How little does it cost to make a counterfeit bottle of Penfolds that retails for more than RMB 1,000? According to Chinese police, less than RMB 10 (USD 1.4).
Chinese police have dismantled a cross-province operation producing counterfeit Penfolds wines with production costs as low as RMB 10 per bottle and selling them nationwide for several hundred to more than RMB 1,000 each, authorities said this week.
Police in Hubei’s Huangpi District said the criminal network generated profits of up to 400% to 500%, with the case involving several million yuan. Officers arrested three suspects and seized more than 4,300 bottles of finished and semi-finished fake wine, along with bottling equipment and packaging materials.
The group was led by a man surnamed Xu, who previously received criminal penalties in Hebei in 2018 for producing fake liquor. Investigators said Xu returned to counterfeiting early this year, attracted by the significant profits, and assembled a new operation that sourced cheap bulk wine and distributed counterfeit bottles across multiple provinces.
The case came to light after Penfolds, one of China’s most recognisable imported wine brands, detected irregularities in the market and reported the matter to police in early August. Officers later identified a secluded single-storey house in a remote village as the operation’s base. Police said the property was isolated, with no nearby residents, but saw vehicles and unfamiliar individuals arriving at irregular hours.
Police said the group employed strong anti-surveillance measures, including irregular work schedules to avoid detection, frequent switching among logistics firms, multiple vehicle changes during transport and cash-only transactions to eliminate digital payment records.
Officers raided the site on Sept. 27 as suspects were loading boxes into a van. Police detained several individuals at the scene and found 50 cases — 300 bottles — of counterfeit wine inside the vehicle. The house contained more completed bottles, half-labelled bottles, totalling 4,313 bottles, as well as empty packaging and a full set of bottling and labelling equipment. Images released by authorities showed replicas of multiple Penfolds labels.
According to police, Xu admitted purchasing extremely cheap raw wine in Yantai, Shandong. Depending on the Penfolds label being counterfeited, he used wine priced at RMB 12,000 (USD 1694) or RMB 24,000 (USD 3390) per tonne, resulting in a liquid cost of about RMB 10 to RMB 20 per bottle. Including packaging, each bottle’s total production cost remained under RMB 50.
Police said Xu hired two accomplices: a man surnamed Kong, who handled filling and labelling, and a man surnamed Shen, who managed transport. The counterfeit wines were then sold to downstream distributors for several hundred to more than RMB 1,000 per bottle, before being resold to consumers at full market prices.
Penfolds labels such as Bin 407 and Bin 707 are widely used in China as premium business gifts and command high retail prices. Xu told police he chose the brand because of its strong demand and recognition among Chinese consumers.
Following the initial arrests, police traced the distribution network to upstream packaging suppliers and downstream resellers located in Beijing, Liaoning, Hunan, Fujian and Heilongjiang. Authorities carried out coordinated raids to dismantle the entire supply chain.
Xu, Kong and Shen have been arrested on suspicion of producing and selling counterfeit goods. Police said the investigation remains ongoing.
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