Burgundy Shaken by Fraud Accusations

A leading négociant is accused of illegally blending and mislabeling 1.5 million bottles
Jun 15, 2012

French federal authorities are investigating Labouré-Roi, one of Burgundy’s largest négociants, for fraud involving 1.5 million bottles of wine. Owners Louis and Armand Cottin, as well as an enologist and the company administrator, were hauled in for questioning by the gendarmes in Dijon, following an 18-month-long investigation. They stand accused of blending wines with wines from other appellations, adding table wine to wine musts to top up volume and mislabeling wines with different vintages or appellations.

No formal charges have been made, but federal prosecutor Eric Lallement told Wine Spectator he strongly anticipates filing charges and expects to bring the defendants before the court by the end of the year.

Reached at his office in Nuits-St.-Georges, Louis Cottin expressed chagrin that their travails had gone public. “We went in for questioning as arranged with the understanding that it would remain confidential,” he told Wine Spectator.

In an unexpected twist, Burgundy's wine board, the Bureau Interprofessionnel des Vins de Bourgogne (BIVB), has announced that they are joining the lawsuit against Labouré-Roi as civil plaintiffs. That will allow BIVB officials to access the case file and defend the image of the region's wines. More than half of Burgundy’s 200 million-bottle production is exported to some 150 countries. “Any suspicion of dishonest practice that might tarnish the reputation of these wines cannot be tolerated,” said Michel Baldassini, deputy chairman of the BIVB.

The evidence against Labouré-Roi is damning. The French DGCCRF anti-fraud inspectors were tipped off after a routine audit. Normally, a certain amount of wine—"the angel’s share"—is lost during winemaking and aging, yet Labouré-Roi’s volume remained remarkably stable. The DGCCRF brought their findings to the prosecutor. “500,000 bottles were cut with other wines,” said Lallement. "If you’re selling Nuits-St.-Georges, then 85 percent of what is in the bottle has to be Nuits-St.-Georges. The biggest portion were wines cut with other [wines from appellations] from the same region. Very little was cut with table wine.”

The value of those 500,000 bottles is estimated to be $3.4 million. Another million bottles were allegedly labeled and sold with false vintages. “For instance, if they ran out of Meursault 2006, they took the Meursault 2008 and sold it labeled under 2006,” said Lallement.

The fraud, if true, could damage Burgundy's reputation for terroir—that every little patch of land counts, every vintage counts. “It’s so important. This destroys the core of Burgundy,” said Shyda Gilmer, COO of New York retailer Sherry Lehmann.

BIVB chairman Pierre-Henry Gagey, who is also president of négociant Louis Jadot, hopes to contain the damage. “This affair must not be allowed to affect the vast majority of Burgundy producers and wine merchants who scrupulously comply with Appellation d’Origine Contrôlée principles,” said Gagey.

The investigation covers three years, 2006 to 2008, and Labouré-Roi has been cooperating with authorities from the start. They have acknowledged making mistakes but blame them on equipment and computers. It’s possible the prosecutor’s office will extend the investigation to cover more recent vintages.

The octogenarian Cottins are one of Burgundy’s great success stories. With roots in the Lyon silk trade, they bought Labouré-Roi in 1974, eventually building a state-of-the-art winery next to their 16th century cellars. They sell 10 million to 11 million bottles a year, with revenues of 35 million euros.

“Our strategy has also been zero errors,” Louis told Wine Spectator. He claimed that any problems had been sorted, and they had passed every possible audit since being alerted by the authorities in 2008. “We now have a system that means I can tell anyone the traceability for all of our wines,” said Louis. “The quality of our wines since September 2008 is perfect.”

But retailers are backing away. Sherry Lehmann has removed their stock of Labouré-Roi from sale until further notice. “This is bad for Burgundy—definitely damages Burgundy, but it’s really destructive for Labouré-Roi,” said Gilmer.

If found guilty, the Cottins and their co-defendents could face 2-year prison sentences and a fine of $46,000.

Crime Fraud France Burgundy News

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