Alleged wine fraud by Canterbury wine producer a threat to billion-dollar trade

Last updated 08:23 04/08/2017

Southern Boundary Wines is in court over allegations it mislabelled products.

Southern Boundary Wines wine maker Rebecca Cope.
Southern Boundary Wines Ltd director Scott Berry.
Southern Boundary Wines director Andrew Moore.

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New Zealand's $1.6 billion a year wine export business is under threat from allegations a Canterbury winemaker sent thousands of bottles of wine overseas with fraudulent labels.

Waipara wine company Southern Boundary Wines Ltd and three of its directors face more than 150 charges in a landmark case alleging wine made for their own and other brands carried false information about its variety, vintage or origin.

The case was brought by the Ministry for Primary Industries (MPI) following an extensive investigation. Suppression orders on some details were lifted in the Christchurch District Court on Thursday, but the names of the labels involved remain suppressed. No health risks were associated with the wine.

It is the first time charges have been laid under New Zealand's Wine Act.

Dieter Adam, chief executive of New Zealand Manufacturers and Exporters Association, said New Zealand's food and drink exports were particularly at risk from any suggestion of misleading labelling. It was an issue of trust and reputation, he said.

"A lot of the attraction of our food and beverage products is due to the country of origin. Something like this is very unhelpful," Adam said.

"This could be made into a big situation, especially in the Asian markets, and the Chinese in particular are very sensitive to misleading labels."

It was revealed on Thursday that Southern Boundary and vineyard manager and winemaker Scott Berry, winemaker Rebecca Cope and operations and export manager Andrew Moore face 156 charges between them.

The charges relate to sauvignon blanc and pinot noir from Waipara and Marlborough made between 2011 and 2013. None of the product in question is available on New Zealand shelves. It has already been sold and consumed, or bought back and seized in the case of some exported wine.

MPI alleges the company, or the directors, made false statements about wine's vintage and production location when applying to send product overseas. It claims the defendants destroyed or concealed winemaking records, or tried to, and failed to deal with grapes, grape juice and wine from a customer as required. Winemakers are legally required to keep production records and MPI alleges some records were found in a rubbish sack.

MPI has said the wineries involved were the victims of the alleged frauds.

New Zealand's wine exports earned the country $1.6b in the 2016 financial year, a market expected to be worth $2b by 2020. Sauvignon blanc accounts for 86 per cent of this market, with Marlborough the main source of sauvignon blanc grapes.

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Jeffrey Clarke, acting chief executive of industry body New Zealand Winegrowers, said they were concerned by the allegations, but supported the process because label integrity was important. 

The organisation was supplying thorough information to international markets so they could respond to consumers as necessary, he said.

"The New Zealand wine industry is highly regarded around the world and we cannot let the alleged actions of one winery damage a reputation that we have all worked so hard to build," Clarke said.

While the exact quantity affected by the allegations was unknown, it was believed to be a "tiny fraction" of the national harvest for those two years, he said.

The investigations proved the systems in place worked, "and it is appropriate that this matter is before the courts". 

"It is important to note that this is a mislabelling and record-keeping issue rather than a health and safety issue – all wine sold was perfectly safe to consumers," Clarke said.

Wine writer Michael Cooper, who helped expose the Wither Hills wine scandal in 2006, said such allegations were significant, but tended not to cause big ructions overseas.

"We do rely heavily on the integrity of wine producers, backed up by legislation . . . because you cannot simply by smelling and tasting a wine, say definitively, 'that comes from here or there'."

Scandals like Wither Hills, where the winery added award accolades to the labels of an inferior product, and the Southern Boundary allegations showed the increasing pressure in a competitive industry, he said.

"We know the number of producers is declining, things are getting tougher. The temptation to take shortcuts must be increasing."

Initiatives such as Pure Marlborough showed winemakers were aware of the potential harm from scandal, he said.

"They're clearly worried about controlling the global image of the Marlborough brand."

National MP for Kaikoura Stuart Smith, a former chairman of New Zealand Winegrowers, said this week's allegations would be disappointing if proven and were "not great publicity" for the industry.

But the strictness of the laws and MPI's process should give consumers confidence, he said. 

"It's very hard to actually break the rules. It's a very robust process". 

Judge Stephen O'Driscoll remanded the hearing to next Thursday for MPI to provide a memorandum about whether suppression should continue for the wine labels involved, and setting out its reasons. He may then schedule a hearing on the issue.

No pleas have been entered to any of the charges so far, but the four defendants will enter pleas on November 30.

- Stuff

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