Whisky: Safeguarding our valuable spirit from threat of fake booze

As Sahira Rafiq, senior solicitor at law firm Anderson Strathern, explains: “Counterfeiting is a global issue affecting a lot of different industries and sectors, and unfortunately Scotch whisky is not immune to this crime.

“Not only does counterfeit Scotch whisky have the potential to damage the brand, reputation and revenue of real whisky, it also comes with health and safety concerns as it is not regulated or produced with the same strict rules as the real stuff.

“By law, Scotch whisky can only be made in Scotland, so counterfeits affect everyone in the chain, from the Scottish distilleries right through to the international consumers.”

She adds that places where there is demand for Scotch are also the areas where it is difficult to try to protect the real product, so the market for fakes and counterfeits is rife in such locations.

For many years, industry trade body the Scotch Whisky Association (SWA) has worked hard to protect Scotch whisky, and therefore consumers, against fake versions.

Sahira says: “Proactively, SWA has protected the Scotch whisky brand by successfully registering Geographical Indication (GI) and certification trademarks for Scotch whisky all around the world wherever they can.”

A GI is an intellectual property (IP) right used on products that have qualities or characteristics attributable to a specific geographical origin, such as Scotch whisky.

“SWA also works with Interpol and Europol on food fraud initiatives, so fakes and counterfeits can be properly identified. Furthermore, SWA works with its member companies, international network of lawyers and investigators, and the public to alert them in the event of a potential counterfeit.”

Alan Park, director of legal affairs at the SWA, expands on the nature of the trade body’s work: “Any sales of fakes mean a loss of sales for the genuine product and damage to reputation. That is why we have a zero-tolerance policy regardless of the size of the market. A small problem becomes a big problem over time. The industry is always keen to stop the problem when it’s small.”

He adds that there have always been those who “wish to take advantage of the fame and reputation of Scotch whisky”.

Discussing the activities of the SWA in the area of legal protection against fakes, Alan says: “We work to have the best regulatory framework in place to protect Scotch whisky around the world. Recent examples include our registration of Scotch whisky as a GI in Brazil and the Philippines. That will continue as we work towards every market in the world formally recognising Scotch whisky is whisky only produced in Scotland. We oppose trade marks with a Scottish association which could be used on whisky of another origin, we take action before the courts to stop the sale of infringing products, and work with enforcement authorities where possible.

“Given the importance of the digital marketplace, our agents use software tools to track and identify people, brands and companies which are suspicious.”

Sharon Mackison, director and chartered trade mark attorney at Lawrie IP, agrees that counterfeit or fake whisky poses a significant threat to the value and reputation of the Scotch whisky industry.

She explains:” With such a premium product comes a high risk of fakes, as counterfeiters attempt to take advantage of Scotch’s reputation. Counterfeits undermine this established reputation and have a negative financial impact on authentic producers.

“Whilst consumers may be tempted by products retailing at a lower value than expected, it is important to be aware that counterfeit goods are not properly regulated and can present significant health and safety risks with potentially serious health consequences.”

Sharon believes the prevalence of counterfeits is an increasingly concerning issue for whisky producers. “All high-value goods are susceptible to being faked and whisky is no exception,” she says. “There are several factors contributing to this increased risk, including rising international demand for Scotch, increasingly sophisticated techniques used by counterfeiters and lack of consumer awareness of the risks presented by fakes.

“The expansion of e-commerce platforms, and even social media channels selling directly to consumers, also provides counterfeiters with easier retail avenues, and makes it more difficult for brand owners to monitor and regulate sales.

“The rise of ‘dupe culture’ also means consumers – particularly in the younger demographic – are used to seeing look-a-likes of premium products being offered for sale, which blurs the lines between counterfeits and authentic products.”

Sharon adds that Lawrie IP works with whisky producers to safeguard their unique brands, designs and innovation by assisting with putting appropriate IP protection in place. This can include trade mark registrations for the brand name, labels and even shapes of bottles to ensure producers protect their investment, but also have a strong basis to take action against producers of fakes.

She adds:”As the counterfeiters become more innovative, Scotch whisky producers are responding with their own innovations, using new developments in technology to make improvements to traceability, tamper-proof packaging and fluid analysis. For any innovations which meet the criteria for patent protection, we work with the producer to protect these technical innovations.”

Sahira says the steps taken by the SWA to proactively protect against the misuse of the Scotch whisky brand, such as applying for trademarks for brands abroad have proved advantageous. She gives the example of a recent case where the director of a South Korean company was jailed and fined approximately £160,000 for producing and selling fake Scotch. The whisky was labelled as having been produced in Jordan, rather than Scotland, and with a strength of only 35% ABV rather than the legal minimum of 40% ABV.

“The South Korean market is the 15th largest in the world by value for Scotch whisky so protecting Scotch whisky and maintaining consumer confidence is vital,” she adds.

In terms of what more can be done to protect Scotch, Sahira says: “One strategy to safeguard Scotch Whisky could be enhanced market surveillance, such as implementing ‘track and trace’ systems to trace the origin of bottles and ensure supply chain integrity.

Another strategy could be using holograms, QR codes or blockchain to help the consumer verify the product’s authenticity.”

Park concludes: “At any one time, we have around 60 cases in courts around the world, more than 100 investigations and many more trademark oppositions.

“Suspicious samples are sent to the industry’s expert laboratory, the Scotch Whisky Research Institute, for chemical analysis using cutting-edge technology.

“All that work will continue on a rolling basis. The team will be progressing new applications to register Scotch whisky for special recognition in other markets in Africa, Asia and South America. Watch this space.”