Ahead of an expose of criminal gangs operating in the UK spearheaded by investigative journalist, Paul Connolly, which is due to be broadcast on Channel 5 this evening, The Daily Mail reports that he discovered an East London factory producing 7,000 fake bottles of Smirnoff vodka per day.
Aside from being fraudulent, the practice is also incredibly dangerous – in January 2013 three men making potentially lethal fake vodka with industrial alcohol were jailed.
The UK government said their illegal plant – where vodka was made using antifreeze ingredient methanol – had the potential to cost £500,000 ($855,000) in lost government excise duty and VAT.
Quantity and quality of fakes rising
The Daily Mail says that criminals use modern machinery to repackage bottles with labels that realistically replicate other brands including Grant’s whisky and Russian Standard vodka.
This morning we posed Diageo a range of questions about the Smirnoff discovery, including whether such brands were particularly susceptible given their premium positioning but also sheer volume and brand recognition among consumers?
What technologies was Diageo incorporating into packaging to stop fakes, how much did it invest to stop counterfeiting, and did it think criminal penalties for gangs involved were sufficiently harsh?
A Diageo spokesperson told BeverageDaily.com: "At Smirnoff, the protection of our consumers and the reputation of all our brands is of paramount importance to us.
As such, we work closely to assist all enforcement bodies including the Police, HMRC and Trading Standards as we recognise the important and valuable role they have in protecting consumers,” they added.
Counterfeits cost the UK $2.2bn a year
“Counterfeiting is rarely a problem if consumers buy their products from known, reputable retailers,” Diageo added, the spokesperson said.
They then advised UK consumers concerned by the taste or packaging of any products to ring the company’s customer care helpline*.
Dissatisfied with Diageo's response, reader Duncan Carmichael, told this site: "I liken Diageo to the the A-Team of the 70s. A large group of enforcers that are mobilized quickly to raid an establishment to show/prove to themselves that their product is/is not genuine.
'None of this helps the hapless consumer': BeverageDaily reader
"None of this helps the hapless consumer. QR codes that need UV light, bottles that can't be refilled etc. do. We developed NTAG as an RFID tag that protects us, and costs very little to employ," he added.
"A RFID tag which is unique and tamper-proof would allow the consumer at the point of sale to prove to himself that the product is genuine," Carmichael said. "The manufacturer would also get the marketing benefit of where their goods are being purchased, and would have phone details to do future targeted marketing of their products."
UK immigration minister Mark Harper – counterfeits smuggled into the UK from abroad are a particular problem and hence fall under his remit – said in December that fake goods cost the UK economy an estimated £1.3bn per year in lost profits and tax revenues.
BeverageDaily.com was referred by the Metropolitan Police to UK Trading Standards Institute (TSI), and was awaiting more information from the TSI on the East London factory at the time of writing.