Spirits group calls for Chinese counterfeit crackdown

By Neil Merrett

- Last updated on GMT

Related tags China European union

A quarter of all spirits brands claiming to be of European origin
now sold in China are counterfeit, according to an EU liquor

Jamie Fortescue, director general of the European Spirits Organisation, told BeverageDaily.com that the significant number of fake spirits sold in China pose a severe danger for the health of the country's consumers as well as the industry's profits.

The claims come as EU trade minister Peter Mandelson yesterday opened talks in China on protecting European intellectual property rights and on safety fears related to imports into the bloc.

Product safety is a key part of the agenda for the trade talks, with Mandelson claiming that China's huge role as a global manufacturer has inevitably thrust it into the spotlight on the question of product safety.

China was responsible for nine per cent of notifications last year to the EU's rapid alert system, designed to detect safety concerns in food and feed products entering the bloc.

Stronger links between the EU and China safety officials is therefore essential to protect both countries from the health and financial dangers of counterfeit products, Mandelson said.

Meanwhile, Fortescue warned of the damage of fakes in terms of undermining the reputation of European brands was also potentially severe.

He added that the organisation was "delighted" therefore that Mandelson would be bringing up these issues, and hoped he would push for tougher sanctions by the Chinese government on those contravening copyright laws in the country.

According to Fortesque, China is becoming an increasingly important market for spirits exports, with further potential for growth, though there had been no drastic improvements in crackdowns by authorities.

According to the organisations figures, exports of European spirits like whisky and vodka reached €200m this year, from just €8m in 1999.

Fortesque stressed that the problem of fake brands is not unique to China - or for that matter Asia - by adding that there were also growing concerns regarding counterfeiting of alcohol in many Eastern European nations.

However, despite the increasingly global problem of counterfeit spirits brands, he claimed that China was proving to be a particular problem for liquor manufacturers as well as the wider food and manufacturing sector.

China is estimated to be the source of 83 per cent of the total counterfeit goods seized at EU borders in 2006, according to figures from the European Commission.

As a result of this fraud, some European manufacturers estimated in April that intellectual property right infringement in China was costing business within the bloc one in every five euros earned in the country.

Spirit manufacturing remains an area of particular concern though, according to a recent survey of customs authorities and companies conducted by the Organisation for Economic Co-operation and Development (OECD).

Industry respondents noted that the most common infringement was the refilling of original bottles with inferior substitutes, the OECD reported.

Alcohol commonly used in cocktails are also particularly attractive as the mixer can mask the distinctive taste of the underlying alcoholic base, the OECD stated.

While many of the substitutions use original bottles and are carried out as small scale cottage industries, industry representatives noted the increasing evidence of large scale operations that include the use of semi-automated bottling lines as well as sophisticated printing machines, the OECD stated.

The investment in such operations could also include bottle moulds, production of packaging and the production of raw spirit.

Industry representatives indicated that organised crime may be entering the sector.

The majority of infringements in the food and drink industry involve the misappropriation of trademarks or registered designs, the OECD noted.

Recent research has suggested that China has begun to act against some local group's According to findings by the US Department of Agriculture, in certain situations, the Chinese government has already been stepping in to repeal trademarks deemed as being unfairly registered.

Not all companies have been this lucky though, last year Italian chocolate maker Ferrero revealed that "copycat" products of its brands in China were hindering its growth in the country.

Despite having been operating in China since 1984, the group decided to take the copyright issue to the country's courts.

The move came over allegations that local confectioner Montresor had packaged one of its chocolate products identically to Ferrero's, Ferrero Rocher brand.

Lawyers for Montresor claimed that the Chinese firm uses its own original packaging design.

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