‘Wine fraud’ threat to NZ trade
New Zealand’s wine industry has not been immune to scandal. Michael Wright reports.
New Zealand’s $1.6 billion a year wine export business is under threat from allegations a Canterbury winemaker sent thousands of bottles of wine overseas with fraudulent labels.
Waipara wine company Southern Boundary Wines and three of its directors face more than 150 charges in a landmark case alleging wine made for their own and other brands carried false information about its variety, vintage or origin.
The case was brought by the Ministry for Primary Industries (MPI) following an extensive investigation. Suppression orders on some details were lifted in the Christchurch District Court yesterday, but the names of the labels involved remain suppressed. No health risks were associated with the wine.
It is the first time charges have been laid under New Zealand’s Wine Act.
Dieter Adam, chief executive of New Zealand Manufacturers and Exporters Association, said New Zealand’s food and drink exports were particularly at risk from any suggestion of misleading labelling. It was an issue of trust and reputation, he said. ‘‘A lot of the attraction of our food and beverage products is due to the country of origin. Something like this is very unhelpful,’’ Adam said. ‘‘This could be made into a big situation, especially in the Asian markets, and the Chinese in particular are very sensitive to misleading labels.’’
It was revealed yesterday that Southern Boundary and vineyard manager and winemaker Scott Berry, winemaker Rebecca Cope and operations and export manager Andrew Moore face 156 charges between them.
The charges relate to sauvignon blanc and pinot noir from Waipara and Marlborough made between 2011 and 2013. None of the product in question is available on New Zealand shelves. It has already been sold and consumed, or bought back and seized in the case of some exported wine.
MPI alleges the company, or the directors, made false statements about wine’s vintage and production location when applying to send product overseas. It claims the defendants destroyed or concealed winemaking records, or tried to, and failed to deal with grapes, grape juice and wine from a customer as required. Winemakers are legally required to keep production records and MPI alleges some records were found in a rubbish sack.
MPI has said the wineries involved were the victims of the alleged frauds. New Zealand’s wine exports earned the country $1.6b in the 2016 financial year, a market expected to be worth $2b by 2020. Sauvignon blanc accounts for 86 per cent of this market, with Marlborough the main source of sauvignon blanc grapes.
Jeffrey Clarke, acting chief executive of industry body New Zealand Winegrowers, said they were concerned by the allegations, but supported the process because label integrity was important.
The organisation was supplying thorough information to international markets so they could respond to consumers as necessary, he said.
‘‘The New Zealand wine industry is highly regarded around the world and we cannot let the alleged actions of one winery damage a reputation that we have all worked so hard to build,’’ Clarke said.
While the exact quantity affected by the allegations was unknown, it was believed to be a ‘‘tiny fraction’’ of the national harvest for those two years, he said.
The investigations proved the systems in place worked, ‘‘and it is appropriate that this matter is before the courts’’. ‘‘It is important to note that this is a mislabelling and record-keeping issue rather than a health and safety issue – all wine sold was perfectly safe to consumers,’’ Clarke said.
Wine writer Michael Cooper, who helped expose the Wither Hills wine scandal in 2006, said such allegations were significant, but tended not to cause big ructions overseas. ‘‘We do rely heavily on the integrity of wine producers, backed up by legislation . . . because you cannot simply by smelling and tasting a wine, say definitively, ‘that comes from here or there’.’’
Scandals like Wither Hills, where the winery added award accolades to the labels of an inferior product, and the Southern Boundary allegations showed the increasing pressure in a competitive industry, he said. ‘‘We know the number of producers is declining, things are getting tougher. The temptation to take shortcuts must be increasing.’’
Every five to 10 years, Michael Cooper reckons, it happens again. That’s how long it seems to be between scandals. When our wine industry is shaken by revelations that a certain bottle, for a variety of reasons, is not what it says it is on the label.
The trend stretches back to the early 1980s when Cooper, now a wine writer, had a story published in the Listener about makers of cask wine diluting their product with tap water by as much as 80 per cent to stretch supply. In 1998 Coopers Creek winery allegedly altered the composition of several of its export wines, blending vintages with other grapes to levels that required a say-so on the label.
The same year, a Lintz Estate shiraz was awarded a gold medal at the Air New Zealand Wine Awards, only to give the prize back over discrepancies between the quality of the entry and what was on supermarket shelves. In 2006 an award-winning Wither Hills sauvignon blanc was found to be an early release of its vintage and only a tiny fraction of what was available in stores. In the fallout, Wither Hills winemaker and director Brent Marris resigned as chief judge of the Air New Zealand Wine Awards.
Yesterday, it emerged that Southern Boundary Wines and three staff are facing 156 charges around the production and labelling of sauvignon blanc and pinot noir varieties. The case involves allegations false statements were made about the vintage and area of origin of wine.
The company and three individuals – operations manager Andrew Moore, vineyard director Scott Berry and winemaker Rebecca Cope – face charges between them relating to wines from Waipara and Marlborough made between 2011 and 2013.
They include that they made false statements about the vintage of a wine, or where it was produced, when applying to send product overseas, and destroyed or concealed winemaking records, or tried to. MPI alleges some winemaking records were found in a rubbish sack.
Average it out and Cooper’s timing theory stacks up. He was front and centre on the Wither Hills scandal – a judge in the Cuisine magazine awards who smelled a rat when the bottle he bought from his local supermarket didn’t compare to the competition entry.
Most trangressors, he said, tend to fall into that category: breaking the rules, but subtly. Like blending wine either with different grape varieties, different vintages, or between different regions.
There are rules around how much you can do any of these things before you have to let the consumer know. For example, a wine from one region of New Zealand can by law contain up to 15 per cent from another without altering the label.
Cooper said this is open to exploitation.
‘‘Take pinot noir. To get a good price it’s great if it’s labelled as Martinborough or Central Otago and not good if it’s from Hawke’s Bay.
‘‘It must be very tempting for a producer based in the Wairarapa to pull [more grapes than allowed] from Hawke’s Bay, where you can grow good pinot noir in the cooler inland sites, and label it as Martinborough. You’d instantly command about $10 a bottle more.
‘‘I’m not saying it’s happening but knowing human nature, and knowing that we’ve got over 670 wine producers, there’s always going to be people who are going to try and hoodwink others.
‘‘The industry is now ferociously competitive. We’ve got wineries that are financially failing. When the pressure goes on, people do things to survive that they shouldn’t.’’
The 2003 Wine Act significantly raised the bar for product traceability. Now, wineries must keep a Wine Standard Management Plan. This records every step of the winemaking process and is subject to an annual inspection by a Ministry of Primary Industries-approved auditor. New Zealand Winegrowers chief executive Philip Gregan said such a system would have caught out Coopers Creek-type offending.
‘‘[With] Coopers Creek, the issue there was there were no records. Because there were no records they weren’t able to do anything. The issue here is you’re required to keep records. That’s what the wine standard management plan’s all about.’’
In the Coopers Creek case, the investigation was triggered by a claim it had misappropriated 10,000 litres of grape juice given to it by another winery for fermenting. Former New Zealand Winegrowers chairman and National MP Stuart Smith said that wouldn’t happen now as, under the management plan, grape tonnage can be compared to wine production.
‘‘For a tonne of grapes I think the national average is 740 litres. If . . . a winery took in 1000 tonnes and it ended coming out with a million litres – it shouldn’t come out with a million litres. It should come out with 740,000 litres. Or thereabouts. You can squeeze more out of them but you can’t get more than 1000 litres per tonne. It’s not possible.’’
The system isn’t fail-safe, though, as the Wither Hills case and charges against Southern Boundary attest. Labelling scandals can be devastating for a brand, but Gregan and Smith agree New Zealand has a high standing overseas for the transparency of its wine industry. Cooper isn’t convinced the system is built to preserve that.
‘‘The industry does not have an incentive to be policing itself in the sense of going out and looking for breaches. Because of the damage that these scandals can do.’’