According to a 2012 report by HM Revenue & Customs, alcohol fraud results in losses of up to £1.2bn per annum to the UK taxpayer. There are different types of alcohol fraud, including illicit production, counterfeiting and the abuse of cross-border shopping rules.
Beer fraud is currently the most significant of all the alcohol frauds affecting the UK, with 2012 estimates indicating between 5% and 14% of total beer consumption is illicit. However, the most commonly sold counterfeit alcohol in the UK is vodka and other white spirits. This is an issue of major concern because some of this illegally made vodka has been found to contain high levels of methanol, which is used to make anti-freeze and some fuels. Drinking high doses of methanol can cause dizziness, breathing difficulties, blindness and even death. In September 2012 in the Czech Republic there were 38 deaths caused from methanol poisoning with many more being hospitalised.
The next most commonly counterfeited alcohol in Britain is wine, including fraudulent bottles of the popular wine brands Blossom Hill and Jacob’s Creek being discovered on our shelves. Many of the seized counterfeit bottles have been found to contain chemicals that pose a public health risk.
British consumers purchase counterfeit alcohol both intentionally and unintentionally. According to a 2013 survey by PwC, approximately 18% of UK residents (3% margin of error applicable) admit to purchasing counterfeit alcohol. This number increases when focusing on younger consumers. Approximately 28% of the 18-34 year old respondents said that they sometimes purchase counterfeit alcohol.
*The percentage of people who knowingly purchase counterfeit alcohol
Of the respondents who admitted to purchasing counterfeit alcohol, 45% purchased it from the local market, 39% from abroad and 16% from the online market.
Many British consumers, who purchase counterfeit alcohol, do so unknowingly. This is because many pubs, clubs, shops and off-licences have been found to sell counterfeit branded alcohol to unsuspecting customers.
There have been a large number of discoveries of counterfeit alcohol for sale in Britain during 2013. This has resulted in many nightclubs and shops in the UK being prosecuted and fined.
In September 2013, a nightclub in Leeds city centre was fined £5,000 after 656 litres of fake vodka was found on site.
In December 2013, a nightclub in Essex received a penalty of more than £16,000 after counterfeit bottles of Smirnoff Vodka were found on its premises. The Essex County Council discovered 102 bottles containing the alcohol and 134 empty bottles.
During the first half of 2013, Staffordshire County Council visited 400 local businesses during a ‘fake booze crackdown’ and they found counterfeit alcohol in 73 stores and seized more than 1,800 bottles.
Nottinghamshire County Council trading standards officers seized 34 bottles of counterfeit wine, labelled as Jacob's Creek, during an inspection at a store in Mansfield. It followed a tip-off from a member of the public who spotted a large number of spelling mistakes on the labelling including ‘Shardonnay' instead of ‘Chardonnay'.
A shop based in Edgware, was fined £1,000 and ordered to pay £750 costs for being in possession of 249 bottles of fake Jacob's Creek wine. This is thought to be one of the largest seizures at retail level of counterfeit alcohol in London.
Mark James, of PwC’s anti-counterfeiting team, stated that technological advances have made it easier for counterfeiters to access markets. “The advent of the internet means that it’s never been easier to set up a business, but also to set up an illegitimate business.”
The sale of counterfeit alcohol is very prevalent on marketplace sites both in Europe and the Far East. These websites give criminals the ability to set up supply chains that ensure the British market continues to be flooded with counterfeit alcohol.
The alcohol brands that are most commonly counterfeited in Britain are the Vodka brands Smirnoff, Glen’s and Selekt, the Whisky brands Teacher’s and High Commissioner, Bacardi Rum and the popular wine brands Blossom Hill and Jacob’s Creek.
Working with these major alcohol brands, NetNames can use brand detection technology and the strong relationships the company has with marketplace websites to restrict the supply of counterfeit alcohol that furnish local suppliers and consumers. NetNames’ unique image and logo detection software, ImageFlare, can monitor and detect brand infringements across the internet and then the threats can be prioritised by tailored criteria. Once the counterfeit products have been identified, NetNames can issue takedown notices to the infringing websites and conduct a full online audit to establish a detailed chain of custody process to support legal proceedings.
The resulting reduction in the supply of counterfeit alcohol would help increase the revenues of the alcohol companies, it would improve the government’s tax revenues, but most importantly, it would reduce the public health risk that has been created through the sale of fake alcoholic beverages that contain dangerous chemicals.