Whisky & True Crime Story (EN)
Part I by Ina Verstl

Before the Excise Act of 1823, the bulk of whisky sold in Scotland and England was illicitly distilled and smuggled out of the Highlands by men with ponies, ingeniously dodging the excisemen along the way. Today’s moonshiners and smugglers are no romantic heroes. More likely organised criminal networks operating globally as the trade in illicit alcohol is considered extremely profitable.
This is a detective story. Some it is it based on verifiable facts. Some is pure speculation. But this does not render it wholly implausible. Here is what we know. In July 2024, the European Anti-Fraud Office (OLAF) issued a press release which said that the agency had successfully busted a sophisticated smuggling scheme, seizing almost 400,000 bottles of counterfeit premium vodka and whisky (unspecified) with an estimated value of EUR 14 million (USD 15.2 million).
The racket, which spanned several continents (unspecified), involved transhipping the counterfeit spirits via the Caucasus to several ports (unspecified) within the European Union. OLAF explained that counterfeiters often use transhipment points to conceal the true origin of the illicit goods. Although the main destination of the fake spirits was the EU market, OLAF claimed, the production and logistics covered several countries (unspecified) outside the European Union.
Guess what, despite the size of the loot and the clear evidence of organised crime, the press release did not make it into mainstream media. The same fate befell OLAF’s press release from 2023, which said that the authorities had seized about 6 million litres of all types of illicit alcohol between December 2022 and May 2023. Or the press release from 2022, which boasted of 14.8 million litres confiscated between December 2021 and May 2022.
The media’s disinterest in OLAF’s feats is probably due to the fact that all the relevant bits of information, like where the spirits had originally come from, were left out. When this magazine asked OLAF if anyone had been charged or arrested, OLAF replied that they could not comment: all to do with data protection (today’s knock out argument) and not wanting to hinder the investigation.
Armchair sleuthing
However, OLAF’s tightlippedness should not prevent us from using “Ze little grey cells”, as Agatha Christie’s detective Poirot was fond of saying, to do a bit of guesswork. After all, OLAF, knowingly or unknowingly, left some interesting clues in the otherwise anodyne press release. What we know is that OLAF seized almost 400,000 bottles. That’s how many maritime containers, you may wonder? By my count, that’s the equivalent of 20 maritime 40-foot containers stacked to the ceiling. Or more, if the containers also held some inconspicuous wares to avoid detection by customs officers.
Since those containers were “transhipped” via the Caucasus (ie Georgia, Armenia, Azerbaijan and Russia) that could point to one of Georgia’s four seaports on the Black Sea. Russia also borders the Black Sea, but its ports are not located in the Caucasus region. Except for … the port of Ochamchire in the Georgian breakaway republic of Abkhazia. The tiny statelet, the size of Puerto Rico, has been under Russian control since 1993 and its port a hub for smugglers, whose networks for illegal cigarettes reach as far as Syria, Georgian and Ukrainian sources say.
Despite their best efforts, the EU’s port and customs authorities are incapable of checking all potentially dodgy containers. The European law enforcement agency, Europol, in a report (2023) admits that out of the 90 million containers, which annually enter into the EU, only an average of 2 percent is opened and inspected. While major EU ports increase security, Europol fears that smaller EU ports (some 1,200 of them) will become more attractive for criminal networks.
What was inside the containers?
OLAF only said that the bottles were premium whiskies and vodkas. Now, if we divide the counterfeits’ estimated value of EUR 14 million by 377,963 bottles (the exact number given by OLAF) we arrive at a value of EUR 37 for each bottle of vodka and whisky. Since OLAF would not know the criminals’ blackmarket price, only the retail price of the genuine article, this number suggests fairly premium whiskies and vodkas. More likely Johnnie Walker Black Label than Johnnie Walker Red Label, or a budget brand like Lidl’s Queen Margot.
Nota bene: I am not suggesting that the counterfeit whisky was Black Label. I am only saying it could have been. It is a popular brand across Europe and Russia, and OLAF’s price tag corresponds to what punters would need to pay for it in, say the UK (GBP 35/EUR 48 at Tesco supermarket), Portugal (EUR 37.50 at Continente supermarket), and Sweden (approx. EUR 33 at Systembolaget, the state alcohol monopolist). All these are countries with a high tax load on alcohol. For example, excise duty and VAT combined account for 75 percent of the retail price in the UK. In Ireland, which has minimum pricing for alcohol, it is a staggering 77 percent per bottle of whisky. Just by evading taxation, the criminals can make a huge profit.
Greetings from Russia?
This leaves us with the question: Where did the counterfeit whisky come from? There could be quite a few contenders. For example: Russia. Both legal and illegal producers of beer, wine and spirits have been flooding the market with counterfeits for decades. Even a Russian kvas brewery, which makes beer from bread, can churn out spirits if it has some banged-up equipment to distil its beer. As Russia has officially run dry of imported whisky following Western boycotts, local criminals have turned to producing counterfeit Johnnie Walker Black Label. This requires a network of suppliers for bottles, labels, closures, seals, and outer boxes, be they located in Russia or China. In May 2023, Russian police raided an illegal bottling plant outside of Moscow. Reportedly, officers found thousands of bottles of Black Label and other drinks brands, all deemed unsafe to drink by the authorities. In a video, an officer is shown inspecting a bottle of the counterfeit Johnnie Walker, which contained black oily bubbles.
Armenia is a potential source country, too. It is renowned for its spirits and notorious for its high level of corruption. Besides, it is located in Asia. Remember OLAF said the scheme spanned “several continents”. It is also possible that the counterfeit whisky originated further to the east, which would add plenty of countries to the list. However, the longer the route to market, the higher the transportation costs and the more bribes to pay. All this would eat into the criminals’ profit. Nevertheless, when it comes to counterfeit spirits, even extended supply chains can turn a profit. Consider this story, which comes from the OECD report on illicit trade in alcohol (2022): In 2021, Spanish authorities seized over 225,000 bottles of counterfeit rum worth EUR 3.5 million, or EUR 15 per bottle. During the investigation it came to light that the rum was made in the Dominican Republic, bottled in Honduras with bottles from China and labels from Peru. The goods were then sent to Spain via bonded warehouses in the Netherlands. At each stage someone must have made a quick buck.
Conflict as opportunity
Therefore, we should not rule out Syria as the source country. The wine fraud expert, Maureen Downey, is adamant that conflict zones are at the forefront of counterfeit wines and spirits, with Syria becoming one of the largest producers of counterfeit spirits of late. Syria’s armed conflict, which began in 2011, has turned the country into a Narco-state and a global hub for drugs, with the industry estimated at USD 10 billion annually, according to The Washington Post newspaper (July 2024). The whisky fraud expert, Isabel Graham-Jooll, explained that not only do the warring factions in a conflict zone need a steady stream of revenue to buy weapons and pay their fighters - armed conflicts also create an environment which allows organised crime to thrive. Since both groups have friends in high places, aka “state-embedded actors”, from state rulers down to commanders of militias, security agencies and military forces, transportation over longer distances and across borders can be arranged.
The illicit supply chain for illicit alcohol is very much like the legitimate one, experts say in a report (2023) prepared for the UK’s Fraud Advisory Panel, an NGO battling fraud. There are specialist manufacturers, wholesalers, retailers and hauliers. But eventually, both need to converge. Only when legitimate distributors, retailers and on-premise venues are complicit in the marketing, can counterfeiters reap the highest rewards, the OECD says. However, the role of e-commerce in distribution is rapidly increasing. The anonymity and vast reach of the internet allow counterfeiters to sell their products to a broad audience without the immediate risk of detection.
The “business plan”
Whether organised crime groups invest in their own distillery and bottling plant or contract it all out, depends on their “business plan” and on how little they care for their customers’ health. Those in the know believe that a 70 cl bottle of illicit new fill whisky, which has had a few secret ingredients added to it to imitate maturation, can cost as little as EUR 1.70. If the whisky is basically ethanol mixed with colouring and flavouring, the cost per bottle will be even lower. And if the bottle contains a fatal dose of an industrial solvent like antifreeze, which was discovered in counterfeit bottles of Glen’s vodka in Scotland in August 2024, then the production cost is merely a cynical quantity. By the way, this was the third time (after 2009 and 2015) that the Glen’s vodka brand, which is owned by the whisky distiller, the Loch Lomond Group, became the victim of counterfeiters.
The last mile
OLAF’s lucky strike proves that criminals seem to have no trouble getting their whisky to Europe. Here things get interesting. The last mile – from depot to store – will most likely be operated by anonymous men in a white van. News stories about fake alcohol often feature corner shops and convenience stores, whose owners are more than willing to pay cash to a man in a white van if they get a bargain. Naturally, they risk a fine and losing their licence – that is provided they get caught.
Big supermarkets are not immune, either. In the Fraud Advisory Panel’s report, Ms Downey mentions that she once bought a bottle of premium gin that froze in her hotel fridge. “My frozen gin probably sneaked onto the shelves of a supermarket when someone told a plausible story about spare capacity or a cancelled order and offered the buyer a great price.” David Richardson, from the UK’s Wine and Spirit Trade Association, is quoted as saying that criminals can make between GBP 3 and GBP 5 (EUR 3.60 -6.00) a bottle from hawking a cheap wine dressed as a popular brand while paying no tax. He is referring to the Yellow Tail scandal, which has been rocking the UK since 2021, when fake bottles of the Australian wine brand began appearing en masse. The bottles and labels (not the contents) were almost indistinguishable from the real thing. It is believed that organised crime groups in China (for the bottles) and Europe (for the wine) orchestrated the fraud.
If crooks can make between GBP 3 and GBP 5 of profit on a bottle of a mainstream wine like Yellow Tail, which sells for under GBP 7 (EUR 9) at Tesco’s (price checked October 2024), imagine the potential profit on a bottle of premium whisky. OLAF’s intercepted containers must have had a blackmarket value of millions of euros.
How big is the problem?
Studies by Euromonitor International (2018), a business intelligence outfit, suggest that 81 percent of the illicit alcohol market is spirits, 10 percent beer and 9 percent other fermented drinks (mainly wine). The predominance of illicit spirits is attributed to factors like the higher unit price, which generates a greater profit margin for producers and smugglers; simple production methods, and ineffective or inadequate controls by customs, the taxman and other agencies.
The market for illicit alcohol is worryingly large and the presence of organised crime a particular concern. In 2018, the total consumption of alcohol worldwide was estimated at 6.2 litres of pure alcohol per person 15 years and older. Illicit alcohol accounted for about 26 percent of this volume. The share varied significantly among regions, ranging from 14 percent in the case of the Americas and 18 percent in Europe, to 67 percent in the eastern Mediterranean region. Euromonitor estimates that globally, USD 8.9 billion of fiscal revenue is lost every year due to illicit alcohol. The annual loss for the EU is put at EUR 1.2 billion.
A cottage industry in fake whiskies
So far, the focus of this story has been on organised crime. This ignores all the small-scale kitchen table outfits, where fake bottles of fine whiskies are produced. The explosion in values for rare whiskies has seen an equal increase in the number of fakes coming onto the market. In 2017, Ms Graham-Yooll, then director at the online auction house Whisky.Auction, helped to uncover a cottage industry in West London. “The ringleader was a kind of Rudy Kurniawan of whisky fraud [Kurniawan sold over USD 100 million of counterfeit wine to collectors], with a level of sophistication that had never been seen before in fake spirits production, all done from a tiny rented apartment.”
The fraudster had submitted whisky bottles to the auction house, which failed the authenticity test. Ms Graham-Yooll raised the alarm and convinced the Metropolitan Police to visit the seller’s home. There they found, alongside a genuine collection, a large-scale production set-up where hundreds of old bottles were being refilled with cheaper, younger liquids. Her discovery was not an isolated incidence. In the previous year, the whisky brokerage firm Rare Whisky 101 had discovered a counterfeit haul of rare Scotch malt whisky valued at USD 1 million, including a fake bottle of Laphroaig 1903.
The equipment for fake whiskies can be purchased on internet platforms for as little as USD 100, the OECD report says. Empty bottles of premium spirits too can be bought on platforms like eBay and Etsy or sourced from restaurants and bars. Restaurateurs have already been advised to smash their empties and destroy the caps so that they cannot be reused by fraudsters.
The forgeries that have been uncovered could be just the tip of the iceberg. Part of the reason why fake wines and whiskies can go undetected, is that as long as they are passed from one collector to another, nobody knows they are fake and nobody loses out. Even the bottles which fail the authenticity test are only returned to the seller, I heard. They can stay in circulation until they find an unsuspecting buyer eventually. The OECD report notes that sentences for counterfeit crimes are rare. Moreover, in many countries the prosecution of counterfeiters is a complicated endeavour. Ms Graham-Yooll’s West London seller was arrested on suspicion of fraud and was bailed. Alas, before he could be tried, he had fled the country.
Keep it out of the media
Ms Graham-Yooll’s discovery made headlines mainly because she chose to go public. This suggests that it took her a lot of convincing before the police showed an interest. Considering how understaffed enforcement authorities are these days, they will rather attend to frauds with a high likelihood of charges and convictions than hard-to-prove frauds where some naive wealthy people have been duped into buying a fake.
She remembers that her decision to alert the media attracted a fair amount of criticism from inside the industry. “Big spirits brands do devote a lot of resources to tracking down frauds but they are terrified publicity will undermine consumer confidence,” she says. The loss in revenue for the legitimate producers must be significant. In 2012, the International Federation of Spirits Producers (IFSP, a now defunct industry body) estimated that spirits companies lose more than USD 1 billion in sales per year from counterfeit alcohol. Worse, the damage to the brands can lead to a long-term loss of consumer trust and loyalty, which is often more challenging and costly to rebuild than the immediate loss in revenue.
It is not that drinks companies are sitting on their hands. It is assumed that they have whole departments devoted to monitoring global markets for counterfeits. They might even employ private investigators. In 2012, the IFSP said that it had teams of investigators operating in about 30 countries. It cannot be ruled out that it was the brand owners themselves who tipped off OLAF – but that’s something OLAF will never admit to.
Ms Graham-Yooll advises whisky lovers to always buy from reputable vendors. “If you make an internet purchase, make good forensic use of whatever information is available (such as photos) as part of the sales process ... and think hard about buying from any auction that doesn’t have a fraud policy.” In short: Don’t trust, verify – if it looks too good to be true, then it is.
Author
Ina Verstl
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