Saturday, February 13, 2016

Yes, Bourbon Fraud Is a Problem

In 2004, Dave Broom, Dominic Roskrow and WHISKY Magazine did some fine journalism that revealed a massive fraud in old bottles of Macallan. The wine world too is periodically rocked by counterfeiting scandals. There is one going on right now. Whether it's whiskey or art, when prices soar forgery soon follows.

Until recently, counterfeiting wasn't much of a problem with American whiskey. It wasn't worth the trouble when the most desirable bottles only sold for hundreds of dollars. That changed when secondary market prices, particularly for Van Winkle whiskey, soared into four figures.

Many rather shabby fakes have appeared recently, leading dimwits to conclude that they can spot the counterfeits. You can't. Why? Because most of them are refilled bottles. Faking the closure is all you have to do and it's not that difficult for someone with a modicum of skill.

One problem with forged whiskey that isn't an issue in, for example, the art market is the whiskey resale market's underground nature. Selling alcohol without a license is illegal everywhere in the United States. It's true that the agencies charged with prosecuting that 'crime,' the state alcoholic beverage authorities, have bigger fish to fry and rarely go after collectors. But the illegal nature of the marketplace forces it underground, into private networks and secret groups on Facebook, and other social networking sites.

The market's underground nature also makes it attractive to thieves. It gives them cover. If your illegal whiskey transactions go bad, you can't very well call the police, can you?

You may think you're safe if you buy your overpriced Pappy from a licensed retailer, but some of them buy their 'special stock' on the secondary market too. Yes, that's illegal, and consequently those retailers may not care if the bottles are fakes. They may even be forgers themselves or in cahoots with forgers. Except where the state dictates prices, retailers are free to charge any price they want, so charging inflated prices for prestige bottles is generally legal. The producers and distributors may not like it (and they don't) but there isn't anything they can do about it. Is that $2,000 bottle of Pappy at the liquor store authentic? It might not be.

The online auction site, eBay, stopped alcohol sales several years ago, so what does eBay have to do with this? It's simple. You can sell empty bottles on eBay and people do, sometimes for hundreds of dollars. You can sell empty bottles wherever you want, it's perfectly legal. You can, however, be pretty sure that anyone who is willing to spend hundreds of dollars for an empty bottle of Pappy 23 is planning to refill it and sell it for thousands.

So, the folks who made the graphic above have this suggestion for people who want to sell their empty bottles but don't want to encourage and enable fraud. When you offer your bottles for sale, do these two things:

1. Include clear photos of the laser-coded numbers on the bottle. The bourbon community will keep track of those codes and match them against any new full bottles offered for sale.

2. Drill a small hole in the base of the bottle. The hole will not be noticeable if the bottle is for a lamp (as some buyers claim), or if it’s intended to be filled with liquid for display. The hole can easily be plugged but never fully disguised, which discourages resale as a counterfeit.

The other problem, of course, is that many of the people who pay absurd prices for Pappy and other prestigious bottles (full) are morons. They are people with way more money than sense. They want to be instant connoisseurs, so they buy what everybody says is 'the best,' and don't care how much it costs. If awareness that fraud is now rampant chases some of those people away, well then that's the silver lining.

16 comments:

Anonymous said...

I hope counterfeit whiskey bottles do not become widespread. But until now counterfeit whiskey bottles has been more fiction than reality. I read these articles that scare people from time to time but no concrete facts or fake bottles shown. Can you provide examples of those Pappy fakes?

Chuck Cowdery said...

I felt just like you do until recently. I'm now convinced. There's nothing I can show you. There's no point in showing obvious fakes and good fakes look exactly like the real thing. Also, the presence of obvious fakes tells me there are good fakes out there too, and they are fooling people.

danz said...

Another sign is the difficulty in finding Old Weller Antique or Weller 12 in most markets. Texas is apparently an exception, but, while I like it, I just don't believe that the world of Weller Antique fans has expanded enough to explain what we have seen in lack of availability.

John said...

Chuck, a refilled PVW passed through my hands unknowingly. Having bought and sold a lot of PVW products, I can say nothing about the bottle stood out as being fake. The color was right, the fill level was right, the foil was right....it fooled not only me, but the person I got it from and the person I sold it to are also avid collectors/traders and it fooled both of them too. I think this is a good way to make people aware of the problem. Thanks for posting.

Anonymous said...

Well, so many people that have that expensive Pappy will never know the difference between real or fake anyhow. Most of them will probably never open the bottle and drink it to find out or even know the difference....or care....

schlimmerdurst said...

To even further your idea of drilling a hole in the bottle: Scotch Vlogger Ralfy proposed to smash such bottles after usage, if you're not collecting them for yourself, to avoid it being refilled. Obviously there are even people crawling through bottle banks to catch that rare bottle, so simply throwing it away doesn't help as well.

Tommy from Maumee said...

Nowadays, many export packages come with a guala fitment that causes the bottle to be much more difficult to counterfeit. Big problem in some areas of the world.

Crown Point Marc said...

I have an empty bottle of 2013 Four Roses small batch 125th anniversary if anyone is interested. I may have to drill a hole in it.

Seth Brewer said...

How was it discovered to be a fake?

Thirsty South said...

Wait, how does photographing the code do anything? Isn't the code (at least in Buffalo Trace/Pappy's case) specific to a bottling line and time, and not to the individual bottle?

Chuck Cowdery said...

The most common way fakes are discovered is by opening the bottle and drinking the (usually dreadful) contents. By then, of course, it's too late.

Erik Fish said...

Seriously, if you fill a Pappy bottle with Weller worth $25, how many rich folks will REALLY be able to tell the difference? ;)

Joe DeMattei said...

Chuck, you deserve a Pulitzer for that last paragraph.

Anonymous said...

Playing devil's advocate, why destroy the empty pappy, BTAC etc. If everyone floods the ebay market with intact empties all ready for the fraudsters, the secondary market could be flooded with the counterfeit goods. This could put the fear of God into potential buyers who may choose not to risk a purchase knowing there is a good chance he's buying pappy van apple juice. Dry up the demand and the secondary prices will go down and maybe put an end to the madness.

Jason said...

I disapprove heartily of counterfeiting, of course, but part of me is of a "let it burn" mentality, because widespread counterfeiting would probably destroy a good part of the secondary market for current-release Pappy and BTAC.

Anonymous said...

There are more than enough double blind scientific studies out there that clearly show people's "taste" is dramatically altered by their perception of the expense of a product.

Faux Pappy would be perceived to be better in a corresponding bottle, than if it were put in a bottle that had less prestige. Like for example a "craft" HH or hand made BF product.

Oh the humanity, of drinking the same old whiskey, from a bottle that didn't have a good fake story.