Faking It

It’s 12pm on a Friday night time when things move on to the next level or you go home. Steven has already spent a good few hours at a bar drinking and chatting with friends. It’s been a long, hard week and he wants to have a good time.He goes up to the bar and orders a glass of Bombay. It arrives in front of him. He takes a sip. Something’s not quite right. The taste is a little off. He’s not even sure it’s Bombay he’s drinking. But, hell, he paid VND80,000 for this bad boy, what else could it be? More concerned with the leggy brunette eyeing him from the other side of the bar, he decides to let it go and get on with having a good time. The next morning he wakes up with alcohol poisoning.

Sound familiar? If you frequent particular nightspots in Ho Chi Minh City, it may do.

A Profitable Trade


In Vietnam there is a booming trade, not only in counterfeiting alcohol but in smuggling it in as well. Vietnam’s love of copying seems to know no bounds – spirits, beers and wines are no exception.


“There are massive financial incentives when it comes to producing fake alcohol,” says a bar owner in Ho Chi Minh City who asked to remain anonymous.


Hoang Minh Phuc, the marketing director at Tan Khoa, the company in charge of distributing a range of wines and spirits, agrees. “The big players in this business are very powerful and can make a lot of money.”


The bar owner explains the process: “Remy is a popular brand of cognac in Vietnam. One bottle costs around VND400,000. Some staff at bars and clubs sell off the empty original bottles. Then the counterfeiters take the empty bottles and re-fill them with a cheap brandy that costs around VND120,000. They repackage it and sell it at the real brand price.”


Phuc says the same happens with wine. The wine industry is rapidly growing here and counterfeiters are taking advantage of this.


“The Vietnamese still don’t know a lot about wines,” he explains. “Importing Bordeaux, for example, is expensive. A 2009 bottle of cheap Bordeaux should cost around VND180,000 but sometimes you see a 1999 or 2001 bottle being sold for VND80,000. A common practice is to fill the bottles with vin de table (table wine) which is substantially cheaper.”




Everyone interviewed believes that part of the problem stems from the huge amount of smuggling that goes on. “85 percent of spirits are smuggled across the border. If the alcohol is coming from an illegitimate source in the first place, the counterfeiters probably have no compunctions about doing what they do,” says the bar owner.


Phuc believes that wholesalers in Cambodia buy from distributors in Singapore and that tax is largely dependent on people’s relationships with the government. This duty-free alcohol then comes across the border into Vietnam and is distributed accordingly.




The Process


So how does it happen?


The process begins with empty bottles. Near the corner of Vo Thi Sau and Tran Quoc Thao are a few shops that buy these bottles – an undamaged Grey Goose bottle can get up to VND15,000.


The VietNamNet Bridge website details how this fake alcohol is made and there are a variety of ways it can be done, but normally the real alcohol is watered down. Experienced counterfeiters use a small drill to bore through glass bottle bases to suck the alcohol out and then pump water in. Alternatively, the alcohol is completely counterfeit using ingredients such as water, artificial colourings and flavourings. Tea can also be added to get a darker colour.


It’s not just the experienced counterfeit outfits doing this either. According to an anonymous industry insider, staff in bars also tamper with alcohol either to make more money for themselves or to increase the bar’s profit margins. Sometimes this is even requested by management.


“One club on Thi Sach is renowned for always serving fake alcohol,” claims the source. “They’ll take a Corona beer bottle and put a mixture of water and cheap beer inside. Doing this, they can make a lot of money.”


Preventative Measures


So what’s being done about the problem?


Tan Khoa has introduced a hologram stamp that will be placed on all the bottles that they distribute, ensuring that inside is a genuine product.


Many in the business were unwilling to comment. Companies like Diageo, who distribute brands such as Johnny Walker refuse to talk about the problem, even though they are taking preventative measures because of fears that it will damage their brand image, an insider explains.


The government is also cracking down with a unit that inspects outlets. There have already been reports of major counterfeit alcohol producers being arrested. The problem, however, is so widespread that they can only do so much.


On an individual level, “there are ways you can tell if a bottle contains a fake product,” explains the bar owner.


He adds: “If we suspect that a crate has been tampered with, we send it back straight away and it gets replaced. We always check new bottles with one that we are sure is genuine. We also smash any caps so as to prevent the empty bottles from being sold on.”


“Vietnam joined World Trade Organization in 2007 and taxes on alcohol will be coming down in 2011,” says Phuc. “This will help to legitimise the market and stop alcohol smuggling.”


The bar owner agrees. “The whole thing will clean up,” he says. “Duties are being relaxed and the price between smuggled alcohol and legitimate alcohol is narrowing. I don’t think the problem with ever be eradicated, but things will improve.”