Globalisation, increasingly sophisticated targeted marketing, and access to information about the latest products through the internet, means today's consumers are more aware of their choices than ever before. This trend, coupled with the increasing demand for convenience shopping, shopping online or making goods available at a local level that would have historically only been available through exclusive retail store: provide counterfeiters with many new channels through which to distribute their illicit goods.
The penalties for counterfeiters, if caught, are still relatively low given the potential impact their actions may have on consumers, brands and governments. As a result of these megatrends, the Global Anti-Counterfeit Packaging market, valued at $60.9bn in 2014, is expected to reach $129.2bn by 2019.
The significant growth is of counterfeiting is an indication of the importance companies need to place on using traceability and authentication systems to ensure consumers are able to reliably purchase their original products with the quality and consistency intended.
Whilst this challenge stretches across the entirety of the food and beverage, pharmaceutical, automotive and a number of other industries, we will be taking a specific look at the threat of counterfeit alcohol and the potential solutions and innovations that can be applied to this escalating problem.
There are three key considerations driving brand protection: consumer safety, lost tax duties to governments and brand equity. For consumers, the risk can be fatal given the deadly substitutes that are often used in counterfeit alcohol.; fFor example, in September 2012, it emerged that at least 30 people had died in the Czech Republic as a result of consuming counterfeit, locally produced rum and vodka tainted with methanol.
For brand owners, illicit products present both risk of reputational damage and a material loss of revenue. This can hamper the launch of new products and prevent companies from entering a particular market outright. The International Federation of Spirits Producers estimates that fake alcoholic drinks result in annual losses of as much as $1bn for the leading global spirits companies. It is therefore no surprise that the spirits and wine industries are expected to exceed more than double the amount they spend on secure packaging over the next five years.
It should be noted that this is not an issue that is localised to one sector or region. The Czech Republic experienced a counterfeit problem with rum and vodka, just as the UK must overcome an issue with beer, China with wine and Thailand with whiskey, with many other countries facing similar challenges.
Given that this is such a widespread issue, the battle against counterfeiting requires constantly evolving risk-mitigation strategies. Collaboration between law enforcement, central and local government departments, alcohol brand owners and packaging suppliers is essential.
These parties must proactively work together in order to create coordinated and adaptable plans to protect consumers and their reputations. Innovation must also play an imperative key role major part.
Evaluating risk and implementing a proactive anti-counterfeiting strategy is the first step to deterring forgeries and protecting a brand's value. This includes evaluating the value chain, from point of origin through distribution channels, to point of sale and even to beyond the purchase in order to identify vulnerabilities.
In some instances, counterfeiters have successfully refilled original bottles with fake product and resold it to local restaurants. The reality is that when a product has been counterfeited, it can be too late for the damage to be reversed.
Brands can address vulnerabilities through a number of approaches; however, a combination of methods is always most effective. These include primary packaging modifications that make it impossible to refill the container, tracke and trace systems that show the history and location of the materials, as well as authentication solutions which enable brands to confirm the legitimacy of their products.
If we take a closer look at the different authentication solutions available to alcohol brands, we can divide these into three categories: overt technologies, covert solutions and forensic features:
- Overt technologies enable instant authentication through visual inspection, and most commonly feature holographic devices and colour-shift inks
- Covert solutions, on the other hand, such as micro-text and microscopic tagging, are difficult to detect without specialist equipment, and rely upon technologies such as UV-invisible inks
- Forensic features, which include molecular markers and biological tracers, offer a further layer of authentication and can only be identified using laboratory equipment
Essentra advocates a multi-layered approach to brand protection. We work with an international customer base to develop and deliver brand protection and authentication solutions for their specific needs. The most effective being a combination of overt, covert and forensic solutions.
Tamper evidence is one of the more straightforward solutions that allows the consumer to identify immediately if the product has been opened or otherwise tampered with. This could be via a label or security seal that is corrupted if interfered with or broken.
While this type of protection can be circumnavigated by counterfeiters, it is nonetheless a feature that Essentra would always recommend as part of a layered approach, as it provides a line of defence which is easily gauged.
A more sophisticated and innovative technology, which bridges covert and forensic layers of authentication, is Essentra's Patron™ taggant system. The system uses a transparent taggant ink that can be chemically engineered to provide customers with a unique signature which can be implemented via litho, screen, gravure or flexo printing, and can be injection molded or added via a spray application. This signature is readable by bespoke Patron™ taggant readers throughout the supply chain to ensure the authenticity of the product.
The risks are evident for brand owners as they seek to protect their reputation, their revenue and most importantly their customers. The continued levels of investment from brand owners demonstrates their proactive approach to security and authentication. Subsequently, we are witnessing the rise of more sophisticated and innovative technologies that are helping to bring about this protection.
This level of innovation must continue to progress in order for brand owners to stay on the front foot in their attempts to deter counterfeiters.