An Australian winery had its luxury product counterfeited by Chinese fraudsters who sold cheap wine in fancy-looking bottles, the company said.
Chinese cops busted the operation, which used bottles made to look like they were genuine Penfolds products, according to a Treasury Wine Estates spokeswoman.
It is believed the scheme was operating for three years and made $26 million.
Penfolds, one of Australia’s oldest and largest wineries, has been the target of Chinese scammers in the past.
But the recent bust was one of the largest ever, Treasury Wine Estates spokeswoman said.
Workshops were raided in Guandong, Jiangsu, Zhejiang, Yunnan and Guangxi provinces, as well as Shanghai, after a long-running investigation.
“Treasury Wine Estates works closely with authorities on any investigations like this,” the spokeswoman said.
The counterfeiting crackdown comes amid a trade dispute between Australia and China that has included the Asian superpower slapping harsh tariffs on wine from down under.
China has attempted to justify the levies with claims an investigation found exporters were ‘dumping’ cheap wine – below the cost of production – into its domestic market.
Treasury Wine Estates recently said in a fact sheet submitted to the Australian Securities Exchange the Chinese market was worth $12.9 billion.
That’s 63 per cent of total volumes distributed in Asia.
Treasury Wine Estates said in late November it was diverting wine to other markets as a result of the Chinese tariffs.
“We are extremely disappointed to find our business, our partners’ businesses and the Australian wine industry in this position,” chief executive Tim Ford said.
“There is no doubt this will have a significant impact on many across the industry, costing jobs and hurting regional communities and economies which are the lifeblood of the wine sector.”
China is the largest buyer of luxury wine from Treasury Wine Estates and about one-quarter of Penfold bottles are sold on the Chinese market.