Australian bottle shops are doing a roaring trade in fake imported spirits, leaving consumers short-changed and, in some cases, potentially putting drinkers at risk.

Key points: Fake scotch and tequila are being sold in some Australian liquor stores

Fake scotch and tequila are being sold in some Australian liquor stores The main brand under investigation failed chemical tests in international laboratories

The main brand under investigation failed chemical tests in international laboratories Their labels claim the spirits are premium imports. The facts suggest otherwise

An ABC investigation has uncovered a cocktail of counterfeits and questionable labelling.

Dodgy drinks are being served as house spirits in bars and pubs, and sold in independent liquor stores in the country's biggest markets, including Sydney, Melbourne and Brisbane.

Documents obtained under freedom of information laws show one rogue operator targeted by authorities was creating spirits by mixing raw ethanol and flavourings.

Separately, the ABC found evidence several Australian companies are selling fake scotch whisky and tequila for as little as $26.99 a bottle.

Both types of spirit have strict geographical requirements, enforceable under Australian law.

Scotch must originate in Scotland, and tequila can only be produced in certain regions of Mexico.

The evidence has angered authorities in the United Kingdom and Mexico, where the iconic drinks drive an export market worth billions of dollars.

Several brands being investigated for questionable origin are bottled in Orange, NSW, by D'Aquino Bros Pty Ltd.

Samples of The Black Scot were tested at a laboratory in Europe. ( ABC News: Taryn Southcombe )

The label of D'Aquino's The Black Scot whisky claims it is a "Product of Scotland".

But the ABC has seen test results from an international laboratory that show The Black Scot lacks the unique chemical compounds that identify a true scotch.

The ABC understands D'Aquino Bros is also one of three companies facing possible legal action accused of production of fake tequila.

D'Aquino Bros declined to answer specific questions, however company staff told the ABC the products were made locally.

When asked if the company's scotch and tequila were imported, one employee said: "No, they make them here in Orange."

Another employee confirmed the company's tequila was "mixed locally".

Both spirits often appear alongside more expensive legitimate products in independent bottle shops.

A bottle of D'Aquino's Reeba Reeba tequila costs just $28.99 in Brisbane, something a liquor distributor who wanted to remain anonymous said was "impossible" for an import.

"You have to wonder how they could get it in the country for that price. It definitely warrants further investigation," he said.

Trucks at the D'Aquino logistics headquarters in Orange last week. ( ABC News: Greg Miskelly )

Shelves stocked with fakes

Scotch is big business for the UK, with exports worth 4 billion pounds ($7 billion) annually. The job of protecting it falls to the Scotch Whisky Association (SWA).

SWA deputy director of legal affairs Lindesay Low said: "Australia is a popular market for scotch, we're always keeping an eye on it."

Do you know more about this story? Email miskelly.greg@abc.net.au

"We found quite a few years ago that there were a number of fake Scotches on the market."

Prosecuting the fake brands is complicated because each state has its own local authorities that are responsible for policing the liquor industry.

Lindesay Low is on the frontline of the battle to defend scotch. ( ABC News )

Shutting down sophisticated national distribution networks requires significant cooperation and coordination.

"We've done quite a lot of work in Australia in the past," Mr Low said.

Fernbrew — a D'Aquino Group company — did plead guilty to producing fake Scotch in 2007, after litigation that ran for more than three years.

In the decade since, Australia's taste for tequila has exploded.

Legitimate imports have doubled to more than 1 million litres a year, spawning a number of local imitations in the process.

The centuries-old tradition of harvesting agave cactus by hand and distilling it to create a unique spirit is fiercely protected by Mexico's Consejo Regulador del Tequila (CRT).

The tequila regulator says at least three Australian brands are "not linked" to the industry:

Brand Company CRT comments Blue Cactus Tequila D'Aquino Bros Pty Ltd Tequila falsification Reeba Reeba Fernbrew Pty Ltd Tequila falsification Los Cabos GJ Wholesale Tequila falsification

Barcodes and missing numbers

A bottle of Blue Cactus Tequila can be bought for as little as $32.50 and looks like the real deal.

However, close inspection of the label, reveals several red flags.

Each brand of tequila is given a unique serial number, but regulator CRT has no record of the one on Blue Cactus, which a company called Fernbrew Pty Ltd claims to import.

Australia's Trademarks Act requires tequila bottles to include the name of its "authorised producer" in Mexico, yet the CRT has no record of the one named by Blue Cactus.

Finally, the Blue Cactus barcode was traced by the ABC to a Canadian company which specialises in swimwear, not spirits.

Blue Cactus importer Fernbrew and D'Aquino Bros share the same address in Orange.

While tequila must originate in Mexico, the label on Los Cabos proclaims it is a "Product of Australia" and continues: "Supplied to and bottled in Australia for GJ Wholesale."

GJ Wholesale's Vernon Jepson says he does not import anything. ( ABC News )

Approached by the ABC, GJ Wholesale spokesman Vernon Jepson indicated he was not responsible for the product's origins: "I don't make it at all, I just buy it from a wholesaler."

Mr Jepson added he does not "import anything".

Mexico's ambassador to Australia, Eduardo Pena Haller, has confronted the issue of fakes overseas.

"We feel betrayed, because tequila was created in the state of Jalisco, and when somebody is producing tequila in another country then, well, they are cheating people," he said.

The ambassador said tequila was "a gift from Mexico to the world".

"If you are buying tequila that does not follow that procedure, well then you're just buying chemical substance," he said.

These are just cases of mislabelling, however, in other cases the products are actually harmful.

Documents obtained by the ABC under Freedom of Information laws detail other cases where it is claimed raw ethanol and flavourings were mixed to create fake spirits.

Documents show the actual amount of alcohol present in counterfeit spirits can vary from what is stated on the label, leaving consumers short-changed.

If that leaves you a little queasy, what's the expert advice to drinkers?

Always check a spirit's origin and label carefully before you buy. What appears to be bargain booze could end up leaving a nasty taste in the mouth.]

A spokesperson for the NSW Food Authority says that liquor regulation is a "priority" and that it runs routine "audit and inspection" of food businesses in NSW.

The spokesperson said it also "works in cooperation with other agencies and state jurisdictions to help drive industry compliance."

The spokesperson said consumers should report suspicious beverages by calling 1300 552 406 or online at www.foodauthority.nsw.gov.au.

Tomorrow: Part two of the ABC investigation and the documents that reveal how a fake alcohol kingpin evaded Australian authorities.