The growing challenge of counterfeiting in the FMCG industry

Of late, the FMCG sector has been suffering from the problem of counterfeiting. As per a report by FICCI CASCADE around 35% of FMCG items are fake. The study also reveals that around 80% of consumers believe that they are buying genuine goods.

The growth of fake goods in the FMCG sector has 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.

Counterfeiters also repackage fake goods to make them visually similar to the genuine ones. 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 brand owners as well.

In India, a large number of the 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 have made it possible for counterfeiters to 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 percent of the total sales.

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Why manufacturers require anti-counterfeiting technologies?

The global market for all counterfeit items is booming. According to the Global Brand and Counterfeiting Report, “The worldwide value of counterfeiting stood at a massive 1.2 Trillion dollars.” It is not just the consumer who faces the brunt of counterfeiting, but manufacturers also have to face the negative impact of counterfeiting.

There are many reasons which are responsible for the growth of counterfeiting in the manufacturing sector. According to a market, expert counterfeiting is becoming a bigger issue in the manufacturing sector for two reasons: The global marketplace is bringing in more players every day, and purchasing departments are pressured to continually lower the cost for what they pay for goods and services.

Another growing threat of counterfeiting in the manufacturing sector is the rise of counterfeit aftermarket parts and spare parts. Of late, particularly, in the auto industry, there has been a rise of fake auto components.

According to the magazine Business World, “The fake auto parts such as a clutch, lamps, steering arm, bearings, filters, and brake linings for two-wheelers, cars, and buses labelled under the name of genuine auto component manufacturers are supplied to the dealers and marketers all over the country.” The article also mentions that fake parts are available at 30-40% lower costs.

Industry experts also warn that it is not just the product which is being mimicked but counterfeiters try their level best to copy the packaging and branding of the product. Many times, they also have nice websites with photos of warehouses and workshops to make them look trustworthy.

In these testing times when counterfeiters have access to advance technology, it has become important to check the growth and sale of counterfeits in different industries. Moreover, there should be constant monitoring of the supply chains and the regular use of cutting-edge anti-counterfeiting technologies. A proper combination of physical and digital anti-counterfeiting technologies can check and monitor the growth of counterfeiting. The use of anti-tampering and scratch solutions will further add up to the anti-duplication game.

U.S firms most impacted by counterfeiting as per OECD report

Street markets and shops are flooded with the counterfeit handbags, football jerseys and scarves. Fake products have massively crept into industries like footwear, fashion and even luxury brands. As per an OECD report the overall value of fake and pirated products across borders in 2016 summed up to $509 billion or 3.3% of the world trade. That’s up from $461 billion (2.5% of the world trade) in 2013.

With a total share of 75%, China and Hong Kong are the biggest hubs of fake goods followed by Turkey, Singapore and Germany who together accounted for global seizures in 2016.

However, looking at the countries most impacted by duplication presents a diverse picture. Between 2014 and 2016, 24% of the total value of duplicate items confiscated by customs around the world were violating IP rights of companies based in the U.S with French, Italian and Swiss firms badly affected.

Surprisingly, the majority of counterfeit or pirated items seized by customs authorities are shipped as small parcels. Around 69% of customs m seizures between 2014 and 2016 were carried by postal or express courier services and 85% of intercepted shipments contained fewer than 10 items.


counterfeiting suspects

Alibaba helps in catching 1,953 counterfeiting suspects

In a recent development, China’s e-commerce giant Alibaba has helped the Chinese police authorities in catching 1,953 suspects involved in crimes related to counterfeiting. The numbers were presented in a report published by the company and was meant for the year 2018.

The company mentioned that it provided 1,634 tips on fake products to the law enforcement departments. The cases solved by authorities related to fake products had a value of 7.9 billion Yuan or 1.16 billion US dollars.

It should be noted that Alibaba has published its annual report on counterfeiting for the fourth time.

Li Xihan Director in charge of intellectual property right protection said that the company has been increasing its anti-counterfeiting efforts in these years. In the year Alibaba launched the original design protection platform since then over 1000 brands have joined the platform.

By the end of the year 2018, 121 brands from 16 countries and regions had joined Alibaba’s anti-counterfeiting alliance.