As the packaging industry dives headfirst into digitalisation, which brings undeniable benefits, a key challenge stemming from this is the rise of counterfeiting.

While counterfeit products are harmful to operations and brand PR, they can also lead to real dangers for consumers depending on the type of product – fake automobile parts and medicines can be fatal for the unaware consumer.

To tackle this issue, smart packaging can be implemented in supply chains in order for brands to limit the losses they endure from counterfeiting.

The Global Connected Packaging Summit invited technology company Ennoventure’s chief product and technology officer Karan Rai to explain how smart packaging can be used to authenticate products and fight counterfeiting.

How can companies stop counterfeit products in the digital marketplace through packaging?

Rai: “Many years ago, authentication methods were mostly passive. Now with online marketplaces, the complexity has increased and the ability to detect authentic packaging has improved. But equally, open economies make it easier for counterfeiters to plug their fake products within supply chains.

To protect products through packaging, we can look at it in the form of layers – a concept of primary, secondary and tertiary packaging.

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Primary packaging deals with the first and last layer of packaging, where the actual product is contained within it. This is secured using techniques such as branded artwork, labels, or holograms.

Secondary packaging deals with how you aggregate the units of different products and transport them across the supply chain. It is tracked by technologies such as QR codes or RFID.

Tertiary packaging includes AI technologies such as embedding invisible signatures, which machines can identify to help assess whether a product is genuine or not.

So it’s important for companies in this digital age to invest in infrastructure, which helps create a link between their digital and physical products. Now you don’t have to wait and pray that someone sees that your product is genuine. You can proactively know whether somebody actually detected a fake product.”

Can you tell us more about invisible signatures?

Rai: “Invisible or cryptographic signatures are part of the printing process of product packaging. Customers have the option of using a mobile application to scan the product and immediately know whether it’s authentic or not. This also leads to consumer engagement. A brand can reach out to customers and say, ‘We know you came across a fake product, let’s address this for you.’

Invisible signatures are also significantly less expensive than traditional technologies such as labels, which require a lot of capital expenditure and equipment and can disrupt the supply chain if faked.”

How does smart packaging provide analytics for counterfeit products?

Rai: “Brands can be aware of which regions they’re seeing a larger proportion of fake products being detected and isolate these sources and identify how the goods are moving.

You can also layer more track and trace capabilities such as demarcated regions where certain products need to be sold and a signature that tells you whether a product is meant for that market or not.

This is also influencing business strategy because companies are now layering products and services, as consumer engagement doesn’t stop with the product.”

Which industries are affected the most by counterfeiting?

Rai: “Authentication is a global issue spread across industries. Larger companies tend to be more affected and organisations that have a strong brand reputation are typically more concerned about it.

Counterfeiting is a huge issue for the pharmaceutical industry. According to the World Health Organisation, around 10% of medical products circulating in low- and middle-income countries are falsified, rising to 50% in African nations. It’s also complicated for this sector as you cannot apply additional materials to packaging without approval from regulatory bodies.

Another industry that sees a lot of counterfeiting is industrial parts manufactured for automobiles. There are small factories that produce counterfeit products sold onto aftermarket, which can lead to fatal accidents if installed in a vehicle.

But I feel that tackling counterfeiting is an effort that all companies should take on in their early days. If you don’t implement strategies around this early, then by the time you actually start facing these challenges, it’s probably too late because you have a large quantity of products already out that people are using and you have no way to pull them back and recertify them.

So, solutions need to be tailored for each industry as they all face a different environment and counterfeiters act differently for each one, but smart packaging can be widely applied.”

How does smart packaging aid consumer engagement?

Rai: “A key strategy is personalisation. If consumers feel that they connect with brands and they’re getting personalised packaging, they’re more likely to come back and buy again.

Once a consumer scans smart packaging, brands can collect varying degrees of information about the customer depending on how comfortable they are with sharing these details in return for a personalised experience.

Gamification is also a great way to keep consumers around and increase engagement time, which is miles ahead of leaflets as a traditional way of disseminating information to a mass audience for CPG companies. We worked with a large FCMG company on a noodle pack, which, when scanned, provided consumers with a list of recipes, which is so effective for engagement.”

What are the limits of smart packaging?

Rai: “A key limit is internet connectivity, which is needed for a lot of systems. If you’re looking at environments where internet connectivity is limited, you need to factor in alternative ways to work in these situations for device capabilities. But this problem is starting to be solved with the widespread availability of high-speed mobile internet.

Another barrier is market maturity and adoption. Educating consumers on being aware of these technologies and how to use them.

Finally, there are risks of cybersecurity from taking people’s information but protecting their privacy, all through product packaging.”