11th June, 2018 by Amy Hopkins
Counterfeit wine and spirits cost the industry €2.7 billion (US$3.18bn) in direct sales across the European Union every year, according to a new report.
New analysis from the European Union Intellectual Property Office (EUIPO) estimates that legitimate trade in wine and spirits is reduced by 6.6% due to counterfeit goods.
Illicit trade in wine and spirits has resulted in a loss of jobs for 7,100 people, while governments have lost €2.2bn in revenue.
In the EU, counterfeit trading across all sectors equates to a total of loss of €59bn – reducing legitimate sales by 7.5%.
According to EUIPO, in addition to having direct economic consequences, intellectual property infringement “could also have dynamic, long-term effects”.
The organisation states that if infringement “reduces companies’ returns on innovative assets, then investment in innovation may be lower than socially optimal”.
In an earlier study, EUIPO estimated counterfeit trading in geographical indication products such as Scotch whisky and Cognac totalled €2.3bn in 2014, representing approximately 4.8% of total GI product purchases in the same year
EUIPO said in its latest report: “[GI infringement] is yet another example of the phenomenon that any time consumers are prepared to pay a premium price for a brand they trust, or for a GI product, infringers are ready to exploit that willingness to pay and thereby defraud the consumers and the legitimate producers.”
The organisation also states that the cost of “enforcement-related activities” to combat intellectual property theft is “particularly burdensome for small firms”.
It estimates that companies with fewer than 50 employees spend an average of €83,653 a year on such activities.
China remains the number one producer of counterfeit goods, followed by India and Turkey, according to EUIPO.