The European Union Intellectual property office has published report (de) presenting the results of the eighth sectorial study, covering the production of two products: spirits and wine. It is estimated that the legitimate industries loses approximately €1.3 billion of revenue annually due to the presence of counterfeit spirits and wine in the EU marketplace, corresponding to 3.3% of the sectors’ sales.
These lost sales translate into direct employment losses of approximately 4,800 jobs. This figure does not take account of the effect of imports, since in those cases the associated employment impacts occur outside of the EU. Nor does it include losses suffered by EU producers as a result of counterfeiting in non-EU markets. Estimated employment losses in the EU therefore relate to goods produced and consumed within the EU.
If the knock-on effects on other industries and on government revenue are added, when both the direct and indirect effects are considered, counterfeiting in this sector causes approximately €3 billion of lost sales to the EU economy, which in turns leads to employment losses of about 23,400 jobs and a loss of €1.2 billion in government revenues, of which €739 million are excise duties.
A major problem which has hindered the effective enforcement of Intellectual Property Rights (IPR) in the EU is related to a lack of knowledge in relation to the precise scope, scale and impact of IPR infringements. Many attempts to quantify the scale of counterfeiting and its consequences for businesses, consumers and society as a whole have suffered from the absence of a consensual and consistent methodology for collecting and analysing data on counterfeiting and piracy across various sectors. Different approaches have been used, such as surveys, mystery shopping, monitoring of online activities, making it all the more difficult to aggregate results for the whole economy. The very nature of the phenomenon under investigation makes it extremely challenging to quantify reliably, as obtaining comprehensive data for a hidden and secretive activity is by necessity difficult.
In the present report the European Observatory on infringements of Intellectual Property Rights (the Observatory) focuses its attention on two sectors officially labeled Distilling, rectifying and blending of spirits and Manufacture of wine from grape by Eurostat. The two sectors have been analysed separately and results have been presented for each one, but, due to the similarity of the products covered both are presented in a join report. This study aims to estimate the scale of the two major economic impacts of counterfeiting which cover the direct and indirect costs to industry and the wider costs to government and society.
The biggest absolute impact of counterfeiting (€263 million) is observed in Spain. The relative effect of lost sales due to counterfeiting in spirits is significantly higher than the EU average (10.4%), while lost wine sales are at the EU average. Italy and Germany present relative lost sales below the EU average in both sectors but are second and third in absolute combined effect, at €162 million and €140 million, respectively. The French spirits sector suffers significant losses, at €100 million, second only to Spain. In the wine sector, France has lower relative effect with a 1.4% lost sales ratio. Considering both sectors jointly, France is fourth in the EU, with combined lost sales valued at €136 million. Finally, in the United Kingdom, relative effects of counterfeiting in lost sales are below the EU average in both sectors and total lost sales are €87 million.