A warning for South American Wine exporters – Counterfeiting is rife in your primary markets

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South America is producing some of the best wines export in the world . In 2014 an Argentine Malbec won the prize for being the best red wine in the world.

Counterfieting is of deep concern to many South American exporters, including winemakers. Asia is a major transgressor in this regard.

The statistics of counterfeiting make alarming reading. The most recent OECD estimate dates from 2007, when it says cross-border counterfeiting totalled around US$250 billion annually and almost two percent of global trade was counterfeit. Others put the figure much higher: the International Chamber of Commerce says it’s US$1 trillion annually.

The wine industry is a major victim. Last year, a French newspaper claimed one bottle in five is counterfeit. Today, French and Italian growers are the main targets of counterfeiters, but as New Zealand’s reputation grows, the risk increases.

There are several ways of protecting against counterfeiting. The most common method is using difficult-to-reproduce stickers that authenticate a product, similar to the way money is identified with special paper, watermarks and metal strips. But this method is expensive and takes an expert to definitively say something is real or isn’t — hardly a consumer-friendly solution.

A New Zealand company Expander  is taking a different approach: placing an individual identifying code on every single product. Expander uses QR codes, which are widely used in Asian countries, including China, and can be scanned with any smartphone. Each scan is checked against a database of valid codes so the purchaser can be assured that they’re about to buy the real deal.

The Expander’s programme discourages counterfeiters, who will always go after easy targets. CEO Erwin Versleijen puts it like this: “Consumer counterfeiters profit from the reputation built by others, and they don’t particularly care whose reputation they mess with. They make a risk-versus-benefit calculation and, like all criminals, they prey on the weak. If you have protections in place that make it more difficult to copy a product or more likely to be caught — or ideally both — then they’ll target someone else.”

And defending against counterfeiters can have an unexpected, positive upside, he says.

“Actively protecting your brand is a wonderful way of demonstrating to consumers that you care deeply about your product and your reputation,” he says. “You’re kicking off a conversation based on trust, rather than a run-of-the-mill marketing message.”

For Expander, that means taking the opportunity when a product is validated to also immediately provide consumers with useful information like tasting notes, product reviews and the winemaker’s history and terroir. People can also register to receive more information in future, or follow the winemaker on Facebook or Twitter.

Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.



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