Why you should care
Because if you’re not careful, you might be out $1,200 for that jacket or $300 for that bottle of dessert vino.
Nestled near a lake in the picturesque heart of Ontario’s wine region, Pillitteri Estates Winery is a quaint, family-owned business where frozen grapes are hand-picked once temperatures fall below -8C then pressed into intensely sweet bottles of ice wine. While it runs around $65 per bottle at the vineyard, it’s also a luxury loved by a growing number of Chinese consumers, who pay up to $300 per bottle in their home country. Just ask Charlie Pillitteri, the fourth-generation winemaker who now ships about half of the 50,000 cases his winery produces annually — making it the world’s largest estate ice wine producer — directly to China.
But here’s the rub: As much as the Chinese enjoy sipping this dessert wine, some estimates say up to 30 percent of ice wine, and 50 percent of wine overall, sold in China may be counterfeit.
China accounts for about 30 percent of global luxury goods spending.
Head down to Chinatown in any major North American or European city in the world and it isn’t hard to find a cheap knockoff Prada purse or Rolex replica these days. But the counterfeit craze is now hitting closer to home — within China itself — even as the country’s rapid development fuels the growth of some niche but quintessentially Canadian luxury products such as ice wine, certain premium foods (think Quebec artisanal cheese and Atlantic lobster) and coyote fur-lined coats or other high-end winter wear. When it comes to the sale of these kinds of indulgences within China, “we’ve been seeing a huge increase,” says Eva Busza, vice president of research and programs at the Asia Pacific Foundation of Canada, a think tank.
Part of this is to be expected, of course, as economic reforms and a booming middle class have transformed China over the past two decades. The country accounts for around about 30 percent of global luxury goods spending, having recently surpassed the U.S., according to the management consulting firm Bain & Company. Demand is forecasted to grow even more as its middle class, which currently sits at some 300 million people, will increase to 700 million by 2022.
What’s more, they’re not just buying these kinds of foreign goods in their home country. They now spend three times more abroad than they do locally, Bain & Company says, and represent the fastest-growing nationality for luxury spending overseas. The downside for businesses, however, is that counterfeits of their goods are getting harder for some consumers — both in China and abroad — to suss out. At Canada Goose, which produces down-filled winter jackets that cost up to $1,195 (the “snow mantra parka,” fleece-lined hand-warmer pockets included), knockoffs became such an issue for the company that it introduced a hologram logo for its coats a few years ago. Its website now also includes a dedicated counterfeit section that helps customers determine whether the plush product they purchased is authentic. (The company declined to comment.)
The research we’ve done says that 3 out of every 10 ice wines in the [Chinese] market are counterfeit.
Meantime, during trips to more than 15 trade shows and other events in China over the past several years, Richard Slingerland, Pillitteri’s vice president of sales, has amassed a photo collection of roughly 30 different counterfeit brands of ice wine that claim to be made in Canada — and aren’t. “The research we’ve done says that 3 out of every 10 ice wines in the [Chinese] market are counterfeit,” he says. The winery’s weapon of choice? On each of its bottles, it now includes 22-karat gold embossing and a unique “quick response” (QR) code that can be scanned. That’s not all. It also has added two (hidden) security features that Slingerland says only he and his staff know to look for. (We searched but couldn’t find them.)
To be sure, recent regulations in China that have cracked down on counterfeit products and created new avenues for protecting both local and foreign filings for trademarks and copyrights have curbed some of this behavior. “The Chinese are really trying to put in better legislation,” says Busza. And in an annual survey from the Asia Pacific Foundation of Canada, business owners indicated that counterfeit competition was the fourth-biggest barrier to doing business in China last year, down from the top concern in 2012.
Others believe, though, the problem may get worse. Like a game of whack-a-mole, offenders are being kicked out of the market, but for every counterfeit manufacturer that disappears, two more take its place, says Slingerland. “I’m finding more now than I did before,” he notes. Even so, while his winery’s use of high-security, anti-counterfeit measures has had little effect on sales in China, it has boosted sales 30 percent in Japan — as consumers are now more confident that they’re buying a legit bottle of sweet vino. And he can thank China for that.