Australia markets closed

    -57.60 (-0.82%)
  • ASX 200

    -49.90 (-0.74%)

    -0.0022 (-0.28%)
  • OIL

    +0.98 (+1.54%)
  • GOLD

    -4.20 (-0.25%)

    -3,350.88 (-5.18%)
  • CMC Crypto 200

    -43.04 (-4.36%)

    -0.0007 (-0.11%)

    +0.0020 (+0.18%)
  • NZX 50

    -44.25 (-0.36%)

    -219.33 (-1.73%)
  • FTSE

    -24.59 (-0.37%)
  • Dow Jones

    -345.95 (-1.11%)
  • DAX

    -23.69 (-0.17%)
  • Hang Seng

    -65.85 (-0.23%)
  • NIKKEI 225

    -65.79 (-0.23%)

‘Penfunils’: Why Chinese copycats of Aussie wine could boom

Jessica Yun
·4-min read
(Source: Getty, Twitter/PaddyFok)
(Source: Getty, Twitter/PaddyFok)

White and red label; graceful cursive font; and presents just like one of Australia’s oldest and best-known wine brands.

It looks like Penfold’s, but it isn’t.

‘Penfunils’, a counterfeit of the Adelaide-produced wine, was spotted and snapped by a Twitter user on Sunday with a tongue-in-cheek comment.

“Spotted in [Chinese city] Hainan,” wrote Beijing-based Paddy Fok. “Must admit I have never come across these Australian labels!”

Chinese companies were caught selling similar knock-off wines before. Another imitation wine called ‘Benfords’ was spotted on Chinese e-commerce giants Pinduoduo and in 2018, with these counterfeits selling better than the real thing, the ABC reported.

A spokesperson for Treasury Wine Estates, the parent company of Penfolds, said it would investigate the fake.

“We take any infringement of our Penfolds brand very seriously and we continue to make significant investments in our brand protection program across markets including China,” the spokesperson said.

Access to Australia’s biggest export market blocked

Australian wine exporters’ access to the Chinese market has been strangled since protectionist tariffs of 107-212 per cent were imposed on Aussie bottled wine on 28 November.

As Australia’s largest trading partner by far, China is also Australia’s top wine export destination.

The recent restrictions have taken its toll. According to figures from Wine Australia, Aussie exports – which hit a record high of $3.1 billion in the 12 months to October 2020 – fell sharply in the last two months of the year, with this decline largely in exports to China.

The outlook isn’t any rosier, with exports to China forecast to remain low this year. And according to Tony Battaglene, CEO of national association Australian Grape and Wine, it’s the producers and local communities at the end of the supply chain that will bear the brunt.

“It’s going to have a devastating impact,” he told CNBC. “It’s grape growers, it’s regional communities and it’s small exporters that have very little ability to adjust. They’re the ones that are going to suffer.”

Will copycats fill the market gap?

But with Australia and China’s frayed relationship yet to be mended, there are no signs that the tariffs will be lifted any time soon – and counterfeits could fill the gap in the market.

“It’s possible we could see more copycats,” Chinese and international law expert and UNSW professor Heng Wang told Yahoo Finance.

“The tariffs are so high that it’s difficult to buy the same product at a comparable price.”

Chinese consumers will still have an appetite for imported wines, he added, but many of them won’t know the difference between a fake and the real thing.

“It varies. If the consumers are wealthy with strong economic capacity, they’re able to differentiate which is a good wine, and from which country.

“Other consumers just want imported wine, but don’t care where it comes from. They just think if it’s imported it should be good quality.”

Aussie exporters forced to adapt

On the whole, Wang said that China’s tariffs have created a higher mark-up on Australian products, creating a lose-lose situation for all. “No one really benefits.”

Wine Australia CEO Andreas Clark said businesses were already looking to grow exports to other markets, such as Europe, which rose by 22 per cent to $704 million, its highest level in a decade.

“Wine businesses are resilient and are already adapting to these changed market conditions, increasing their engagement in markets other than China, particularly the UK, USA, Canada and the domestic market,” he said.

But Battaglene doesn’t think it’ll be easy to pivot to other markets quickly.

“[August to December] is our peak time of export – 50 per cent of our product goes into China in the last four months of the year. That’s closed. So this product has nowhere else to go.”

Meanwhile prominent economist Tim Harcourt said there was one potential upside to the copycats.

“The Chinese consumer is willing to pay [a] premium price for Australian wine,” he told Yahoo Finance.

“The more imitators the more that drives up the price of the real thing.”

Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter. Subscribe to the free Fully Briefed daily newsletter.