A French court convicted a dozen wine producers and traders of fraud in a scheme that exported fake Pinot Noir from Southwest France to the U.S., duping American giant E. & J. Gallo Winery among others.
The decision comes amid a tough time for the French wine industry as a whole. Economic hardship has pushed its main export markets of the U.S. and U.K. to drink less and favor cheaper wines. Its exports of high-end Champagne and cognacs suffered a record drop in 2009, according to figures released Thursday.
A French merchant with a key role in the fake-Pinot affair said Thursday that he may appeal, claiming that his wine is “irreproachable.”
Claude Courset of the Ducasse company received the harshest sentence from the court in the city of Carcassonne: A six-month suspended prison sentence and a fine of €45,000, or about $61,000. The company that sold Ducasse wine in the U.S., Sieur d’Argues, was convicted of fraud and handed a €180,000 fine.
Eight vintners and wine cooperatives in the Languedoc-Roussillon region, charged with deception and forgery, were given sentences ranging from a month suspended prison to fines of €40,000.
The southern Languedoc-Roussillon isn’t known for its production of Pinot Noir, a thin-skinned grape mainly associated with the Burgundy region. The Carcassonne court described the fraud as “organized and structured.” Prosecutor Francis Battut said that Merlot and Syrah grapes were passed off as Pinot Noir in a scheme dating from January 2006 to March 2008.
A spokeswoman for Modesto, Calif.-based Gallo said the company is “deeply disappointed” that Sieur d’Arques was found guilty, adding that it is no longer selling that wine to customers. Gallo officials said Wednesday that the only French Pinot Noir that was potentially misrepresented to Gallo was the 2006 vintage.
Mr. Courset, whose company dealt with Sieur d’Arques for the export of the wine, said he “reserves the right to appeal” the court’s decision. “We scrupulously respected the contract terms of our client,” he said. “Our wines are irreproachable.”
He has contended that the investigation went off course, concentrating on the wine growing situation in general amid the global economic crisis “but also with obscure regulations that fluctuate from country to country.”
Mr. Battut said wine cooperatives sold “local wine to Ducasse labeled Pinot at his request and modifying accompanying documents and bills.” He labeled the case a “very important fraud.”
France’s exports of wine and spirits fell 17 percent to €7.74 billion ($10.5 billion) last year, according to figures released Thursday by the Federation of French Wine and Spirits Exporters.
It marked the largest ever one-year drop in French wine and spirits exports and was the first annual decline since 2004, said Renaud Gaillard, a spokesman for the industry group.
The biggest drops were in pricey bottles of Champagne and cognac. Exports of Champagne fell 28 percent to €1.6 billion last year, the federation said. That represented a drop in volume of nearly 22 percent, to 8.87 million 12-bottle cases.
Cognac sales also suffered from the economic malaise, sliding 16 percent to €1.4 billion last year.
U.S. imports of French wine and sprits tumbled 22.7 percent last year to €1.34 billion, while sales fell 20% in Britain, France’s second-largest market for its wines and spirits.
“Falling global demand and consumers’ switching to entry-level brands weighed on our results last year,” said Claude de Jouvencel, the federation’s president.
Mr. de Jouvencel was slightly more optimistic for this year, saying that “2010 will not be as bad as 2009 and could return to slight growth, 5 percent at best.”
Vodka, not a drink typically associated with France, was the single bright spot in the national drinks industry last year. Sales of French vodka, accounted for almost exclusively by the Bacardi-owned Grey Goose vodka brand, rose 14 percent to €238 million last year.
U.S. demand for the premium vodka drove the increase in sales, Mr. Gaillard said, as the country accounts for 70 percent of French vodka exports.