Contents
• What is Liv-ex
• How are we exposed
• How do we mitigate against the problem
• Scale of the problem
• What more can be done
• Conclusion
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How are we exposed to the risk of counterfeits?
• Large player in the secondary
market
• High value wines
• We stand behind every trade
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How do we mitigate against it?
• Trade only access
– Members do their own due diligence
– Our members need to trade with us tomorrow
and the next day
• Policy
– Membership committee vets new members
– Detailed due diligence on new counterparties
– We only pay after checking the wine
– Collect cash deposits against trading limits
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How do we mitigate against it?
• Process
– Algorithms flag high-risk wines
– Photo/ checking process
– Cataloguing of authentic wines
– Each case given a unique ID
• Knowledge & intell
– 16 logistics/ warehouse staff
– Communication with key stakeholders
(our members and producers)
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How do we mitigate against it?
Stanley
blade
Jewellers loop
(magnifying
glass)
Canon EOS Digital
SLR Camera
Digital USB
Microscope
Safety gloves
Tape
measure
UV Torch
Photograph
requirements
Compressor
& nail gun
LED light box
Racking
with glass
shelves
Camera
tripod
Dell touch
screen PC
with label
printer
Flash
strobe
with tripod
• Tools and Technology
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Examples of photographs taken – Haut Brion 2012
Front label Label under UV
Capsule Punt
40x magnification 400x magnification
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Scale of the problem
Most common reason for non-compliance is human error:
• Wrong wine
• Condition issues
• Wrong pack size
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Scale of the problem
• Counterfeits account for a
relatively small part of our problem
• Of the wines inspected by Liv-ex
in the last 2 years, a small fraction
remain on our “suspect” list
• What do we mean by ‘suspect’?
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Scale of the problem
• Common examples of “Suspects”
that turn out to be fine:
– Late release stock
– Different labels for different markets
– Stock labelled by someone other
than the Chateau (e.g. agent or
negociant)
– Buyer replacing labels with copies
(Common with Port)
• When in doubt, don’t buy! Discrepancies between two real labels of Lafite 1982
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Suspect examples
400x magnification photographs of Le
Pin 2009. Images on right are suspect.
Bottle on left: suspect DRC Romanee Conti
2011. Bottle is missing three UV points on the
label.
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Silver linings
• Role of technology
– Although counterfeit wine is easier to
produce, it is easier to mitigate against
• Knowledge
– The risk of counterfeit wine has never
been better understood
• Producers
– Helping to tackle the issue
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What more can be done?
• Better communication from Chateaux
• More education across the supply chain
• Increased transparency from trade and
producers
BoE detail many – but not all - of the security
features on their website. The new “Fiver” is
packed full of holograms, foil patches, UV and
3D images and other innovations.
“We are responsible for providing banknotes
that you can use with the confidence that
they are genuine”. Bank of England
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Conclusion
• Counterfeit wine is potentially an existential problem that we take very
seriously, but currently it is not the biggest challenge we face
• Liv-ex – like many in the trade - invests in process and systems to
mitigate against the risk of counterfeit wine in the supply chain
• While the trade has never done more to combat the issue, there is still
work to do and no room for complacency
Editor's Notes
Explanation of what we mean by ‘suspect’ wines. We refer to them as suspect because it is often unclear if the wine is fake, or if it is something else.
0.03% - of the 75,548 cases photographed by Liv-ex in 2years, 30 suspects found.
Intent of sale onto a particular market – e.g. French CRD labelling on capsules
Multiple print runs at the Chateau – see Lafite pictures
Buyer replacing labels with copies – We have seen this often on Port bottles, which tend to be in poor condition. Merchants will put on copies of labels so that their end customers are able to find the bottles in their racks.
Latour - proof tag’s on bottles can be scanned and authenticated. You can also check serial numbers on their website.
Margaux also offers a scanner, pictured here. It scans a chip below the capsule and will display ‘Margaux’ or ‘no tag’ depending on the wine.
Better communication from Chateaux – for example, see BoE advice on fakes.
Better education - For example, knowledge of where to find UV markings, like on Haut Brion 2005.
