UK loses €25 million in spirits and €62 million in wine sales thanks to counterfeiting

By Jo Gilbert

Published: 26 July, 2016

A new report has revealed that €87 million in sales across wine and spirits is lost each year in the UK due to the counterfeiting industry.

The full extent of the cost of the fake wine and spirits market was revealed in a report released today (July 28), from European Union Intellectual Property Office (EUIPO), which showed that the 4.4% of spirits sales and 2.3% of wine sales are lost each year across the EU thanks to the sale of fake alcohol.

The loss of sales in the UK as a direct result of counterfeit culture was found to be €25 million for spirits and €62 million for wine.

But while the UK's total lost sales were below the EU average at €87 million, the UK lost the most in terms of excise duty, with €197.

This was almost double that of France - the second country on the list - down €100 million in excise duty.

The executive director of the EUIPO, António Campinos said that small and medium-sized businesses are inevitably hit the hardest by the illicit practices.

"The spirits and wine manufacture sector in the EU is overwhelmingly made up of small and medium enterprises, with an average of 10 workers per firm. This report shows the economic impact of counterfeiting on this industry, and its consequences for the EU economy as a whole. Our findings are intended to help policy makers as they respond to the challenges of counterfeiting in this crucial economic sector," he said.

The United Kingdom is currently the largest producer of spirits within the EU, with production valued at more than €5 billion, followed by France with more than €4 billion.

United Kingdom exports represent more than 40% of total EU exports of spirits.

France is also a major exporter of spirits, accounting for nearly 30% of total extra-EU exports.

The loss of sales to counterfeit enterprises translate into 4,800 jobs directly lost across the spirits and wine sectors in the EU, as legitimate manufacturers employ fewer people than they would have done in the absence of counterfeiting.

When the knock-on effects of counterfeit wines and spirits in the marketplace are taken into account, 18,500 additional jobs are lost in the EU economy, of which 8,600 jobs are in agriculture and 1,300 jobs in the food industry.

The total yearly loss of government revenue as a result of counterfeit products in these sectors across the EU-28 in terms of household income taxes, social security contributions, corporate income taxes, VAT and excise duties is estimated at €1.2 billion.

Today's report is the eighth in a series of studies released by EUIPO via the European Observatory on Infringements of Intellectual Property Rights into the economic impact of counterfeiting in industrial sectors in the EU.

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