Illicit wine and spirits cost EU firms €1.3 billion

27th July, 2016 by Amy Hopkins

Counterfeit wine and spirits production is costing EU businesses €1.3 billion (about US$1.4 billion) every year, a new report from the European Union Intellectual Property Office (EUIPO) has claimed.

Russia-vodka-counterfeit-spirits

Illicit spirits production continues to blight EU businesses

As such, 4.4% of legitimate spirits sales in the EU are lost each year, while 2.3% of legitimate wine sales are lost.

This translates to a loss of 4,800 jobs across the bloc since “legitimate manufacturers employ fewer people than they would have done in the absence of counterfeiting”.

EUIPO adds that when the “knock-on effects” of the counterfeit market are taken into account, 18,500 additional jobs are lost in EU economy.

Furthermore, EUIPO estimates that in total the EU’s 28 member states lose €1.2bn in taxation from counterfeit wine and spirits.

“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,” said António Campinos, executive director of EUIPO.

“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.”

EUIPO estimates that the UK wine and spirit manufacturing sectors lose €87m in wine and spirits sales each year due to illicit trade, €25m for spirits and €62m for wine, while the UK government loses an estimated €197m in tax annually.

Spain’s wine and spirits manufacturers are the biggest losers to counterfeit trade, according to EUIPO, with €263m lost each year, while the country’s government misses out on €90m in excise duties.

France’s wine and spirits industries lose €136m and the government loses €100m in tax, Germany loses €140m in trade and €65m in tax, and Italy loses €162m in trade and €18m in tax.

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