Do We Have eBay to Thank for All That Counterfeit Wine?

If you aren't yet aware of the fact that fake wine is a big deal, you will be soon. It's coming to a theater near you.

Billionaires getting swindled by fake bottles of wine purportedly belonging to Thomas Jefferson aside, as the world's greatest wines continue to climb in price, wine fraud continues to increase in frequency and in value.

At this point, the fakery of wines has become a big business. No one knows just how large, but some wine experts say the real figure is probably shudderingly large: millions of dollars worth, to be sure, and perhaps even tens of millions. Wine Critic Allen Meadows told writer Michael Steinberger that he believes perhaps 10% of the pre-1960 wines he comes across these days might be fakes.

And it all may be due, in part, to things like this:

3 x RED WINE BOTTLE LABEL SCREAMING EAGLE GRACE ..Empty

A bottle of 1994 Grace Family Vineyards Cabernet, a bottle 1995 Tignanello Red Blend from Tuscany, and a bottle of 1996 Screaming Eagle, all empty, of course.

Together they may sell for between $10 and $60 on eBay. Filled up again with some red wine, re-corked and re-foiled, these three wines would sell for a total of about $2224 according to WinePrices.Com.

And that, of course, is the problem.

As mentioned last week in the New York Times Freakonomics blog, a recent paper by a member the American Association of Wine Economists (see the PDF abstract) suggests that online auction sites like eBay may be significantly contributing to the problem of counterfeit wine.

The logic presented in the paper is quite simple: after watching a bunch of sites like eBay, it's quite clear that the sale price of empty bottles directly correlates to the price of that bottle were it to actually be full. In short, those willing to pay $100 for an empty bottle of Petrus must be getting some value from the bottle that is completely out of whack with its real value in the marketplace (as a glass container with a paper label on it).

While eBay certainly can't be held responsible for people doing illegal things with innocuous items that they buy perfectly legally online, I wonder whether it might be in everyone's interest for them to prevent people from selling bottles that are particularly prone to counterfeiting.

This wouldn't be easy, of course, and may be unreasonable to ask, but they've got a lot of controls in place already to make sure that people don't break the law in a million other different ways (like, for instance, selling dangerous chemicals online). How hard would it be for them to pay a little more attention to the empty bottle problem? It certainly would be good for the wine world.

Posted by: Alder on June 28, 2009 9:43 PM: Filed under: Ramblings and Rants; Like this post? Share it! Digg it! - Add to del.icio.us - Add to Stumbleupon - Add to Reddit

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Comments (5)

ndog wrote:

06.29.09 at 12:33 PM

>Interestingly, the most powerful variable explaining both the incidence
>of sale and the price of an empty bottle is the price a full and
>presumably authentic bottle could potentially fetch in the marketplace.

Must have been a government-funded survey as I think anyone with common sense could have come up with this conclusion. Pretty much the case with any consumable who's container becomes a collectible.

D Jones wrote:

06.30.09 at 7:49 AM

The book you reference it fantastic. It reinforces the belief for me that I will only buy my "top" wines directly (Harlan, Bryant, etc) as even some of the best auctions get wines with questionable provenance. While in Napa a few weeks ago, I asked some of the expensive wineries (bottles in the $150+ range) what they do to safeguard buyers, and it seems the US labels have a long way to go to catch-up w/ the likes of Lafite.

Grant wrote:

06.30.09 at 8:35 AM

Alder, I read somewhere that there are now more recorded tastings of 1947 Cheval Blanc than there were bottles produced. And yet the wine is still traded and 'tasted' each and every year.It is a serious problem.

Alder wrote:

06.30.09 at 11:42 AM

ndog,

Yeah, I see where you're coming from. The minor point I might make is that while the price of the original item might be strongly correlated with the desire for people to hang onto it once they have consumed it, it seems less likely to be associated with the resale value of the empty container. If you weren't the one who drank it, the bottle of 1989 Petrus is much less valuable to you UNLESS you are going to resell it.

Dylan wrote:

07.01.09 at 5:33 AM

I never considered there were would be people who collected bottles which they hadn't also consumed. Then again, I suppose everyone has their item--if not bottle caps or stamps, then bottles of Screaming Eagle. How's this for a subject--if not the actual wine, what other red wine are they refilling it with?