Cracking down on fraud: Using tech to battle counterfeit wine

Illustration of hand holding bottle of wine with graphs and figures in background — Credit: Kouzou Sakai / Folio Art

(Image credit: Kouzou Sakai / Folio Art)

In the world of luxury goods, there has avoiding counterfeits: purchase from a reputable seller. But recent raids in Europe have put a question mark over just how reliable that advice is when it comes to the world of fine wine.

In October last year, police from France, Italy and Switzerland dismantled a criminal network that was, according to the report from anti- organised crime body Europol at the time, selling a significant number of faked bottles purporting to be French grand cru estate-level wines for up to €15,000 each.

The bottles were so convincing that they were reportedly being sold, unwittingly, by ‘honest wine traders’ across the globe. It’s no longer just a case of rogue bad actors – the problem runs deep within the industry.

Counterfeit wine is by no means a new phenomenon. As far back as ancient Rome, fraudsters counterfeited trademarks on amphorae, passing off cheap local plonk as premium Roman wine. However, the last 20 years or so have seen a steep escalation in the prevalence of wine fraud as technological advances have enabled counterfeiters to push their products into legitimate supply chains undetected.

Now, a number of companies are promising solutions that make use of blockchain and artificial intelligence to guarantee the authenticity of wine and identify and remove counterfeit products from the market.

But with so much hype around these shiny new technologies, it can be difficult to differentiate between genuine solutions and false dawns.

Blockchain solutions

Maureen Downey uses a blue light to checkthe age of the paper used in the label of a bottle of fake Domaine de la Roman&eacute;e-Conti — Maureen Downey uses a blue light to check the age of the paper used in the label of a bottle of fake Domaine de la Romanée-Conti.

Maureen Downey, widely considered the industry’s foremost expert on wine fraud, believes that the scale of the problem is worse than anyone realises and that the only way to counteract it is to take control of the supply chain digitally. She points out that bottle markings, labels and QR codes – all tools currently used in the fight against fake wine – can easily be replicated and used to pass even the most eagle-eyed inspection.

In response, she created Chai Vault in 2016 with technology company Everledger, through which wineries can enter bottles into a blockchain-secured ledger at the time of production. For wines on the secondary market, Chai Vault will send an expert to physically inspect the bottles and authenticate them before registering them on the blockchain. When these wines are bought and sold, the transfer of ownership is similarly recorded.

In a similar vein, London-based wine membership club Crurated also uses blockchain to register bottles at the time of production. Each bottle is assigned an NFT (non-fungible token) with a corresponding near-field communication tag – a smart chip that allows customers to access digital information using a smartphone – embedded in the bottle’s capsule. When the bottle is opened, the tag is broken, so it can’t be reused.

According to founder Alfonso de Gaetano, the company currently works with 200 producers and boasts 10,000 members, a remarkable number considering it only launched in 2021. However, despite its success, the platform has limitations. The technology can only be used for new bottles, which means that wine already in the secondary market – where wine fraud is particularly prevalent – can’t benefit from it. It’s also worth noting that producers must sell the wine via Crurated’s platform, which may deter some from signing up.

Alfonso de Gaetano sitting at table with glass of wine — Alfonso de Gaetano

While blockchain appears to be a useful tool for creating robust records, there’s one crucial element it can’t help with: detecting whether the wine itself is what it purports to be. If a wine is compromised, perhaps by an errant employee working somewhere between the vineyard and warehouse, or tags and capsules are somehow bypassed, blockchain technology won’t pick this up.

Matthew Hemming MW, group director of fine wine at London-based wholesaler and importer Vinum Fine Wines (and DWWA judge), points out that a robust physical supply chain with checks and quality control measures throughout could, in fact, probably provide a similar level of reliability.

Matthew Hemming MW at table with bottles of wine — Matthew Hemming MW.

Downey tells me that one of the outcomes of the Rudy Kurniawan scandal in the US, and the subsequent Netflix documentary Sour Grapes documenting his spectacular rise and fall as the world’s most prolific and successful wine counterfeiter, was that organised criminal gangs realised the opportunities available to them – a hugely profitable market with minimal risk in comparison to many other criminal enterprises.

As a result, she says, counterfeiters are spending vast sums on tools and technology to fool the market. Two methods are generally used to create counterfeit wine: bottle re-creation and refilling old bottles. In the latter, workers in high-end restaurants are offered cash for empties and eBay is scoured for old bottles, preferably with corks included. These are then filled with wines blended to a close approximation of the original, or with a different, cheaper vintage of the same wine, and sold on the secondary market.

The leftover bottle from a Château Cheval Blanc 1947 – which can sell for more than £20,000 and is considered an exceptionally good year – could be refilled with, say, a Cheval Blanc 1953, available at much lower prices. Given that they both come from the same producer, the wines will share enough similarities that most palates will fail to recognise the difference. After all, few are lucky enough to taste such a rare wine even once in their lifetime; fewer still have the opportunity to taste it again and draw comparisons. This may well be why much wine fraud goes undetected – customers don’t even realise that they’ve been duped.

Finding fakes with AI

It will come as no surprise then to learn that technology is also being leveraged to detect blends and vintages that aren’t what they claim to be.

In 2023, researchers from the University of Geneva and the Institute of Vine and Wine Science at the University of Bordeaux announced the development of a technique that combines AI with gas chromatography – a method used to separate and identify different components of substances – that could be used to identify counterfeit wine.

They tested the technique on 80 wines across 12 vintages from seven Bordeaux estates and found that it could identify the estate with an astonishing 99% accuracy and the vintage half the time.

Professor Alexandre Pouget, one of the scientists involved in the research, tells me that he has had a mixed response from wine producers to the technology. While some are excited, others have been less enthusiastic about its capabilities.

He explains that as well as detecting counterfeits, the technology can be used for quality control and could change how wine is made. This, apparently, is what’s making some producers nervous.

Like many white-collar criminals before him, Kurniawan has reportedly found success on the after-dinner circuit since being released from prison and deported back to Indonesia. He’s said to be delighting wealthy guests with taste tests between glasses of 1990 Petrus and other wines and his own blends, which the guests are said to often prefer.

Left: wine labels and other items used as evidence duringKurniawan&rsquo;s trial. Right: ink stamps that were used to mark corks. — Left: wine labels and other items used as evidence during Kurniawan’s trial. Right: ink stamps that were used to mark corks.

The AI technology that Pouget and his collaborators have developed could potentially enable counterfeiters to recreate blends such as these by providing a ‘recipe’ to follow, which, for boutique producers, is a frightening prospect.

The technology, however, is still in development and requires more investment before it will be available commercially. For that reason, Pouget is wary of companies that claim to be offering this type of counterfeit-detection technology in a commercial setting as the research, he believes, is still a couple of years away from that point.

Below the top tier

For the vast majority of wine drinkers, the contents of bottles of wine costing thousands of pounds is of little concern. What, then, of mass-market wine, purchased in supermarkets – do those purchasing Blossom Hill for a night in front of the television need to be concerned that their wine is not in fact a Californian Chardonnay, but a copycat shipped from China?

While less common, criminal infiltration of lower-priced wine is not unheard of. In 2021, it was reported that a Birmingham supermarket had been stripped of its license to sell alcohol after 41 counterfeit bottles of Yellowtail, the Australian brand that typically sells for less than £10 a bottle, were found on its premises.

Could the blockchain solutions outlined above be available to help prevent this? In theory, yes, but the cost would be prohibitive when it comes to cheap, mass-produced supermarket wine.

No system is foolproof, and enterprising criminals are rarely more than one step behind any interventions to foil their illicit schemes. Whether blockchain and AI companies manage to fulfil their promise in the long term remains to be seen, For now, as the Romans would say, caveat emptor remains the best advice.

Boning up on blockchain & NFTs

Surely one of the more baffling buzzwords of recent times, blockchain is actually a relatively simple concept: an encrypted database or ledger in which information is grouped in ‘blocks’ that are linked together in a chronological ‘chain’.

What makes blockchain technology revolutionary is that the database is decentralised (the data is stored on a network of computers), immutable (once data is in the blockchain, it can’t be changed) and works by consensus (new blocks can only be added if the majority of participants in the network agree to do so), all of which combine to make it extremely secure.

When a transaction takes place (say the transfer of ownership of a bottle of wine), the details are recorded in a new block, which is added to the chain. As the unique identifiers for each new block include data from the previous block, the exact sequence and timing of each transaction is clearly visible and it’s virtually impossible to alter any block without changing all of the subsequent blocks, ensuring the integrity of the whole process.

A non-fungible token, or NFT, is effectively a digital certificate of ownership for a specific item. Unlike money, which is ‘fungible’ – that is, one pound sterling is the same as any other pound – NFTs represent something unique (‘non-fungible’). So an NFT for a bottle of Château Lafite 2022 doesn’t represent ownership of any old bottle of Château Lafite 2022, but rather of that one bottle in particular.

The details of the bottle and its ownership are contained within the NFT and are also recorded in a blockchain – as, then, are any subsequent changes in ownership of the NFT and hence the bottle. In this way, the NFT for a specific bottle could be traded numerous times without the bottle’s location changing, but the details of those transactions would be recorded and can be easily accessed, providing transparency about provenance.

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A writer and consultant from Dublin, Elaine’s work is focused on the intersection of law and culture, with a particular emphasis on intellectual property law. She is passionate about preventing the proliferation of counterfeit goods and finding new tools and methods to help in the fight.