The impact of counterfeiting in the FMCG industry

The trade of counterfeit goods is a growing concern for the FMCG industry. There are a large number of cheap copies of different products which are being sold at different stores and small shops. From fake hair oil to edible oil, bathing soaps to detergents, toothpaste to creams and much more one can hardly imagine the multiple negative effects of counterfeit items. The counterfeit market in the FMCG sector has grown at 44.4 per cent per annum and is hampering the growth of manufacturers.

The consumer goods which are highly susceptible to counterfeiting are consumer packaged goods, tobacco, personal care products, mobile and mobile components, automobile components, computer hardware and software. According to a study by FMCG, the value of such duplicate products has reached Rs 1,054 billion in the year 2014.

An industry expert says that fake goods in the FMCG sector have had an impact on both consumers and producers. While the manufacturers suffer from a tarnished brand image and low sales the consumer is at the risk of losing money and a bad impact on his or her health. He also says that unscrupulous manufacturers are also detrimental to the national economy. The prime reason behind this is that they evade taxes and lead to a rise in a host of other criminal activities. Counterfeit goods also put an unnecessary strain on the health system.

Counterfeiters also use refill or repackage fake goods with the packaging of original goods. It has been seen that old plastic water bottles are being repackaged and sold in the market the same is the case with many other goods. Such deceptive duplication leads to a loss of consumers and the brand owners as well. In India, a large chunk of population settled in rural parts of the country suffer from rampant counterfeiting of FMCG goods. With a little check of authorities and poor regulation and manufacturing guidelines counterfeiting is easily slipping in the pockets of the common man.

Advancements in technology and easy procurement of the same has made it possible for counterfeiters establish little backyard factories and hubs for the manufacturing of duplicate items. It has also been observed that counterfeiters are making fake labels and packaging to dupe consumers. In the year 2014-2015 sale of FMCG, tobacco and alcoholic beverages constituted 65 per cent of the total sales.

However, in the past few years with new and advanced packaging solutions counterfeiters are struggling to copy FMCG products with efficacy. Many companies have resorted to the use of security holograms, security labels, barcodes and many other technologies to protect their brands from the threat of counterfeiting.