Another Vodka Shot

Here is an interesting entry from the sporadically updated yet highly intelligent Trading in Words blog detailing the counterfeit vodka economy. Because high-end vodka tastes so smooth and low-end vodka tastes so awful, counterfeiting the low-end booze is more common than counterfeiting the higher-cost product, because consumer expectations for the cheap stuff are so low.

Unlike the case with other counterfeit products, consumers don't see much of a price difference between real low-end vodka and fakes. Retailers and bootleggers, on the other hand, do see the difference and rake in the money. The lack of price differential between real low-end vodka and its fake counterpart is a real problem for discerning consumers, who often use out-of-line price signals to discern between real and fake products. And consumption of fake vodka is unsafe and unwise at any price. With retailers purchasing from shady sources to achieve their windfalls, Trading in Words suggests automatic prison sentences for any retailer caught with a counterfeit bottle. Tough words, but a compelling case. Read the whole thing.

Blind Drunk

The counterfeiting scourge is a global trade phenomenon by and large, but its applications are always local. Someone in your community has purchased fakes and knock-offs, and while most fakes do not cause danger to their purchaser, many do.

In Britain, the Cheshire Trading Standards Office has issued a warning concerning fake Imperial Vodka. The counterfeit vodka contains methanol, a fuel causing warming of a very different and fatal sort.

The last line of the news item hints at one cause of the problem - murky supply chains. Purchasing vodka from supermarkets is safer than from small liquor stores or bodegas. No reason is given regarding why, but supermarkets buy in bulk, meaning that they can often command superior wholesale pricing directly from the manufacturer. This relationship ensures authenticity in the products supermarkets sell.

Smaller stores, alas, often cannot buy on the same terms. To compete with the bigger outlets, these stores sometimes enter the shadowy secondary market to purchase consumer goods.

And even when wholesale pricing terms are the same, a large supermarket will have corporate marketing and legal departments that are typically more risk-averse than their entrepreneurial counterparts. This caution is for good reason. One news item about counterfeit consumer products at a supermarket could destroy millions of dollars of supermarket brand equity, a problem not faced by anonymous bodegas and smaller retailers.